The paper selected for the cover of this
annual report is just one of over 30 embossing
patterns available, which include textile
weaves, leathers, rippling effects and intricate
geometric formations.
In January 2023, the Embossing Centre of
Excellence was opened. The installation of
an embosser varnisher includes smart eye
production technology for precision-made
textured paper.
This multi-million pound investment will
allow James Cropper to meet growing demand
for surface aesthetics in luxury packaging and
creative papers, as well as best in class service
for bespoke textural effects alongside the
development of individual colour.
Making a material difference.
WE’RE A PURPOSE-DRIVEN BUSINESS BUILT ON STRONG VALUES.
COMBINED WITH OUR WEALTH OF MANUFACTURING KNOWLEDGE,
TECHNICAL KNOW-HOW AND PIONEERING ABILITIES WE WILL
STRENGTHEN OUR POSITION ACROSS MULTIPLE SECTORS AS THE
PREFERRED GLOBAL PARTNER OF CHOICE.
Steve Adams, CEO
Our purpose
Our values
PIONEERING MATERIALS
TO SAFEGUARD
OUR FUTURE.
FORWARD-THINKING.
RESPONSIBLE.
CARING.
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37
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CONTENTS
STRATEGIC REPORT
Financial Highlights
Financial Summary
Chairman’s Letter
Chief Executive’s Review
The Pension Report
Risk Management
Promoting the Success of Our Group
- S172(1) Statement
Technical Fibre Products
ColourformTM
Paper Products
Sustainability - ESG
Our People
GOVERNANCE
Board of Directors
Corporate Governance Statement
Compliance with the QCA
Corporate Governance Code
Report of the Audit Committee
Report of the Nominations Committee
Report of the Remuneration Committee
Directors’ Report
22
21
Manufacturing
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R&D
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Sales Office
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Partners
# Location
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
13 Budapest, Hungary
14 Bucharest, Romania
15 Schenectady, USA
16 Philadelphia, USA
17 Dubai, UAE
18 Shanghai, China
19 Guangzhou, China
20 Hong Kong, China
21 Melbourne, Australia
22 Johannesburg, South Africa
# Location
1 Burneside, UK
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
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10 Paris, France
11 Strasbourg, France
12 Milan, Italy
Manufacturing
R&D
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Partners
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# Location
12 Milan, Italy
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Budapest, Hungary
Bucharest, Romania
Schenectady, USA
Philadelphia, USA
Dubai, UAE
Shanghai, China
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Guangzhou, China
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Hong Kong, China
Melbourne, Australia
Johannesburg, South Africa
Manufacturing R&D
Partners
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FINANCIAL STATEMENTS
69
Statement of Directors’ Responsibilities
Group 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
Geographical % segmentation of revenue
Summary of results
Total revenue
£129.7m
2023
2022
2021
2020
2019
24%
129.7
78.8
104.9
104.7
101.1
2023
2022
2021
2020
2019
UK
Europe
Americas
Asia
Other
10%
20%
30%
40%
50%
60%
Profit before tax
£1.3m
2023
2022
2021
2020
2019
1.3
1.7
2.8
2.6
53%
5.5
Gearing (2)
38%
2023
2022
2021
2020
2019
10%
38
28
26
17
21
Capital expenditure
£5.8m
15%
16.6
2023
2022
2021
2020
2019
5.8
6.8
3.1
5.2
9.2
Adjusted profit before tax (1)
£3.2m
2023
2022
2021
2020
2019
3.2
4.0
4.0
4.0
Basic and diluted EPS
5.4p
2023
5.4
2022
2021
2020
2019
14.2
13.2
24.3
Net debt (3)
£16.6m
2023
2022
2021
2020
2019
Non-GAAP Measures:
21%
6.7
62%
50.6
35%
12.3
7.5
8.6
11.1
1 Adjusted profit before tax equates to profit before tax excluding the impact of IAS 19 and exceptional items.
2 Gearing is calculated as the proportion of net debt to Total Shareholders' Equity, excluding the IAS19 Pension deficit.
3 Net debt is calculated as total loans and borrowings less cash and cash equivalents. Included in net debt from 2020
are lease liabilities for right-of-use assets under IFRS 16.
All figures in £’000
2023
2022
2021
Restated *
2020
2019
Revenue
129,664
104,922
78,768
104,667
101,095
Adjusted operating profit (APM 1)1
Adjusted profit before tax (APM 2)1
Exceptional items2
Impact of IAS 193
Profit before tax
Earnings per share
Statement of Financial Position
4,767
3,195
(1,095 )
(787 )
1,313
4,585
4,045
(354 )
(914 )
2,777
4,510
4,023
(1,502 )
(802 )
1,719
7,240
6,674
-
(1,215 )
5,459
4,262
3,962
-
(1,386 )
2,576
5.4 p
14.2 p
13.2 p
50.6 p
24.3 p
All figures in £’000
2023
2022
2021
Restated *
2020
2019
Non-pension assets – excluding cash
Non-pension liabilities – excluding borrowings
Net IAS 19 pension deficit (after deferred tax)
Net debt
Equity shareholders’ funds
Gearing % - before IAS 19 deficit
Gearing % - after IAS 19 deficit
Capital expenditure £’000
86,754
(25,990 )
60,764
(12,105 )
48,659
(16,594 )
32,065
81,568
(24,913 )
56,655
(9,847 )
46,808
(12,294 )
34,514
70,780
(18,744 )
52,036
(14,933 )
37,103
(7,502 )
29,601
72,084
(19,032 )
53,052
(7,600 )
45,452
(11,055 )
64,871
(16,236 )
48,635
(18,798 )
29,837
(8,561 )
34,397
21,276
38 %
52 %
28 %
36 %
17 %
25 %
26 %
32 %
21 %
40 %
5,779
6,761
3,127
9,195
5,229
* Details of the restatement are included in note 28 to the financial statements.
1 Alternative performance measures (APMs) are defined on page 13.
2 Exceptional items are detailed in note 26 to the financial statements.
3 The IAS 19 pension adjustments are explained in detail in the Chief Executive’s Review section, pages 10 to 16. 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 pension
charge pre IAS 19 adjustment better reflects the actual pension costs for ongoing service. This adjustment is made internally when we assess
performance and is also used in the EBITDA and EPS targets used in management incentive schemes. The IAS 19 pension adjustment of
£787k (2022: £914k) comprises:
All figures in £’000
Current service charge
Normal contributions
Interest charge
IAS 19 pension adjustment
Period ended 1 April 2023
Period ended 26 March 2022
974
(532 )
345
787
1,203
(656 )
367
914
Further details can be found on page 19 (The IAS 19 impact on profit).
06
07
Strategic Report - Chairman’s Letter
Strategic Report - Chairman’s Letter
MY GREATEST DESIRE FOR JAMES CROPPER IS THAT WHILE WE REMAIN
PROUD OF OUR GREAT HERITAGE, WE ALWAYS FEEL YOUNG, AND ACHIEVE THIS
BALANCE BY SEAMLESSLY COMBINING GENERATIONS OF KNOW-HOW
WITH A RELENTLESS APPETITE FOR RENEWAL .
Mark Cropper, Chairman
In the same vein, we will also look to
invest further in innovation to meet the
anticipated demands of future markets
and customers, whether technical,
environmental or economic.
We have ambitious plans to decarbonise the
Group’s operations, the first phase will be
to cut natural gas use by 25% by 2025,
keeping us on track to achieve net zero
across our entire supply chain by 2050.
This includes novel approaches to heat
generation that we hope can blaze the way
for other energy intensive manufacturers.
We are also investing to enhance our
position in hydrogen electrolysis, fuel cells,
carbon capture and other fast growing
markets. The growth potential is
significant, but we will only earn a share
through step changes in performance and
cost reduction. This will involve both
technology advances and operational
investments. For example we have recently
commissioned a hydrogen component line
in the United States, taking production
closer to a large share of our customer base
whilst at the same time cutting freight and
duty costs.
Our paper and packaging partnerships
within luxury and premium retail sectors
remain strong, whether designing new
tailor-made papers or ColourformTM
products or offering customers more
sustainable options and recycled fibres.
On this note, we are proud to have been
involved in the recent creation of the
first-ever 100% plastic-free remembrance
poppy for the British Legion, whom we
have proudly partnered with since 1978.
We have also launched our FibreBlend
Upcycled Technology programme, offering
a choice of different recovered fibre
categories. This builds on our award-
winning CupCycling proposition which
gives used coffee cups a second life as a
valuable fibre source for high quality
paper. At present, over 75% of our
custom-made paper products contain a
blended fibre source. Our plans in this area
include developing a unique technique to
separate cotton, recyclable into paper, from
artificial fibres.
Dividend
In financial terms, the Group reported a
profit before tax of £1.3m for the period
ended 1 April 2023. This was down by
53% versus the prior period with the
Group revenue rising by 24% split between
Paper (+25%), ColourformTM (+29%)
and Technical Fibre Products (+19%).
In line with expectations, the Board is
recommending a final dividend of 4.0 pence
per share, making a total dividend for the
year of 6.0 pence per share.
Board changes
This year has seen several changes to
our leadership team. In August 2022,
Steve Adams was appointed CEO,
following the departure of Phil Wild.
Transitioning to a brighter future
As ever, James Cropper continues to earn
its future by building a diversified business
across multiple markets and geographies
and by adapting with pace when required.
I am very conscious that this has included
the hard choice to restructure our paper
division from four machines to three with
associated headcount reductions.
The decision was not taken lightly but
has been essential to address years of
headwinds and margin pressures and create
a more resilient, profitable business.
Overall, we are blessed with a talented team
and a range of materials and products that
have never been more relevant in a world
that rapidly needs to learn to live in greater
balance with nature. Common to all our
activities is the opportunity to accelerate
the transition to greener economies and
societies, and grow a vibrant group
around this. I am hopeful these actions
will position us better than ever to truly
deliver on this.
Everyone in the Company is playing a part
in this journey and I would like to thank
all who work for us and with us for their
continued commitment to James Cropper.
Since the year end, we have also seen the
departure of Isabelle Maddock, our CFO,
who resigned in June 2023. I would like to
personally thank both Phil and Isabelle for
their dedicated service to James Cropper.
Mark Cropper
Chairman
23 August 2023
CHAIRMAN’S LETTER
Dear Shareholders,
As I look back over the last year what
stands out is less the circumstances,
which were as challenging as ever in
some quarters, but more the broad range
of positive actions we have taken to
reposition the Company over the period.
Our foundations for sustained growth
are being strengthened in every corner,
with the final result coming in ahead of
revised market expectations.
I must thank all our customers for their
support in the year. Even then, at times
it was challenging to keep up with the
inflationary environment.
The resulting impact was lessened by
outperformance in Technical Fibre
Products and its Hydrogen business
unit. Overall, however, significant credit
is due to our workforce who addressed
the unfolding situation with exceptional
urgency and dedication.
Adapting to circumstance always leads to
change and accordingly within the year
we have comprehensively reviewed our
growth plans and the foundations required
to ensure we maximise opportunities
and minimise risks as these roll forwards.
This has enabled us to bring to life our
strategy in realigning the business to
be centred around our customers.
Our products and markets will remain
broadly the same, but we will start the
journey to reposition ourselves operating as
one company. To move from three separate
divisions (James Cropper Paper, Technical
Fibre Products and ColourformTM) into
four market-facing segments, all unified
under the Group name, James Cropper.
Creative Papers
Luxury Packaging
Technical Fibres
Future Energy
My greatest desire for James Cropper is
that while we remain proud of our great
heritage, we always feel young, and
achieve this balance by seamlessly
combining generations of know-how
with a relentless appetite for renewal.
The reorganisation truly encapsulates
this blend from our historic roots in
papermaking to cutting edge materials
and components in renewable energy.
Importantly, across this range it is no longer
accurate to refer to us as a paper-mill or
paper business, as has been the norm
since our outset in 1845. Today, James
Cropper is successfully transitioning to
an advanced materials and paper products
group across everything it does, committed
to pioneering innovation in traditional
markets alongside breakthrough areas.
We are determined to stay modern and
relevant, which will lead us to spend more
over the coming years as we invest in our
processes and systems. This will enable
smarter access to data, leaner working
practices and cost savings.
08
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Strategic Report - Chief Executive’s Review
Strategic Report - Chief Executive’s Review
Financial Review
Revenue and adjusted operating profit
Group revenue for the financial period is £129.7m, up 24% on the
prior period (2022: £104.9m) driven by organic volume growth,
price increases and the energy surcharge applied to counter
energy and raw material cost increases.
Revenue for the Paper division increased by 25% in the period to
£88.2m generating an adjusted operating loss of £2.8m, compared
to £2.3m in the prior period.
Revenue for the TFP division increased by 19% in the period
to £37.2m generating an adjusted operating profit of £9.2m,
compared to £8.7m in the prior period.
Revenue for ColourformTM grew by 29% in the period to
£4.3m, generating an adjusted operating loss of £1.1m,
compared to £0.8m in the prior period.
CHIEF EXECUTIVE’S REVIEW
I am delighted to report our financial
results in my first year as CEO.
Despite a year of unprecedented economic
turbulence and market volatility with
high energy and raw material costs still
being prevalent, we have continued to
show resilience.
All parts of our business responded with
conviction and pace to implement actions
to offset as much of the cost headwinds as
possible. The Group also experienced
strong demand and retained contracts
throughout the period across all divisions,
with 24% revenue growth in the year to
1 April 2023, which is ahead of previous
market expectations.
I wish to express my sincerest thanks to
all our customers for their continued
loyalty and support and to our employees
who have remained focused on delivering
the best outcome possible.
Over this last year, we have made
significant progress in our journey to
reposition James Cropper to an advanced
materials and paper products group.
We have defined and introduced our
six strategic priorities, building a
solid foundation to drive a strategy
for accelerated growth.
Our customer base is changing and we
are putting the right measures in place
to improve both the customer and
employee experience and to truly deliver
on our purpose of ‘pioneering materials
to safeguard our future’.
We have strengthened our commercial
leadership teams to expand in markets
that we currently already operate in,
whilst being constantly curious to explore
new opportunities. We are also in the
process of further strengthening our
executive leadership team with the skills
and knowledge to support our ambitious
growth plans.
The fast-growing renewable energy and
decarbonisation markets are creating an
ever-greater need for novel and high-
performance materials, while sustainable
fibres, and low, or zero, carbon processing
are driving growth within paper
and packaging.
After 12 months of planning, I am also
pleased to share that the installation of
our new energy-efficient boiler has taken
place. This will dramatically improve
our energy efficiency and resilience as
we drive forward with our net zero
carbon ambition.
These energy saving investments in
upgrades to our paper machines, along
with a small decrease in gross paper
production over the last 12 months,
have contributed to an 8% annualised
reduction in site fuel consumption.
We are on track to build our Low Carbon
Energy Centre with the necessary
planning application attained and grant
application awarded.
A STRATEGY FOR ACCELERATED GROWTH:
1. Profitable growth through new customer acquisition
Opportunities to expand in new and existing markets.
4. Leaders in sustainability Recognising our responsibility
to reduce and ultimately eliminate our emissions.
2. World class execution Investment in global systems
5. Inspiring our people Building a culture of trust, cooperation
and functions.
and involvement.
3. Technology and Innovation Centre for Innovation will
6. Build the brand Presenting a more meaningful and relevant
include decarbonisation and waste fibres as well as exploring
new ideas.
face to our increasingly global customer base.
2023
£’000
2022
£’000
Change
%
APM4
9,045
8,636
129,664
104,922
Summary table of results
Group Revenue
Adjusted EBITDA
Profit summary
Paper Products
Technical Fibre Products (TFP)
ColourformTM
Other Group expenses
(2,847 )
9,244
(1,057 )
(573 )
4,767
(330 )
(1,242 )
3,195
(986 )
(109 )
(2,338 )
8,684
(754 )
(1,007 )
4,585
-
(540 )
4,045
(354 )
-
Adjusted operating profit
Fair value movement on derivatives
Net finance costs (excluding exceptional items and IAS 19 impact)
APM1
Adjusted profit before tax
Exceptional costs
Exceptional finance costs
APM2
Adjusted profit before tax after exceptional items
APM3
2,100
3,691
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 77.
(442 )
(345 )
(787 )
(547 )
(367 )
(914 )
1,313
2,777
24%
5%
22%
6%
40%
-43%
4%
0%
130%
-21%
179%
0%
-43%
-19%
-6%
-14%
-53%
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 dampened
margins, with an adjusted EBITDA increasing by 5% on the
prior year.
Energy costs proved a significant headwind and the unprecedented
price rises saw costs increase 104% year-on-year, from £7.4m in
FY2022 to £15.2m in FY2023.
Similarly, with inflationary pressures in the pulp, recycled pulp,
chemicals and dyes markets, material costs increased 23%
year-on-year. During the year, the Group also paid a one-off cost
of living payment to employees totalling £0.6m in recognition of
the escalating costs that employees were facing.
Depreciation and amortisation charges increased by 6% year-on-
year, mainly due to the timings of capital investment programmes.
10
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Strategic Report - Chief Executive’s Review
Strategic Report - Chief Executive’s Review
Divisional highlights
While operating under the Group’s combined Purpose and Values, currently each business division acts independently, focusing on niche
markets and growth areas:
Technical Fibre Products
James Cropper Paper
ColourformTM
Within Technical Fibre Products demand
remains strong with contracts returning to
pre-Covid levels in aerospace, defence
and the industrial sectors.
TFP Hydrogen continues to exceed
our expectations and our new coating
line within our Schenectady, New York
hub, became operational, building on
our successful UK Hydrogen plant in
Launceston and bringing capability even
closer to our US customers.
This significant investment will provide
a more attractive offer to our existing
and potential customers across North
America, as well as providing a blueprint
for future James Cropper hydrogen
coating lines worldwide, supporting the
electrolyser manufacturing hubs being
established globally as the technology
adoption accelerates.
Within the Paper division, demand in
many of our traditional volume areas
such as files and folders, commercial
print and stationery papers has declined
as those sectors continued to move away
from paper to digital or they prove to no
longer be economically viable.
We are taking this opportunity to
right-size our business, streamlining our
portfolio and service offer to be much
more aligned on high value partnerships.
In particular, we are focussing our offer
on luxury packaging and premium
creative papers where our customers
really value our innovation, expertise
and quality.
This year the Embossing Centre of
Excellence was opened. The installation
of an embosser varnisher includes
smart eye production technology for
precision-made textured paper.
This multi-million pound investment will
allow James Cropper to meet growing
demand for surface aesthetics in luxury
packaging and creative papers, as well as
best in class service for bespoke textural
effects alongside the development of
individual colour.
ColourformTM continues to disrupt the
luxury packaging market, maintaining
a strong pipeline of sales with 29%
revenue growth throughout the year.
This was driven by innovative new
market launches in the luxury drinks
and cosmetics sectors.
We celebrated the overall category
winners for the Dieline award as well
as both the Yellow and Wood pencil
D&AD awards. Receiving international
acclaim for our creativity and
sustainability in a way that no other
product in the global packaging
market has ever been able to achieve.
Overall, while margins were strong,
profits were impacted by inflationary
pressures in raw materials and energy
prices. Moving forward, the division
is expected to drive ongoing revenue
growth in profitable long-term packaging
rebrands, coupled with an improved
focus on operational performance to
increase margins and manage costs.
The integration of ColourformTM into
James Cropper Luxury Packaging
will create greater synergies, build
better efficiencies in our operating
model as well as increase relevance
and scale in key markets.
Expenses and profit
Other expenses have increased from
£20,960k in 2022 to £25,471k in the year
to 1 April 2023. The business has
experienced widespread cost inflation
across an array of overhead expenditure,
with distribution costs and consultancy
expenses increasing materially.
In the first half of the year the Paper
division suffered considerable machine
downtime, which resulted in a significant
increase in repairs and maintenance
expenditure in the year.
TFP Hydrogen continued to perform
above management expectations in the
year to April 2023. Business outlook
continues to improve and at the year end
this required the value of the contingent
consideration on the business acquisition
to be reassessed. An exceptional cost of
£1,095k (2022: £354k) has been posted to
the Statement of Comprehensive Income
in this regard.
Management considers this adjustment
a positive indication on the future value
of the business and the profit that TFP
Hydrogen will deliver.
With strong revenue growth, adjusted
operating profit (see APM1 Alternative
Performance Measures) was £4,767k in
the year, up 4% on prior period, despite
the challenging economic environment,
which saw unprecedented raw material
and energy prices.
Net finance costs have increased by
£702k in the year, as the Group has
continued to draw down on its external
borrowing facilities and interest rates
have increased notably.
The Group has hedged the first £15m
drawn down of the external financing
across UKEF and Commercial Facility
at a rate of 1.5% plus margin, which
provides assurances and visibility over
future interest payments and limits
exposure to increasing interest rates.
Adjusted profit before tax (see APM 2
Alternative Performance Measures) was
£3,195k in the year and ahead of market
expectations, partly due to stronger
trading in TFP and the accounting
adjustments of provisions relating to TFP.
After the impact of IAS 19 the
Group reports a profit before tax of
£1,313k, a 53% decrease on prior year
(2022: £2,777k) due to an increase in net
finance costs and exceptional costs.
The Group's profit after tax for the
period is £516k (2022: £1,358k) which
calculates to earnings per share of 5.4p
(2022: 14.2p).
Alternative performance measures
These accounts contain two main adjusting factors being the impact of IAS 19 pension adjustments which is separated out
and exceptional items. 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.
APM2
“Adjusted profit before tax”
Adjusted profit before tax refers to profit before tax
prior to the impact of IAS 19 and exceptional items.
APM3
APM4
“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
summary tables of results.
IAS 19 pension adjustment is separated out from operating profit measures as the impact of IAS 19 varies from one reporting period to
another which makes year-on-year comparison of performance challenging. Over the last 12 years, the average impact is a negative hit
to profit before tax of £1,052k. This year the charge is £787k (2022: charge of £914k).
12
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Strategic Report - Chief Executive’s Review
Strategic Report - Chief Executive’s Review
Currency
Opening Rate v. £
Closing Rate v. £
£ weakened against currency (%)
US$
1.3165
1.2333
€
1.1998
1.1370
(6.32 %)
(5.23 %)
This table compares the opening and closing exchange rates for the financial period.
Sterling weakened against the Dollar and Euro over the year. 59% of the Group’s
revenue is for customers outside of the UK (2022: 61%) 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, creating 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 a 3% impact on revenue increasing
revenues by £3,884k for the period.
Statement of financial position (SFP)
Non-pension assets have increased largely due to capital
expenditure, an increase in trade debtors and the recognition
of the interest rate cap in other financial assets.
Capital investment in the period was £5,779k (2022: £6,761k).
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 additional embossing varnishing
capability in the Paper division and new energy technologies have
been introduced in Paper to facilitate the path towards the Group’s
net zero goals.
The Group experienced a greater level of revenue in the
period compared to the prior period, and, inevitably with
this, an increase within trade and other receivables of £2,857k
and inventory of £711k.
After deferred tax the Net IAS 19 deficit has increased by
£2,258k to £12,105k (2022: £9,847k), the reasons for which are
detailed in the Pension Report on page 18.
As a result of these movements on the pension scheme
deficits, shareholders’ funds show an overall decrease of
£2,449k to £32,065k.
SFP
All figures in £’000
Non-pension assets
- excluding cash
Non-pension liabilities
- excluding borrowings
Net IAS 19 pension deficit
(after deferred tax)
Net debt
2023
2022
Restated *
86,754
81,568
(25,990 )
(24,913)
60,764
56,655
(12,105 )
(9,847)
48,659
46,808
(16,594)
(12,294)
Equity shareholders’ funds
32,065
34,514
Gearing % - before IAS 19 deficit
Gearing % - after IAS 19 deficit
Capital expenditure £’000
38 %
52 %
28 %
36 %
5,779
6,761
Cash Flow
All figures in £’000
Net cash inflow from operating activities
Net cash outflow from investing activities
Net cash inflow from financing activities
Net (decrease) / increase in cash and cash equivalents
Effects of exchange rate fluctuations on cash held
Net (decrease) / increase in cash and cash equivalents
Opening cash and cash equivalents
Closing cash and cash equivalents
2023
2022
Restated *
In the period the Group’s net cash
outflow was £71k (2022: inflow £985k).
The Group continued to invest in capital
expenditure throughout the year in order
to facilitate future revenue growth by
building capacity and capability.
There was also an increased demand for
working capital following the improved
demand in the year.
5,550
4,029
(6,643 )
(6,598 )
(1,093 )
(2,569 )
622
3,436
(471 )
400
(71 )
7,750
7,679
867
118
985
6,765
7,750
* Details of the restatements are included in note 28 to the financial statements.
Net debt
The Group incorporates £3,791k (2022: £3,949k) of
right-of-use leases in its 2023 borrowings figure. The Group’s
banking arrangements monitor net debt excluding IFRS 16.
On this basis net debt has increased over the year from
£8,345k to £12,803k, an increase of £4,458k. Net debt
including right-of-use lease liabilities is £16,594k, an
increase of £4,300k on the prior period.
Net debt before RoU leases
All figures in £’000
Cash and cash equivalents
2023
2022
Restated *
7,679
7,750
All borrowings excluding RoU leases
(20,482 )
(16,095 )
Net debt on an equivalent
comparison basis
(12,803 )
(8,345 )
Funding
All figures in £’000
Facilities
Less: Undrawn facilities
Total Borrowings
Less: Cash and cash equivalents
Net debt
Cash and cash equivalents
Undrawn facilities
Funds available at year end
Borrowings: repayable
within one year
2023
2022
Restated *
39,773
(15,500 )
40,544
(20,500 )
24,273
(7,679 )
20,044
(7,750 )
16,594
12,294
7,679
15,500
23,179
(1,758 )
7,750
20,500
28,250
(1,595 )
Funds available at year end
21,421
26,655
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 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
a further two years and an overall tenure of eight years
from inception, repayments are on a straight line basis
from years 4 to 8. The Group’s key financial covenants are
EBITDA: net Interest 4x, and the Net Debt: EBITDA
3.5x. The Group is in compliance with all its banking
covenants at the period end.
Cash and cash equivalents decreased marginally from
£7,750k to £7,679k in the year. Long term borrowings
(falling due after more than a year) increased by £4,066k
to £22,515k. The expiry profile of existing borrowings
is detailed in note 19.3 to the financial statements.
Facilities comprise of unused overdraft facilities of £3,500k
plus the total unused credit facilities of £12,000k, this
means a total of £15,500k remains unutilised at the year-end
date. Having taken account of current borrowings to be
paid within 12 months of the reporting period the Group
has £21,421k available to the Group beyond 12 months.
* Details of the restatements are included in note 28 to the financial statements.
14
15
Strategic Report - Chief Executive’s Review
A further cohort of approximately
40 employees will be invited to
participate in the coming year.
We have committed to invest in creating
a great place to work and will continue
with our pledge across all our sites to
improve the workplace environment,
providing more facilities and amenities
for our employees.
Over the next three years it is our
intention to invest in a multi-million
pound programme to update our
IT systems and infrastructure.
This will drive significant efficiency
and productivity improvements
as well as improving resilience.
The investment will equip our teams
to make smarter, data driven decisions
and improve our response times and
agility in dealing with our customers.
Inspiring our people
We recognise that it is the passionate,
committed and talented people we
employ that will help us navigate
through the business changes and
opportunities we have before us
to deliver long term sustainable
business growth.
Our online employee opinion survey
is in its second year and saw a marked
increase in employee participation
as well as increased engagement.
Whilst this is pleasing to see, we
will work even harder to deliver
an improved proposition for our
employees with continued focus
on upgrading our policies, updating
our working practices and reviewing
our remuneration and career
opportunities for all.
We have concluded the first year of
our LEAP leadership development
programme with 50 leaders - from
first line leaders to Executive
Committee members - having
benefited from the course.
Looking forward with confidence
I am excited by the many opportunities
we have in front of us as a Company
but certainly do not underestimate
the external challenges that we continue
to face.
I have confidence in our strategy to
accelerate growth and in our exceptional
team worldwide to make a real difference.
We will create a greater global presence
for James Cropper, by repositioning
ourselves to better serve our existing
and target customers.
We will also drive increased value for our
shareholders through accelerated growth
in each of our market focused segments;
Creative Papers, Luxury Packaging,
Technical Fibres and Future Energy by
leveraging our potential as one Company
under the James Cropper name.
Building on our foundations, we aim to
redefine ourselves and become – what we
believe – will be a different organisation
with a very bright future.
Steve Adams
Chief Executive Officer
23 August 2023
16
17
Strategic Report - The Pension Report
Strategic Report - The Pension Report
IAS 19 assumptions
The IAS 19 impact on profit
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 ongoing valuations and under
IAS 19 the deficit is likely to be volatile
and can be very different between
different reporting periods.
Discount rates for IAS 19 are based on
corporate bond yields which do not reflect
the investment strategy of the schemes.
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 OCI.
The Group’s total reported profit before tax is impacted by the adjustments
required for IAS 19, and these adjustments fall within operating costs and
finance costs. The total charge against profit for the year end 1 April 2023
includes an adjustment of £787k (2022: £914k) to bring the cost in line with
IAS 19.
Operating costs
The cost of providing pension benefits is included within “employee benefit
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 £442k (2022: £547k) 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; and
• 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 £345k is charged to the statement of comprehensive
income this period (2022: £367k).
The retirement benefits note to the financial statements can be found on
pages 110 to 113.
THE PENSION REPORT
The Group operates two funded pension schemes providing defined benefits for a number of its employees; the James Cropper PLC
Pension Scheme (the “Staff Scheme”) and the James Cropper PLC Works Pension Plan (the “Works Scheme”).
The Statement of Financial Position IAS 19 deficit
The combined pension scheme deficits on an IAS 19 measure has worsened over the year from £13.1m to £16.1m (before deferred
tax). This table shows the overall value of the schemes’ assets which have decreased by 33% in the period whilst the schemes
liabilities decreased by 27%.
IAS 19 pension valuation 2022
Staff
Scheme
Works
Scheme
Both Schemes
2023
2022
Restated *
Change
%
Discount Rate
4.85 %
4.90 %
4.88 %
2.75 %
Assets
Liabilities
£’000
34,557
(36,701 )
£’000
38,608
(52,604 )
£’000
73,165
(89,305 )
£’000
109,909
(121,651 )
Deficit
(2,144 )
(13,996 )
(16,140 )
(11,742 )
Effect of limit on recoverable surplus
-
-
-
(1,388 )
Net Deficit
(2,144 )
(13,996 )
(16,140 )
(13,130 )
Funding Level - %
94 %
73 %
82 %
90 %
(33 %)
(27 %)
23 %
(8 %)
* Details of the restatements are included in note 28 to the financial statements.
A significant increase in corporate bond yields over the year,
combined with a reduction in long-term inflationary expectations,
has led to a material reduction in the scheme’s liabilities.
However, the scheme’s assets have also significantly decreased
due to lower-than-expected returns. Overall, the reduction in
assets exceeded the reduction in liabilities, leading to a combined
increase in the scheme’s deficit.
In line with previous years, the IAS 19 valuation includes a
correction for sex-inequalities inherent in Guaranteed Minimum
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 (OCI) statement.
A full retirement benefit disclosure is provided in note 20 to the
financial statements.
18
19
Strategic Report - The Pension Report
Strategic Report - Risk Management
Defined benefit schemes the triennial “ongoing” 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 ongoing triennial valuations are an important
part of aligning the latest position enroute 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 2022 and determined the combined
deficit of the schemes to be £16.6m.
This compares to the previous triennial valuation
of April 2019 when the combined triennial deficit
was £19.9m.
The April 2022 triennial
"ongoing" valuations
Discount Rate
Staff
Scheme
£’000
Works
Scheme
£’000
Total
£’000
2.75 %
2.75 %
2.75 %
48,846
(48,277 )
59,226
108,072
(76,378 )
(124,655 )
Assets
Liabilities
Surplus / (deficit)
569
(17,152 )
(16,583 )
Funding Level - %
101 %
78 %
87 %
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 increase in discount rates from 2.5% in April
2019 to 2.75% in April 2022, together with a
reduction in life expectancies as a result of a
review of future mortality improvements, acted
to reduce liabilities. However, this reduction was
offset in part by an increase in future inflation
expectations over the period.
As part of the triennial valuation, the Company
agreed with the Trustee to pay annual deficit
contributions 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.
• Future annual increases in pensionable pay were
capped at a maximum of 2% from 1 April 2011,
and starting in April 2014 employee contributions
were increased.
Most of the economic risks are hedged by the
schemes’ liability driven investment strategies,
which brings some protection however it is not
practical or cost effective to hedge all pension
scheme risks.
Risk management activity over the years has
comprised of the following;
• The Schemes were closed to new members in the
year 2000 in order to contain the Group’s
exposure to rising pension costs and to safeguard
the accrued benefits to existing members.
• 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.
• In April 2018 a new liability driven investment
strategy was adopted which aims to significantly
reduce risk whilst maintaining a similar level of
overall return and protecting asset values.
20
Risk Management
The Board has overall responsibility for
the determination of risk appetite, plus
ensuring appropriate risk management and
fostering of the Company’s risk culture
which are all aspects of effective governance
and achieving robust decision making in
delivering 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 self-insurance and third-party insurance.
Self-insurance is rooted in practical
mitigation through actions taken internally
or in conjunction with other third parties
that serve to both reduce the likelihood
and impact of the risk occurrence.
Higher risks in financial and operational
areas are normally more dependent on
third party insurance. Risks in commercial
and personnel areas, because of their
nature, are more likely to be managed
by self-insurance.
The Executive Committee is responsible
for designing the risk management
framework and controls, ensuring that
they are effectively deployed throughout
the Company and have the appropriate
level of resource focused on management
and mitigation activities.
When assessing risk both external
(legal, regulatory, environmental,
social and governance) and internal
factors are taken into consideration.
RISK MANAGEMENT
The Executive Committee formally
reviews the risk register twice per year
and, correspondingly a Board risk review
is also held twice per year.
Employee Health & Safety, Attraction &
Retention of Key Skills and Corporate &
Regulatory Compliance were also elevated
to principal, following Board review.
The divisional and functional management
teams, in turn, have the responsibility
for identifying, managing and escalating
risks as part of their execution of the
strategic plan.
Principal Risks
The principal risks that may adversely
impact the performance of the Group
are set out in the following pages, along
with the mitigating actions 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.
Principal risks are frequently reviewed
by the Board and may change based on
its assessment of the macro and micro
landscape, both internal and external.
On that basis, Pandemic was de-prioritised
during the year. Additionally, Water
Abstraction and Flood are now considered
to be within the scope of our climate
related risk assessment and do not
constitute principal risks at this time.
However, Pulp Price Volatility was
augmented by other raw material
categories and elevated to the principal
risk of Security of Supply.
Emerging Risks
The emerging risk horizon is scanned
by the functions and the businesses
who will take the lead in identifying
and promoting risk awareness, adopting
mitigation activities or escalation.
Climate related risks
and opportunities
The Group continues to progress the
definition and assessment of its climate
related risks and opportunities. Due to the
longer term and emerging nature of climate
related risks it has not been considered a
principal risk in its own right at this time.
However, there are clear links to
existing principal risks such as Net
Zero Emissions, Security of Supply
and Energy Price Volatility.
As such, climate related risks and
opportunities now form part of the
ESG sub-committee agenda and the
Company will further strengthen its
commitment to reporting with the
creation and appointment of a dedicated
ESG manager role in the coming year,
reporting to the newly created role of
General Counsel & Company Secretary.
PRINCIPLE RISK
LINK TO STRATEGY
PRE MITIGATION RISK POST MITIGATION RISK
G
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Employee Health & Safety
Attraction & Retention
of Key Skills & Talent
Fire
Net Zero Emissions
Pension
Network & Systems Security
Security of Supply
Energy Price Volatility
Corporate & Regulatory Compliance
High
Moderate
High
High
Very High
Very High
High
Moderate
Moderate
Moderate
Low
Moderate
Moderate
High
Moderate
Moderate
Low
Low
21
Strategic Report - Risk Management
Strategic Report - Risk Management
EMPLOYEE HEALTH & SAFETY
Risk description and Impact
COMMERCIAL
OPERATIONAL
REPUTATIONAL
No Change —
ATTRACTION & RETENTION
OF KEY SKILLS AND TALENT
COMMERCIAL
OPERATIONAL
Increased ▲
Given the nature of our manufacturing facilities, the risk of injury or accident is ever
present and the Group is subject to legislative and regulatory requirements to protect
people on our sites. An accident or injury can cause significant distress and impact on
wellbeing as well as causing significant disruption and exposure to cost and penalties.
Damage can also be caused to the Group’s reputation.
Mitigation
Providing a safe working environment across all of our sites as well as for those travelling
on Group business, free from the risk of mental and physical injury, is of utmost priority.
The Group adopts behaviour-based safety policies and procedures to manage its
operations and protect its employees, contractors and visitors to its sites. It operates
a safety hierarchy throughout the Group from Safety Action Teams to Central
Safety Strategy Committee. The Group actively reviews its lagging metrics and is
increasingly focused on leading metrics and preventative measures. We have enlisted the
support of external experts to provide advice on improving our safety culture and have
driven a number of initiatives on housekeeping and forklift truck safety. Moving forward,
the Group will bolster its Health & Safety structure with the appointment of a senior
Health & Safety manager role reporting to the CEO.
Actions: ACTION
Continue to assess site risk environment and update policies and procedures to strive
towards an accident-free site.
Risk description and Impact
Our ability to deliver our accelerated growth strategy relies heavily on the knowledge,
skills, experience and capability of our people. The nature of our manufacturing
operations and technologies combined with the customers and markets we serve means
we need highly skilled engineers, scientists, operators and businesspeople. Our ability
to attract and retain this talent is influenced by business purpose and reputation, pay
and benefits, working environment, location, culture, ability to offer flexible working,
changing demographics and local employment levels.
Mitigation
Our people policies and practices are being reviewed and upgraded. Our recruitment
and evaluation process has been upgraded to reduce reliance on external agencies and
shorten lead times. We believe culture is created through leadership and this is how we
will develop the right environment - a culture of trust, cooperation, and involvement.
We are unleashing the talent within our organisation, developing leaders at all levels
through LEAP our James Cropper Leadership Development Programme.
Our goal is to ‘home grow’ our talent where possible and have a strong and healthy
‘talent pipeline’, ensuring we invest in the next generation of James Cropper custodians.
‘Everyone Engaged’ is an essential part of our Growth strategy. Creating an employee
experience and workplace where people want to be and are proud to work, where people
feel rewarded and recognised for the contribution they make to our success.
We have committed investment in upgrading our facilities including improved canteen
facilities, washrooms and an employee fitness centre. Moving forward we will also
complete a review of our job grading and remuneration practices and working
arrangements. We seek feedback through our employee engagement surveys and pulse
checks which have shown increased engagement and participation rate year-on-year.
Actions: ACTION
Continue to review and improve our employment value proposition with specific
focus on reward, working environment and working practices. Further develop our
talent and succession planning process across our leadership population.
FIRE
COMMERCIAL
OPERATIONAL
No Change —
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 is mitigated by robust fire detection systems including sprinkler systems in the
high-risk areas and site wide fire alarm system that has been recently upgraded.
The Group has around 60 fire marshals deployed around the sites and regular
housekeeping audits are conducted in high-risk areas. The sites are insured for fire
damage and BI cover.
Actions: MONITOR
Continue to monitor current fire risk environment.
NET ZERO EMISSIONS
Risk description and Impact
ENVIRONMENTAL
FINANCIAL
REPUTATIONAL
No Change —
PENSION
FINANCIAL
Increased ▲
The Group has a goal of net zero emissions for scope 1 and 2 by 2030. Achieving this
goal is dependent on significant investment in technologies and solutions to drive
energy efficiency and facilitate the move to green energy sources. Failure to achieve
this goal would result in potentially higher cost penalties through carbon taxation,
reputational impact on our ESG and brand positioning and compromise our ability to
attract new business.
Mitigation
The Group is investing in upgrades to its paper machines that have driven fuel
efficiency improvements of 7%-9% on an annualised basis. The Group is further
investing in pioneering technology, as part of a funded scheme, which will facilitate
the conversion from gas/oil to green electricity usage for paper machines in advance
of our 2030 ambition.
Actions: ACTION
Continue with construction of our decarbonisation facility in a purpose built energy
centre on site.
Risk description and Impact
The pension deficits for the two defined benefit schemes do not reduce in line with
agreed plans with the actuary, or continue to increase, dependent on discount rates,
inflation, mortality assumptions and investment strategies.
Mitigation
Monitor pension investment strategy with the trustees, taking into account gilt yields,
inflation and hedging arrangements. Also consider additional solutions to ensure the
deficit is reduced year-on-year. Add strength to our pension team through contracting
with a pension lawyer. Maintain formal reporting structure to hold the Trustee to account
over investment performance.
Actions: ACTION
Agree deficit reduction mechanism, to include additional contingent payments as and
when the Group deems it is in a position to pay them. New General Counsel and CFOO
to join internal pension sub-committee on appointment.
SECURITY OF SUPPLY
Risk description and Impact
COMMERCIAL
FINANCIAL
OPERATIONAL
No Change —
Disruption to access of critical raw materials due to shortages, logistical challenges
or market forces leading to insufficient volumes being available to support production
operations or escalating costs could lead to loss of business and penalties.
Mitigation
The Group has identified and continues to manage strategic suppliers through supply
agreements and contracts. Dual sourcing of critical raw materials is applied in most cases
and the adoption of hedging strategy to minimise/manage costs. The Paper business
continues to drive the identification and use of waste fibre streams to replace virgin
fibre in its goal to achieve 50% use of recycled fibre as a proportion of overall fibre
usage. Compliance to Sourcing Standards is monitored and maintained throughout.
Actions: ACTION
Secure multiple sources of supply for critical supplies. Increase agility in applying
surcharge mechanisms where required to offset cost escalation.
22
23
Strategic Report - Risk Management
Strategic Report - Risk Management
Viability statement
James Cropper is driven by its purpose –
Pioneering Materials to Safeguard our
Future – which informs and influences
the decisions we make as we fulfil our
accelerated growth strategy.
Our aim is to create increased value for
our stakeholders, on a sustainable basis,
through accelerated growth in each of our
market focused segments; Creative Papers,
Luxury Packaging, Technical Fibres and
Future Energy by leveraging our potential
as one Company under the James Cropper
name supported by a strong capital
expenditure programme.
We are about making a material difference,
utilising over 175 years of innovation,
market leading experience, long term
sustainable focus and know-how and
stewardship. We aim to deliver solutions
to today’s societal needs, including
sustainable, easy to recycle packaging
and high-performance technical materials
for advancement in industries focused
on the transition to a greener and more
sustainable future.
The Board has assessed the Group’s
prospects and believes that a two-year
planning horizon to March 2025, based
on the Board approved Group strategic
plan, is an appropriate period over which
to evaluate the Group’s ability to continue
as a going concern.
The Board is satisfied that the Group
will be able to respond to such plausible
downside 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 Group and Company will have
sufficient funds to continue to meet their
liabilities as they fall due for at least 12
months from the date of approval of the
financial statements and therefore have
prepared the financial statements on a
going concern basis.
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. The Group remains within its
key financial covenants which are that its
net debt to underlying EBITDA ratio must
not exceed 3.5 times and EBITDA must
exceed 4.0 times net interest expense.
There is adequate headroom throughout
the duration of the plan, subject to
reasonable downside scenarios, and the
Group manages operations to maintain
at least 20% headroom to the facility
covenant positions.
NETWORK & SYSTEMS SECURITY
Risk description and Impact
ENVIRONMENTAL
FINANCIAL
REPUTATIONAL
No Change —
A targeted cyber-attack could result in significant loss, manipulation or destruction of
critical information and operational capability, severely disrupting business operations.
Mitigation
The Group continues to evolve its cyber security posture to provide a robust IT security
and data protection roadmap in line with an ever-evolving threat landscape.
A multi-layered approach has been implemented, including:
- Investment in best of breed next generation intelligent solutions (including Firewalls,
Intrusion Detection, SIEM, immutable backup technology, End Point Protection and
real-time threat detection and protection). Independent external experts are engaged to
conduct annual assessments and to provide ongoing cyber security assurance support
(vulnerability management, risk management and weekly testing). We continuously
review the latest threats and trends to ensure our programme is current & effective
and we continue to evolve the design and policies of our platform to manage resilience
and incident management and response effectively.
- We engage with all employees to provide training and ongoing insights/awareness
of cyber security threats and support (at work, at home and personal) and invest in
training platforms and 3rd party consultancy to support the onward development
of the IT team.
Actions: ACTION
Continue to evolve our cyber security posture with ongoing investment and
review. Continue to focus on business engagement and education to all employees
on identifying risks.
ENERGY PRICE VOLATILITY
Risk description and Impact
FINANCIAL
No Change —
CORPORATE & REGULATORY
COMPLIANCE
COMMERCIAL
FINANCIAL
REPUTATIONAL
No Change —
Global uncertainty continues to drive energy price volatility and suppress liquidity which
reduces the opportunity for forward purchasing. Although the main site has the ability to
run on multiple fuel sources, energy costs are interconnected. As an energy intensive
business, prolonged high energy costs have a negative impact on business performance.
Mitigation
The Group continues to pursue forward pricing opportunities to secure best
pricing and/or provide price certainty for a given period of time. It can apply an
energy surcharge mechanism to offset peak pricing periods. Longer term, continued
investment in energy saving upgrades and in its pioneering decarbonisation programme
will facilitate the move to more consistent green energy contracts.
Actions: MONITOR
Continue to monitor current energy pricing and secure longer term price hedging.
Risk description and Impact
With over 600 employees across our locations, individuals may fail to act in accordance
with ethical and legal requirements, internal policies or the Group’s Values. Failure to
comply with these requirements could result in significant financial penalties, disputes
and claims, loss of customers or access to contracts and damage to our reputation.
Mitigation
The Group has a strong and clear Purpose and Values set created by employees which sits
at the heart of our decision making. Compliance policies and procedures are in place for
key regulatory compliance risks. The Group works with a network of third-party experts
to augment our advice on specific compliance areas. Additionally, the Group has begun
to roll out online compliance courses around these risks. A newly created employee Code
of Ethics & Behaviours was implemented and distributed to all employees during 2022.
The Group is subject to regular and detailed audit by its critical customers and has a
standing compliance team that is engaged to respond.
Moving forward, the Group has recently created a new role of General Counsel and
Company Secretary which will bolster its internally capability to manage compliance
in this risk category.
Actions: MONITOR
Continue to monitor and advise on the prevailing regulatory environment.
24
25
Strategic Report - S172(1) Statement
Strategic Report - S172(1) Statement
PROMOTING THE SUCCESS OF OUR GROUP
OUR APPROACH
The Board is responsible for leading
engagement across all stakeholder groups.
We supply to customers across the globe,
to both small businesses and multinational
organisations, investing the time to build
and retain strong partnerships is key to
our success.
We recognise our employees are the
lifeblood of our business and are our
most valuable resource. From new
starters, apprentices and graduates
beginning their working life to employees
who have followed their family through
several generations.
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.
OUR SHAREHOLDERS
The Directors consider the best method
of delivery to achieve our strategic
objectives taking into consideration all
stakeholders including shareholders and we
endeavour to ensure all shareholders are
treated fairly. All Directors hold shares in
the Company aligning their interests with
those of shareholders.
Engagement with our institutional and
private shareholders is an ongoing process
that we encourage and pro-actively
engage with through a range of channels.
We hosted an on-site investor day for
potential investors in July 2022.
S172(1) STATEMENT
We participate in regular face-to face
investor meetings, virtual meetings and site
visits throughout the year, as well as email
correspondence, calls and at our AGM.
At this year’s AGM, we will be offering
shareholders the opportunity to undertake
a site tour of our paper mill.
BOARD CONSIDERATIONS
In response to the negative voting last year,
the Board has addressed a majority of
actions. Further details can be found in the
Corporate Governance Statement, the
Report of the Audit Committee and the
Report of the Remuneration Committee.
Further reading:
Pages 52 to 55
Corporate Governance Statement.
Pages 57 to 58
Report of the Audit Committee.
Pages 61 to 65
Report of the Remuneration Committee.
During the year an interim dividend
2.0p per ordinary share was paid.
In addition, the Board are proposing a
final dividend of 4.0p per ordinary share
to be approved by shareholders at this
year’s AGM.
The Board will invite all shareholders to
our next AGM on Tuesday 26 September
2023. 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.
OUR EMPLOYEES
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, embedding Code
of Ethics and Behaviours at work.
Despite the 4% annual pay increase to all
employees, the Board made a significant
decision to provide all employees with a
one-off cost of living payment to support
the sudden inflationary rises.
The on-site gym is now fully open with
unisex shower facilities and the canteen
has been refreshed and upgraded.
LEAP, our leadership development
programme was launched across all
leadership levels as well as a people portal
for all employees to have access and review
their personal data and development.
As a result of feedback from the employee
survey in FY2022 the Company continued
to implement improvements to facilities
and working environment.
At our Burneside site, we have completed
the first phase of our three year plan to
upgrade our fire systems. The air
conditioning systems have been repaired
in the canteen and blender house.
The maintenance of the papermill roof
is still ongoing.
To ensure all employees are kept up to
speed with latest developments and
business news, communication is regularly
provided via face-to-face briefings, global
emails, our internal intranet and regular
team updates. We encourage two-way
dialogue and have successfully introduced
an open channel for anyone across the
business to ask a question. We also
conduct bi-annual financial briefings
and presentations for our workforce.
To improve visibility, the Executive
Committee regularly enjoy lunches with
employees in the canteen. On a monthly
basis, the Chairman and CEO undertake
impromptu site walks, as well as hosting
Chairman’s lunches with small groups
across the different divisions.
Bi-annually, the CEO will visit our global
teams in Launceston, Cornwall and
Schenectady, New York. The Chairman
also regularly meets with senior managers.
Regular consultative meetings were
held with union representatives on all
aspects of Group developments.
Further reading:
Pages 47 to 48 Our People
Pages 10 to 16 Chief Executive’s Review
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
profit ploughed back into the local
community. Discussions will shortly be
underway for a fourth phase 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
Steve Adams
Chief Executive Officer
3 August 2023
OUR CUSTOMERS AND SUPPLIERS
Our business model depends on strong
partnerships with our customers and
suppliers. These relationships are based on
true partnerships and collaborations that
enable us to provide pioneering solutions
that solve their business need.
In recent years, our growth has been
underpinned by close collaborations
with more global corporations.
We continue to increase our work in
the area of preventing modern slavery.
Our latest Modern Slavery Statement
can be found on our website.
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 an energy price
surcharge agreed with our customers that
is monitored regularly as we share the
burden of the volatile energy prices.
OUR COMMUNITY
Being the largest business in the local
area, with the Cropper family still living
locally and involved in the business,
the Group fully supports the local
community and charities.
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
£6,327 were made to local charities and
organisations in addition to the free
paper donated to various schools and
organisations. The total figure donated
over the last 5 years by the Community
Support Committee is £62,938.
26
27
Technical Fibre Products
Technical Fibre Products
TECHNICAL FIBRE PRODUCTS LTD
The last year has been another record
year for the division, delivering £37.2
million in revenue and further sales
growth expected, particularly in the
future energy markets.
Our core Aerospace business has now
recovered to pre-covid levels, but has been
overtaken as our largest market by the fuel
cell and electrolyser segment, which has
shown year-on-year growth of almost 40%.
This growth is reflective of the segment’s
projected expansion, with a predicted
compound annual growth rate (CAGR)
of 61% and 26% over the next five years
for PEM electrolysers and hydrogen fuel
cells respectively.
To support the continuing rapid growth
forecasted, TFP has installed a coating
line in the US to increase production
capacity this year, as well as making key
senior appointments to both lead and
further accelerate sales and market
growth and drive operational efficiency
and capacity improvements. The associated
increase in overheads and investment to
position the Company for future growth
has impacted EBIT, with revenue growing
at a higher rate.
DIVISIONAL REPORT
This expansion in both team and
production capacity is part of a robust
five-year growth strategy, which the
division has implemented, focusing on
driving accelerated growth in both core
and emerging markets, cultivating a
high-performance team and achieving
operational excellence.
As the Company starts to position
itself as an advanced materials and
paper group, Technical Fibre Products
and TFP Hydrogen Products will be
known under the established Group
name James Cropper.
The divisions will become two market-
facing segments, named James Cropper
Technical Fibres and James Cropper Future
Energy respectively, these routes to
market have been created for the benefit
of our external audiences and will enable
us to leverage the brand value of the
James Cropper name across all markets.
This change will be implemented in the
coming financial year supported by
branding work and further marketing
growth related activities, we look
forward to presenting the accelerated
successes next year.
James Gravestock
Managing Director, TFP
23 August 2023
TFP
Revenue
Adjusted EBITDA (APM4)
Adjusted operating profit (APM1)
2023
£’000
37,187
10,714
9,244
2022
£’000
31,209
9,905
8,684
Change
19%
8%
6%
TFP: POSITIONED FOR STRATEGIC GROWTH
To further accelerate growth and realise
the potential of the division, TFP has
implemented a new strategy focussed
on four main areas with each playing a
pivotal role.
These are; People, Systems, Operations
and Commercial Growth.
To deliver strong commercial growth,
strategic markets such as hydrogen
generation and use, carbon capture,
fuel cell technology and renewable energy
are being deliberately prioritised and
targeted with recently created market
growth programs. Alongside additional
tools that our expanding sales teams are
being equipped with these, will accelerate
our sales successes and also help retain
our strong market position in core sectors
such as aerospace and defence.
Greater customer intimacy and
understanding of their future needs is
also shaping future new product
development (NPD), route to market
and portfolio decisions.
To support the anticipated increase in
sales and to meet the future demands of
our customers, the operational structure
and capacity also needs to be in place.
This will require significant investment in
manufacturing, to both ensure scalability
and improve the operational efficiency of
existing assets.
We are also reviewing plans for new lines
and new manufacturing locations in order
to meet prioritised geographic market
demand and provide local support for
customers. Investment in business system
upgrades is taking place to further improve
material quality, customer relationship
management and to start to integrate all
our business processes to enable improved
planning and efficiencies.
In parallel to this investment in systems,
capacity and commercial growth, we
recognise that growth also necessitates
continued investment in our people.
An integral part of the strategy therefore
will be to continue to develop a global,
diverse and high-performing team.
28
29
Technical Fibre Products
INVESTING IN TALENT
In order to spearhead our ambitious growth plans, TFP announced a number of key leadership appointments in 2023. These include the
appointment of Robert Musgrove as Global Commercial Director of TFP Ltd and President of TFP Inc., Rajat Samal as Global Operations
Director and Lauren Wolstencroft as Head of Marketing.
Robert Musgrove
Rajat Samal
Lauren Wolstencroft
Rob commenced his post in January 2023,
bringing with him a wealth of international
commercial experience in the materials
sector in markets including electronics,
construction, transport and industrial.
He has a strong leadership background,
with previous senior roles including
Sales Director and Global Key Account
Manager at 3M. Based in the USA,
Rob oversees the global commercial
activities, and is working across the
division to drive the activities from the
recently created Commercial growth
plan, to further accelerate growth in all
sectors, particularly in renewable energy
and the hydrogen economy.
Rajat joined TFP as Global Operations
Director in February 2023, with over
20 years’ leadership and manufacturing
experience gained from working for GE,
Eaton and most recently Fluiconnecto
by Manuli. Rajat is responsible for TFP’s
manufacturing, customer service and
supply chain functions, delivering a
robust global operations strategy that
will enable the scale up of the TFP
and TFP Hydrogen businesses for
the significant growth anticipated in the
near and medium term.
Lauren started as Head of Marketing for
TFP in March 2023. She leads all aspects
of the division’s marketing strategy and
activities globally, to achieve the division’s
long-term vision to serve industries and
applications that enable a cleaner, greener,
safer world. Lauren has extensive B2B
and B2C marketing experience across a
number of sectors including art, law
and engineering products, most recently
as Head of Marketing and Commercial
Services at Metalube Group.
TFP is forecast to deliver unprecedented growth in the next 5 years and recognises that the people and expertise that we have in place are
central to achieving this. The wealth of expertise that Rob, Rajat, and Lauren bring to the team will further strengthen our ability to
introduce and deliver our advanced materials into both new and existing global markets.
CAPACITY EXPANSION TO SUPPORT
EXPONENTIAL GROWTH IN GREEN HYDROGEN
Over this last financial year, TFP Hydrogen
Products (TFPH) has expanded production
outside of the UK and installed specialised
electrolyser coating technology at
TFP’s site in Schenectady, New York.
Our investment in a US facility has been
a necessary step, both to increase capacity
worldwide and to provide local supply
and technical ground support for
North American Electrolyser companies,
creating a lean, short, supply chain.
This will provide significant market
opportunity in North America.
The technology incorporated in our new
line produces high performance component
coatings which improve the efficiency and
durability of Proton Exchange Membrane
(PEM) water electrolysers, one of the
foremost technologies in the transition to
green hydrogen.
The US line, which can support 600MW
electrolyser capacity, is now fully
operational and its rapid installation
and commissioning forms the basis of
our future expansion plans which project
a further threefold increase in capacity
by the end of 2023.
The addition of the Schenectady line also
means that our current coating production
is now capable of supplying 3GW of PEM
electrolyser capacity globally, even before
the additional expansion.
Scalable Manufacturing
The new line in Schenectady utilises
proprietary coating technology developed
by TFPH in Cornwall, UK and has been
specifically designed with scalability in
mind to facilitate and respond to the
exponential growth that is expected by
this market.
The U.S. Department of Energy’s (DOE)
anticipates that the U.S. electrolyser
capacity alone will have to increase from
0.17 gigawatts (GW) today to over 1,000
GW in 2050. The line provides a blueprint
for future TFP Hydrogen coating lines
worldwide, enabling us to support the
electrolyser manufacturing hubs being
established globally as the technology
adoption accelerates.
Accelerating PEMWE Adoption
TFP Hydrogen’s coating
technology addresses the key material
challenges in using titanium PEM
electrolyser components.
It improves the performance of the parts
by reducing their interfacial contact
resistance so that they operate more
efficiently, as well as protecting parts
from corrosion which would normally
reduce function and lifespan.
The result is improved long term
component performance and durability and
an increased electrolyser system lifetime.
This ultimately helps to reduce the total
lifetime cost of green hydrogen production
and enable PEM electrolysers to progress
towards achieving the ‘Hydrogen Shot’
– a US Department of Energy (DOE)
initiative that seeks to reduce the cost
of clean hydrogen by 80% to $1 per
1 kilogram in 1 decade (“1 1 1”).
Technical Fibre Products
WHAT IS A PEM WATER ELECTROLYSER?
A Proton Exchange Membrane
(PEM) electrolyser is an electrochemical
system that carries out the electrolysis
of water. PEM electrolysers consume
an electric current, generated from
renewable energy, to split the water
into its component molecules hydrogen
and oxygen.
As a result, green hydrogen is
produced, which has the
potential to change the way we
fuel our cars and other modes
of transport, as well as the way
we heat our homes, businesses
and power industrial processes.
TFP CREATES SUSTAINABLE SOLUTIONS
TO COMPOSITES INDUSTRY
AND LAUNCHES ECOVEIL
The improved surface finish reduces further
processing costs of the composite and can
also be used to add functionality to the part
if needed.
The new range is an exciting addition to
our current portfolio of solutions for
composites and the market has responded
positively to the product, with testing
and validation already commenced with
multiple tier 1 aerospace suppliers.
As well as expanding capacity to support
the growth in the hydrogen industry,
TFP has also launched a new range of
sustainable materials designed for use in
multiple composites markets, including
aerospace, automotive and sporting goods.
This range, branded as ECOVEIL,
has been introduced as a response to
the increasing demand for more
environmentally responsible alternatives
in the composites market.
Sustainable Solutions To
Composite Challenges
Our new ECOVEIL nonwovens are
produced from naturally derived or
recycled fibres and can be incorporated
directly into a composite structure to
improve the finish, fabrication and
functionality of a component.
One typical application is providing
a sustainable alternative to traditional
composite surfacing veils, such as
our OPTIVEIL range, which are used
to create a smooth layer on the surface
of composites.
WHAT IS
A COMPOSITE?
Composites, or ‘polymer
composites’, represent a key market
for TFP’s nonwoven materials.
A composite is a multi-phase
material in which a fibre
reinforcement (e.g. glass, carbon or
aramid) is encased in a resin matrix.
Composites deliver a higher
strength per unit of weight than
most metals, for example they are
up to 70% lighter than steel, whilst
also offering a high level of
corrosion and abrasion resistance.
As a result they have become
well established in the aerospace,
automotive and wind turbine
industries (amongst many others)
as a means to reduce weight
without compromising on
strength or performance.
This need for the ‘lightweighting’
of components is key to achieving
lower vehicle or aircraft emissions
and higher power output from
offshore wind turbines.
30
31
ColourformTM
ColourformTM
MOULDED PACKAGING PRODUCTS
I am pleased to report that our
ColourformTM business not only
continues to grow but remains unabated
in its ability to disrupt the luxury
packaging industry. Our strategy of
encouraging our partners to re-imagine
what is possible, despite any perceived
restrictions, has delivered exciting new
collaborations over these last 12 months.
We have delivered packaging launches for
Lancôme (L’Oréal) and Perrier-Jouët
(Pernod Ricard) bringing noteworthy
and new dimensions to their sectors.
Innovations include stunningly detailed
embossing on La Vie Est Belle, and the use
of vine shoots for the Belle Epoque
‘Cocoon’. The naturally derived agrifibre is
recovered after end of season pruning,
ensuring that is given a second life and that
the packaging is both recyclable with other
paper products and circular in design.
We have achieved international acclaim
for our creativity and sustainability in
a way that no other product in the
global packaging market has ever been
able to achieve.
Winning 16 awards and counting, has
allowed the James Cropper Luxury
Packaging proposition to become
positioned as an exemplar that is being used
by more of the world’s luxury brands.
DIVISIONAL REPORT
We continue to regularly feature in the
international packaging media and design
community for luxury moulded fibre,
exhibiting and providing thought
leadership at over 40 innovation meetings
and industry events in Paris, Milan,
London, Monaco, Glasgow and New York.
Growing for future success
As we look to the year ahead, our focus
will ensure a balanced portfolio of future
projects that reflect the needs of the market.
Our headline innovation projects continue
to expand, developing the finished products
further with colour and embellishments.
We will also address more general business
demands that reflect the desire to seek
alternatives to plastic and multi-material
existing packaging in the sector.
In order to continue our trajectory of
growth, we will combine our talent,
technical knowledge and experience with
our colleagues across the paper mill to
collaborate and provide a richer offering
to our customers.
By promoting the full suite of James
Cropper Creative Papers and Luxury
Packaging, this will enable us to expand
our proposition and own the luxury
packaging market.
This is an exciting new chapter for us as we
continue to provide solutions that prove
beauty and sustainability do work together
in partnership, brilliantly!
Patrick Willink
Managing Director, ColourformTM
23 August 2023
ColourformTM
Revenue
Adjusted EBITDA (APM4)
Adjusted operating loss (APM1)
2023
£’000
4,326
(260 )
(1,057 )
2022
£’000
3,363
174
(754 )
Change
29%
-249%
-40%
32
33
James Cropper Paper
PAPER - HIGHLIGHTS
FOCUS ON LUXURY PACKAGING
After a few challenging years the market
for luxury packaging is poised to grow
annually at rate of 5.5% to 2033.
Luxury packaging can go a long way
towards distinguishing premium
products and enhancing that all
important shelf appeal, and our focus is
firmly on delivering growth in this sector.
As our society seeks to abandon fossil-
based materials, there is continuing
demand and preference for paper-based
packaging due to its high recyclability
and sustainability credentials.
Consumers are demanding eco-friendly
options, from biodegradable and recycling
solutions to strikingly colourful materials
and innovative textures.
In January 2023, our multi-million
investment in a new Embossing Centre of
Excellence culminated with the installation
of a new embosser varnisher, sitting
alongside smart eye production technology
more commonly applied in Formula 1
and the aerospace sector, for the creation
of precision-made textured papers.
This investment will allow us to meet
growing customer demand for surface
aesthetics in luxury packaging and creative
papers, as well as best in class service for
bespoke textural effects, alongside the
development of individual colour.
We continue to make improvements in
our operations to deliver a choice of low-
carbon, regenerative, bio-based solutions
for our customers, and most importantly,
work alongside clients on eco-design
led projects that are making a material
difference on their sustainability journey.
Iconic Mulberry Green packaging:
Custom green, 50% recycled
“ At Mulberry, we are committed to transforming our business to a
regenerative and circular model by 2030, and to become Net Zero
by 2035. To achieve these ambitious goals, we are continuously
assessing ways to reduce our environmental impact and steward
circularity, even down to our Mulberry packaging. James
Cropper’s innovative recycling system transforms coffee cups into
the paper for our iconic carriers and also helps ensure that all our
customer-facing packaging is now recyclable or reusable.”
Conscious Beauty from Shiseido:
Rydal Natural White, 100% recycled
“ Ulé is a conscious beauty brand, so it made sense to design our
packaging with the most minimal impact on the environment
right from the start. At the same time, we wanted products with
a desirable look and feel, in line with our brand codes.”
The brand uses light weighted glass bottles and bio-based lids
and has removed leaflets and inner carton components from
outer packaging.
It was a challenging year for the paper
manufacturing industry as a whole, with
significant increases in raw material and
energy costs, resulting in a number of
mills in the UK and Europe being forced
to close.
Whilst, we managed to achieve record sales
of £88.2 million, up 25% on the previous
year, the cost increases we incurred severely
impacted our product margins, resulting in
an operating loss.
Demand in some of our traditional higher
volume areas has declined as those sectors
move away from paper to digital, a trend
accelerated by changes in customer
behaviour in response to the pandemic.
At the same time, we have also chosen to
exit less value adding businesses to enable
us to focus on our main strategic areas.
Following a value over volume strategy,
our focus is increasingly on Luxury
Packaging and premium Creative Papers.
Our expertise in colour and leading
innovation in sustainable fibre, provide
strong points of differentiation and have
helped us to achieve share growth in
both of these areas, in spite of the tough
market conditions.
As we further develop our sustainable
capabilities, a particular highlight was
the launch of our FibreBlend Upcycled
Technology programme. Building on
from CupCycling, our unique approach
to recycling used paper coffee cups, we
have expanded our capability in the
recovery and upcycling of other
valuable waste materials.
PAPER PRODUCTS
DIVISIONAL REPORT
Our reclaimed fibre sources include waste
paper from offices, trim from packaging
manufacturing and the thread from used
denim jeans, keeping materials in use that
would otherwise go to waste.
With FibreBlend, we take a tailored
approach to every project, creating papers
that support the sustainability ambitions
of our customers, without compromising
the technical and aesthetic requirements.
Right-sizing our business
Throughout the last year, we have been
reviewing all aspects of the Paper business
and developing a major transformation
programme, to enable a return to profit.
We aim to create a stronger and more
competitive business, that will serve our
customers better and ensure that we are
more resilient to the external challenges
that we will continue to face.
During the coming year, we will be right
sizing the Paper business, based on a reduced
volume, aligned to a streamlined and higher
value customer and product portfolio.
The transformation includes an
organisational restructure, with a
15% reduction in headcount across the
Paper division. Alongside this we will be
introducing a new operational model,
with continuous seven day manufacturing,
enabling greater productivity.
This will be supported by the
implementation of a lean business
programme to drive further quality
and efficiency improvements.
Leading with our Values; forward-thinking,
responsible and caring, we are committed
to make the necessary changes that will
provide a more flexible working
environment; one that meets our employee
needs, our business requirements
and delivers for our customers.
We recognise personal development is
extremely important, as was evident in the
2022 employee survey results. We want
to ensure any change made to working
practices is to the benefit of our employees,
by providing better training and more
opportunity to up-skill for career
progression within James Cropper
and beyond.
We acknowledge that this year, and the
previous years, have presented themselves
with many challenges and I wish to express
my gratitude to all employees who have
shown their strength, agility, openness
and ability to embrace change so positively.
Steve Adams
Managing Director, Paper
23 August 2023
Paper
Revenue
Adjusted EBITDA (APM4)
Adjusted operating loss (APM1)
2023
£’000
88,151
(1,277 )
(2,847 )
2022
£’000
70,350
(796 )
(2,338 )
Change
25%
-60%
-22%
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James Cropper Paper
Sustainability - ESG
Royal British Legion’s
new Plastic-free Poppy:
Custom red & green,
50% recycled
“ We’re proud to have designed a
plastic-free poppy that will enable
people to show their support for our
Armed Forces community in a more
sustainable way. We are thankful to our
long-standing supplier James Cropper
who developed the innovative paper
used in the new poppy. The Company’s
industry-leading technology which
reuses waste from the manufacture
of coffee cups has ensured the iconic
poppy is now made entirely from
responsibly sourced materials.”
FIBREBLEND UPCYCLED TECHNOLOGY
Consistent with our vision to drive
growth of upcycled fibre within the
Company’s paper products to reach
50 percent by 2025, James Cropper’s
FibreBlend Upcycled Technology model
organises the plethora of fibre options
available to customers into a clear offer,
demonstrating the limitless expertise
available to them.
More than just a product or process,
FibreBlend embraces the key strands of a
circular economy system, driven by design;
to reduce waste, circulate materials at their
highest value and regenerate nature.
The fibre combinations we use not only
support the regeneration of forest
ecosystems but also keep materials in
use; through a commitment to constant
fibre innovation, we have found solutions
to tackle societal challenges on waste by
upcycling problematic materials into high
value paper products.
We use a variety of carefully selected
natural and renewable fibres for our paper
products, perfectly showcased in our
Rydal Collection for luxury packaging –
demonstrating that sustainability doesn’t
begin and end with recovered fibre.
A perfect balance of paper performance,
environmental impact and visual appeal
can be achieved by using a blend of virgin
and recycled fibre, whilst maintaining
consistency in the product properties.
From the world’s first technology to
upcycle used coffee cups to the industry
leading incorporation of used jeans into
fully recyclable paper for packaging –
we are making a material difference with
our FibreBlend options.
ENVIRONMENTAL, SOCIAL
AND GOVERNANCE (ESG)
At James Cropper, sustainability
spans every area of our business and
is integral to the way we add value to
our customers.
We care deeply about delivering
greater positive impact; for our planet,
the environment, our neighbours
and society in general.
James Cropper is the name behind
pioneering materials and technologies
that feature in many of the world’s
most successful brands. With that comes
a responsibility to ensure that our
activities, the way we do business, will
help safeguard a sustainable future for
generations to come.
As the world changes and evolves, so too
does our focus on sustainability; it has
been, and will remain, a central element of
how we do business.
Our rich papermaking heritage has always
celebrated natural, renewable materials.
Today, our strategic goal for sustainable
growth takes on many more forms.
Whether that is from upcycling or
recycling materials, lightweighting,
decarbonisation, or innovative solutions
in the green energy sector, we continue
to evolve our business as we work to
reduce our effect on the environment.
Our Purpose
Pioneering materials to safeguard our
future - underpins our commitment to
sustainability that is aligned to the
United Nations Sustainable Development
Goals (SDGs). The innovative materials
we create and technologies we employ
allow us to tackle some of the biggest
challenges the world is facing.
Sustainability means doing business the
right way, adapting and challenging
ourselves to meet business needs, today
and in the future. We work closely with
our customers to create differentiated
products, that are making a material
difference for the long-term.
As we work to accelerate the
transformations needed for a net zero,
nature friendly, balanced and fair future,
our aim is that the sustainability issues
and opportunities we have identified
across the business are addressed in the
day-to-day activities of all our employees
ESG Committee
Formed in September 2020, our ESG
Committee is chaired by our CEO,
Steve Adams, and is a formal subcommittee
of the Executive Committee.
It has delegated authority to oversee the
development, measurement and delivery
of the metrics that the Group will use
across the three pillars of our sustainability
strategy: Sustainable Manufacturing,
People and Society, and Responsible
Business Practices.
It comprises members of the Executive
Committee and Non-Board members
from across the business. With a blend
of knowledge and strengths from across
the Group on the 9 priority areas
identified as being most material to the
key stakeholders for our business, the
Committee has additional expert advice and
support provided by third-party partners.
In 2022, the ESG Committee met quarterly,
and going forward ESG will have greater
focus and resource within the business to
make improvements and navigate an
increasingly complex regulatory landscape.
External Ratings
Our full focus is on delivering impact on
the priority areas, however, we understand
the value to our stakeholders of external
ratings. We use the submission and
feedback processes from ratings such as
EcoVadis to learn and improve our
approach across the sustainability agenda.
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Sustainability - ESG
Sustainability - ESG
Downstream Scope 3 emissions are
specifically excluded as it would involve
detailed life cycle analysis to deliver
reliable results. Additionally, the ability
of James Cropper Group to influence
associated emissions is limited compared
to opportunities in the supply chain and
elsewhere in the business. The exclusion
of these categories may be reviewed in
the future.
Our Scope 1, 2 & 3 GHG emissions are
verified by Erebus Environmental Ltd.
The carbon footprint report follows the
reporting principles of the Greenhouse
Gas Protocol Corporate Standard and
associated supplemental advice for
Scope 2 and 3.
Carbon footprint
At the end of the financial year, we
achieved a significant reduction in our
gross Scope 1 and Scope 2 emissions of
6,900 tCO²e, finishing at 34,700 tCO²e
(2022: 41,600 tCO²e). This is a 16.6%
reduction against our baseline carbon
footprint report year of 2022.
Several capex projects are also underway
that will significantly help us reduce our
operational carbon emissions:
• A significant amount of work has
been completed in the past year on
balancing our paper machine drying
hoods. Installs have been completed
on two of our machines and the
controls are constantly being optimised.
Work is planned to continue this project
throughout 2023/24, optimising our
hood balances further, ultimately
reducing the amount of steam used for
the drying process.
• Our manufacturing site in Burneside
• Phase 2 of our metering project is
has installed a new state-of-the-art high
efficiency steam boiler, which will deliver
a reduction in environmental emissions
as well as energy usage in the coming
years. Due to its ability to modulate
(unlike our previous model), it is well
equipped to cope with a wide range of
energy demands and will significantly
improve the control of energy for
production across the site.
• We have attained planning permission
to build a new Low Carbon Energy
Centre, which will enable us to electrify
our papermaking processes over the
coming years. Scheduled for 2025, this
project will provide a change in
energy-source, resulting in a dramatic
reduction in the amount of carbon we
emit. This will also help towards our
customer’s Scope 3 emissions targets.
underway. To date, 80+ meters have
been installed and there are plans to
complete another two phases after this.
Enhancing our understanding of when
and where energy is being consumed
on site allows waste to be identified
and corrective measures to be taken.
Adequate metering is said to enable
businesses to save 5% of their annual
energy consumption.
We saw a decrease in our upstream Scope 3
emissions of 5,000 tCO²e, finishing at
41,000 tCO²e (2022: 46,000 tCO²e).
This decrease of 10.8% against our baseline
carbon footprint report year of 2022,
has been driven through collaboration
with supply chain partners and more
robust data collection.
James Cropper pro-actively monitors
and manages the impacts of its
operations and continues to improve
the breadth and accuracy of
environmental reporting to better
understand and communicate these to all
stakeholders, and to manage associated
business risks and opportunities.
The Group already embeds sustainable
business principles across the organisation
in operations including waste management,
water use, energy efficiency and renewable
energy, and sustainable sourcing of
materials and services.
Despite the external challenges of recent
years, we have remained focused on our
priority on tackling climate change as part
of our wider sustainability commitments.
Decarbonisation is seen as one of the most
urgent and important actions to undertake.
We have been working in partnership with
Erebus Environmental Ltd, as we continue
to develop methodologies to follow best
practice in how we collect, analyse and
report data. As our knowledge in this
area grows, we are making incremental
improvements on data accuracy each year.
SUSTAINABLE MANUFACTURING
Sustainable Manufacturing
Decarbonisation and energy • Water • Waste and resource management
Priority Area
Decarbonisation and energy
Strategic Intent
UN Sustainable Development Goals
To have a robust net zero aligned
strategy and achieve net zero by 2050
across our entire supply chain.
We have a robust decarbonisation
roadmap in place for our manufacturing
sites and we are already implementing
the changes needed to cut our natural
gas use by 25% by 2025. Work is also
commencing to understand how we
will fully decarbonise and support our
ambition to be net zero by 2050 across
our entire supply chain.
Our commitment to net zero has driven a
programme to understand and rethink how
we consume and manage energy. A crucial
element of this is a significant reduction in
our primary energy usage and a move to
renewable energy sources, and we have
made some great strides in tightening up
process controls and made efficiency
improvements resulting in savings on
energy consumption.
In 2022, we consumed 189,000 MWh
of energy across our Global operations
(197,000 MWh in 2021). As part of
our strategy to improve the efficiency of
energy consumption, a number of capital
investments and work was completed,
in particular within energy intensive
Paper Operations.
Delivery against our decarbonisation
ambition, through technology
transformation and move from fossil
energy sources, allows us to demonstrate
quantifiable carbon reductions to support
our customers and meet consumer
expectations. Developing products from
sustainable sources that offer benefits in
use and support customers, also benefits
consumers in living more sustainably
and reducing their carbon footprint.
Decarbonisation & Energy - Scope 1 & Scope 2 Emissions Only
Purchased 100% renewable electricity
from the grid for the Burneside site.
Feasibility study to develop the required technology
for the decarbonisation programme completed.
Significant energy saving investments and upgrades
contributed to an 8% annualised reduction in site
fuel consumption.
Planning permission attained for the new
Low Carbon Energy Centre
Grant application awarded for the decarbonisation
programme and new Low Carbon Energy Centre
Phase 1 of the Low Carbon Energy Centre installed
and in operation
38
39
Sustainability - ESG
Sustainability - ESG
Table 1 – Global Greenhouse Gas (GHG) Emissions – Location-Based Figures
Global Operations
(Location-Based)
Metric
Unit
UK Operations
USA Operations
2021/22
Baseline
2022/23
Deviation
2021/22
(Baseline)
2022/23
Deviation
Scope 1
(Direct emissions)
Scope 2
(Indirect emissions)
Total
(Gross emissions)
tCO2e
40,123.4
33,036.6
-17.7%
tCO2e
1,235.4
1,381.8
11.9%
tCO2e
41,358.8
34,418.4
-16.8%
210.7
78.9
289.6
246.4
79.2
325.6
17.0%
0.4%
12.4%
Energy Consumption
kWh
200,456,939
186,552,822
-6.9%
1,911,442
2,108.661
10.3%
Intensity Ratio
(kWh/£100,000)
£/kWh
£2,005
£1,866
-
£19
£21
-
1 Calculated using the location-based approach.
2 Calculated as (Scope 1 + Location-Based Scope 2).
3 Global operations in 2023 totalled 34,744.0 tCO²e compared
to 41,648.4 tCO²e in 2022. A 16.6% reduction against the
selected baseline.
Table 2 - Global Greenhouse Gas (GHG) Emissions – Market-Based Figures
Global Operations
(Market-Based)
Metric
Unit
UK Operations
USA Operations
2021/22
Baseline
2022/23
Deviation
2021/22
(Baseline)
2022/23
Deviation
Scope 1
(Direct emissions)
Scope 2
(Indirect emissions)
Total
(Gross emissions)
tCO2e
40,123.4
33,036.6
-17.7%
tCO2e
25.4
42.8
68.5%
tCO2e
40,148.8
33,079.4
-17.6%
210.7
78.9
289.6
246.4
79.2
325.6
17.0%
0.4%
12.4%
1 Calculated using the market-based figures approach.
Burneside and Crewe are on a certified green Electricity tariff.
2 Calculated as (Scope 1 + Market-Based Scope 2).
3 Global operations in 2022/23 totalled 33,405.0 tCO²e compared
to 40,438.4 tCO²e in 2021/22. A 17.4% reduction against the
selected baseline.
Methodology
• GHG Protocol.
Greenhouse gas emissions are
reported in accordance with the
Greenhouse Gas Protocol Carbon
Reporting and Accounting Standards.
• Location-based Method.
The first table reports emissions
according to the GHG Protocol’s
“location-based” reporting method,
using grid-average emission factor data
for all electricity generation sources.
• Market-based Method.
• Inventory Guidance.
US EPA was used to identify
Scope 1 and Scope 2 emissions for
our operations in Schenectady, USA.
• Group figures are compared to
the selected base year to provide an
indication of progress over time.
The second table reports emissions
according to the GHG Protocol’s
“market-based” reporting method,
which accounts for renewable energy
purchases which are used to support
our operations.
• Both the Location-Based and Market-
Based tables are provided to deliver
an insight into the emission savings
generated through our Green Tariff
Electricity contracts, however, from
a reporting perspective the guidance
on this is likely to change.
41
STREAMLINED ENERGY & CARBON REPORT
Energy use
Renewable energy
National Grid electricity
The underlying energy data used
to calculate carbon emissions includes
electricity, natural gas and other
fuels purchased for use on-site
and for transport.
Energy used in the year across our
Global locations totalled 188,661,483 kWh,
lower than the previous year of
196,550,102 kWh, driven mostly by
efficiencies and savings made in
Paper production.
Globally we purchased 7,894,545 kWh
of Electricity from the Grid, of which
87.7% was on a Carbon Trust Certified
Green Tariff.
Classed as Tier 1 – from Solar, Hydro
and Wind sources only, this renewable
energy product conforms to the
Greenhouse Gas Protocol, so can be
reported as zero carbon emissions
when using the market-based method.
For reporting purposes, Scope 2
emissions are reported using location-
based (grid average) and also using
market-based (REGO backed) emissions.
1.21MW of Solar PV is currently installed
across 6 different locations at our Burneside
site. A majority of which are power
purchase agreements made with Burneside
Community Energy Ltd, a community
benefit society. An additional 0.25 MW
of Solar PV has recently been installed by
the Ellergreen Group at our Effluent Plant
in Burneside.
At the end of our calendar year, we saw
an increase in solar generation of 171.067
kWh, finishing at 793,319 kWh (2022:
622,252 kWh). This is an increase of
27.49% against the previous year.
We also saw an increase in the hydro
generation from our River Kent Turbine,
again a power purchase agreement made
with the Ellergreen Group. There was an
increase of 4,001 kWh, finishing at 211,679
kWh (2022: 207,678 kWh ). This is an
increase of 1.93% against the previous year.
40
Sustainability - ESG
Sustainability - ESG
Sustainable Manufacturing
Decarbonisation and energy • Water • Waste and resource management
Priority Area
Water
From our base amongst the Lake
District fells, stewardship of the natural
environment is integral to our business,
along with a mutual respect and
celebration of nature and conservation.
The Lake District’s rivers are the beating
heart of Britain’s waterways. They have
been shaped by industry and land
management over many centuries, and
all watercourses have at some point been
modified or altered to create space for
farming practices or industry.
This has exacerbated the effects of
several severe flood events in recent
years, with the area also suffering a
severe decline in biodiversity.
Strategic Intent
UN Sustainable Development Goals
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.
With around 70% biodiversity loss around
the world over the past 50 years, action on
this is critical.
The weir removal at Bowston, a project
proposed by South Cumbria Rivers Trust
(SCRT) in agreement with James Cropper
who owned the redundant low head dam,
was the largest river barrier removal in the
UK in 2022.
Removing Bowston weir has helped to
re-naturalise this section of the River
Kent – an internationally important site
of special scientific interest and the primary
water source for our operations – improve
navigation for migratory species, reduce
flood risks for residents and is set to
provide a 44% biodiversity net gain.
Sustainable Manufacturing
Decarbonisation and energy • Water • Waste and resource management
Priority Area
Strategic Intent
UN Sustainable Development Goals
Waste and resource
management
To commit to valuing waste across our
operations and employ innovative solutions
to minimise and repurpose waste.
Plastic waste has been a growing
environmental concern. In Europe alone,
about 60 million tonnes of plastics are
produced every year, while only 30% of
it is recycled.
A new partnership established with one of
the best plastic reprocessing companies in
the UK, now means that the 5% of waste
plastic that is removed by CupCycling is
now being recycled locally, rather than
going to energy from waste – UK recycling
being the preferred option based on Life
Cycle Analysis.
This technological step forward, means we
have now been able to close the loop on our
CupCycling technology.
The CupCycling development comes as we
have commissioned new stretch packaging,
42
42
that protects products from moisture ingress
during transport. The new wrap contains
30% recycled content, and so is excluded
from plastic tax, and has a high stretch
percentage which has also enabled us to
significantly reduce the amount of protective
plastic packaging we use.
This work is the result of some fantastic
collaborations with partners that have helped
us achieve our 2025 pledge on plastic to the
Ellen MacArthur Global Commitment.
In 2022, we extracted 103 tonnes of
plastic from cup waste for recycling, and
reduced plastic film wrap use within our
business by 11 tonnes in the 5 months
since the introduction of the new wrap
(59% reduction over a comparable period
the previous year).
RESPONSIBLE BUSINESS PRACTICES
Our approach to raw material
procurement supports sustainable
sourcing and supplier partnerships,
which in turn provides our customers
with the confidence they require on
the provenance of our materials.
Our growth and the impact we have is
through market and technology niches
in partnership with our customers.
Responsible Business Practices
Supply chain • Business ethics and risk • Materials with purpose
Priority Area
Supply chain
Strategic Intent
To ensure our suppliers operate to the
same ethical and sustainable standards
that the Company adheres to.
UN Sustainable Development Goals
Our commitment to sustainable
sourcing is enabled by supply chain
certification and transparency.
Confirming environmental integrity and
social accountability is an increasingly
important prerequisite in our upstream
supply chains.
During 2022, we implemented our Supplier
Code of Conduct (SCoC), and to date
compliance by key supply chain partners
issued with this SCoC is over 90%.
Responsible Business Practices
Supply chain • Business ethics and risk • Materials with purpose
Priority Area
Business ethics and risk
Strategic Intent
To operate responsibly, steering
governance, best practice and
in line with our core values
throughout our operations.
UN Sustainable Development Goals
Our Code of Ethics and Behaviours
(the Code) provides a guide to the
values, behaviours, policies and
procedures and the ways of working that
are core to James Cropper. All employees
are expected to uphold our values
and behaviours.
Our People team keep a register to
ensure that all employees have received
a copy of the Code and that they are
aware of, and understand, the responsibility
that they have to ensure honesty and
integrity are maintained wherever we
conduct our business.
43
Sustainability - ESG
Sustainability - ESG
PEOPLE AND SOCIETY
A lasting legacy of the pandemic has been
the recognition of the need for a healthier
world, with the wellbeing of the
communities we depend upon a priority.
There was a massive increase in anxiety
and stress reported by the World Health
Organisation (WHO) throughout the
pandemic, and concerns about mental
health still remain elevated three years on.
In recognition of this our employee
engagement on wellbeing had a focus on
mental health services and support.
People and Society
Employee well-being • Enhancing livelihoods • Local community
Priority Area
Employee well-being
Strategic Intent
We support our people’s physical, mental
and emotional wellbeing; balancing their
work and personal responsibilities to
help them to work safely and effectively.
UN Sustainable Development Goals
People and Society
Employee well-being • Enhancing livelihoods • Local community
Priority Area
Enhancing Livelihoods
Strategic Intent
We are committed to providing
meaningful work, generating a positive
organisational culture and working
environment which promotes diversity,
inclusivity, personal development
and respect.
UN Sustainable Development Goals
At the heart of this commitment is fair
pay, even more important in light of the
global cost of living crisis.
Mindful of the of increasing financial
burden being placed on families, the
business offered some help to employees
with a one-off payment of £1,000
(£0.6m total) in recognition of the
escalating costs that everyone is facing.
Equality and diversity are essential to
ensuring we run the business ethically
for our valued employees, and our Gender
Pay Report ensures transparency of data
and our approach to improve equality for
current and future employees.
During this last year we ran refresher
training for our team of 12 mental
health first aiders and ran mental health
awareness campaigns throughout the
business during Mental Health Awareness
week in May and in the run up to World
Mental Health Day in October, with
information and advice provided by
the Mental Health Foundation.
We have also developed an employee
volunteering policy that allows 2 paid
days off a year to do volunteer work in the
local community. We ran a successful pilot
scheme with Growing Well, a local mental
health charity, and once fully reviewed we
intend to roll the scheme out across the
entire business.
The mean gender pay gap at James Cropper
in 2022 was -0.5% and our continued focus
will act as a catalyst, ensuring equality of
pay in the workplace.
James Cropper PLC
Gender Pay Report 2022
Responsible Business Practices
Supply chain • Business ethics and risk • Materials with purpose
Priority Area
Strategic Intent
UN Sustainable Development Goals
Materials with purpose
To create sustainable material solutions
aligned to societal needs delivered in a fair,
healthy and inclusive way.
Through the application of our
intellectual property and innovative
technologies, our smart solutions work
to reduce our impact, and that of our
customers on the environment.
A fantastic example is giving pre-loved
denim cotton a new lease of life with the
launch of Rydal Apparel. This beautiful
paper for packaging is an industry first, and
affirms our ongoing commitment to world
class FibreBlend innovation and creating
value from waste.
With eight billion pairs of jeans produced
globally each year, fashion’s favourite
staple contributes significantly to the textile
waste problem. According to the World
Economic Forum, 73% of worn clothing
is incinerated or sent to landfill when
discarded. Only 12% is recycled for
insulation or mattresses, and less than
1% is used to make new products.
Being cellulose-based, Rydal Apparel can
be recycled after use in the standard paper
waste stream, giving the discarded textile
fibres a second, third, fourth life...
In addition, Cocoon, the latest moulded
champagne wrap for Maison Perrier-Jouët
combines an aesthetic inspired by nature
with a concern for environmental impact.
Another introduction to the portfolio is
ECOVEIL, a new customisable range of
highly porous sustainable nonwoven veils
which are produced from naturally derived
or recycled fibres.
The Cocoon wrap hugs the champagne
bottle, a minimalist design approach that
fits well with new European guidelines on
minimising wasted empty space across
packaging formats.
These materials have been specifically
developed for use in advanced composite
structures for aerospace, automotive
and sporting goods applications.
Polymer composites achieve significant
lightweighting benefits, improve the
finish, fabrication or functionality of a
component, whilst simultaneously
providing the means to demonstrate
environmental responsibility without
compromising on performance.
Not only does the design focus on
lightweighting, being a featherweight
49 grams which is 93% lighter than
the previous gift box, it incorporates
5% agrifibre pulp derived from vine
shoots. This is a great circular story for
the brand, linking the by-product of
winemaking to the champagne case.
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Sustainability - ESG
People and Society
Employee well-being • Enhancing livelihoods • Local community
Priority Area
Strategic Intent
UN Sustainable Development Goals
Local community
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.
Our People
OUR PEOPLE
Better employee experience
Employee engagement survey
Early Careers
We recognise it is the passionate,
committed, talented people we employ
that will help us navigate through the
changes and opportunities we have before
us and help in delivering long term
sustainable business growth.
Conducted annually, our Company-wide
employee survey provides every employee
the opportunity to voice what is working
well and what are the changes that
we need to make to improve and inspire
our workforce.
Attending our local schools career days
as well as participating in the Windermere
Science Festival are all ways in which
we have been engaging with young
individuals to show them the career
possibilities here at James Cropper.
To continuously strive in creating an
employee experience and workplace
where people want to be and are proud
to work, where people feel rewarded
and recognised for the contribution.
This is supported by the code of ethics
and behaviours, over 86% employees
have signed up to help us build a
culture that embraces continuous
performance improvement. To deliver
modern business practices and ways
of working that are efficient, flexible
and responsive to our customers.
Workplace improvements
We continue to invest in our working
environments with the opening of the
gym, unisex changing facilities, and the
refresh of the canteen.
A steering committee is in place to lead
further refurbishment across the Burneside
site, in particular, to the finishing roof
and the welfare facilities within the yard,
security and engineering sites.
We have improved our work placement
process, and with the encouragement
and expertise of our employees, we have
supported six individuals completing
work experience placements. We currently
experience a high demand of applicants
from local schools and colleges.
From schools and colleges to university,
we have given placement opportunities to
two individuals within the ESG and TFP
Technical teams. Supporting them to gain
valuable knowledge to support their studies
and provide us with fresh views and insight.
Celebrating apprenticeships, these have
always been a valuable opportunity to
grow talent, especially in Engineering.
The introduction of the Apprenticeship
Levy back in 2018 has enabled the scope of
education to grow with a large proportion
of our internally developed professional
qualifications now funded through the
Levy. In the past year, we have invested
over £100k in our workforce.
We currently support 22 Apprenticeships in
Engineering, Leadership, Administration
and Procurement and Supply.
It is well known that good literacy at an
early age improves opportunities of all
kinds in adulthood, and that children
who read for pleasure are far more likely
to go on to have a positive experience of
school and much improved life chances.
In the UK alone, around one quarter of all
children left primary school in 2022 unable
to read to the required standard.
Libraries are an integral part of school life,
and so when we were asked to support the
modernisation of our local school library
facility, to encourage a passion for reading
with local pupils, the project was close
to our heart. The cash donation helped
the school to build its range of books
covering religion, science, geography,
history, and music to name a few.
Each year we make cash donations in the
region of £10k to charities and good causes,
and St Oswald’s Primary School library is
just one of the local projects that have
received our support.
According to research, art and craft is a
recognised way to alleviate systems of
anxiety, depression and even loneliness,
having positive benefits for mental health.
Bi-annually we donate redundant
paper stocks to local schools, nurseries
and community groups.
First initiated during the pandemic, we
periodically run campaigns in the local
community to support arts and crafts
activities with free paper available to the
public at local supermarkets.
46
47
We are extremely proud to house a very
talented pool of technical and strategic
experts who are collectively all passionate
about making a real material difference.
The Strategic Report is approved by the
Board of Directors on 23 August 2023
and signed on its behalf by
Steve Adams
Chief Executive Officer
Our People
We have made a number of changes to
our family friendly policies with the
creation of a fertility policy and
enhancements to our maternity policy that
allows James Cropper to be the supportive
and modern employer and we will continue
to work on other family friendly initiatives.
Developing Skills and Knowledge
We recognise personal development is
extremely important, as was evident in
the 2022 employee survey results. We want
to ensure any change made to working
practices is to the benefit of the individuals,
by providing better training and more
opportunity to up-skill for career
progression within James Cropper
and beyond.
Continuing to develop our leaders at all
levels through LEAP, our leadership
development programme, 35% of our
leadership team have participated.
The programme’s ambition is to develop
leaders who can provide direction and
scope, set the standard for behaviour
and performance, while treating their
teams as individuals.
Equality and Diversity
As a Company with a global reach, we
are committed to invest in our people
and believe that equality and diversity
are essential to attract and retain a modern
and flexible workforce.
With over 600 employees based in the
UK, we welcome the UK legislation
requiring companies to report the
percentage of female employees and the
average difference in pay between women
and men.
Our ambition is to continuously improve
and reduce the gender pay gap, we are
pleased to report for 2022 the mean gender
pay gap at James Cropper is -0.5%.
This shows that on average, we at James
Cropper, currently pay our female
employees 0.5% more than our male
employees. The median was -10.4%, a
slightly wider proportion than previous
years which is due to the breath of females
spanning a broader range of responsibilities.
The transparency of our gender report
enables us to continually develop new
strategies to improve equality for present
and future employees. We are committed
to ensure this remains high on our agenda,
independent to our financial goals.
48
CONTENTS
STRATEGIC REPORT
05
Financial Highlights
Financial Summary
Chairman’s Letter
Chief Executive’s Review
The Pension Report
Risk Management
Promoting the Success of Our Group
- S172(1) Statement
Technical Fibre Products
ColourformTM
Paper Products
Sustainability - ESG
Our People
GOVERNANCE
Board of Directors
Corporate Governance Statement
Compliance with the QCA
Corporate Governance Code
Report of the Audit Committee
Report of the Nominations Committee
Report of the Remuneration Committee
Directors’ Report
49
50
52
56
57
59
61
66
FINANCIAL STATEMENTS
69
Statement of Directors’ Responsibilities
Group 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
Steve Adams
Chief Executive Officer,
MD, Paper Division
Appointed: August 2022
Independent: No
Committee Memberships:
Executive
Qualifications: BA (Hons)
Patrick Willink
MD, ColourformTM Division
Appointed: March 1998
Independent: No
Committee Memberships:
Executive, Pension
Qualifications: BSc MBA
James Gravestock
MD, Technical Fibre Products
Division
Appointed: November 2021
Independent: No
Committee Memberships:
Executive
Qualifications: BA (Hons)
Experience: Mark is the sixth generation of the Cropper
family to hold this position. Following university,
he pursued a career in environmental finance and
renewable energy.
External appointments: Ellergreen Hydro Projects Ltd
(Director), Paper Foundation (Director), Kendal Futures
CIC (Director), Rydal Hydro Ltd (Director), Scandale
Hydro Ltd (Director), Cropper Trustees LTD (Director),
Ellergreen Trustees (Director), Ellergreen Group LLP
(Designated Member)
Experience: Steve joined James Cropper in 2017 as MD
of the Paper division. He has 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.
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), Paper Foundation (Director)
Experience: James previously worked for Halma PLC
as Group Managing Director and prior to that holding
a succession of successful commercial leadership roles
in 3M.
Board and Executive Changes
The Company announced the resignation of Jim Aldridge, Company Secretary on 26 May 2023 and Isabelle Maddock,
Chief Financial Officer on 14 June 2023 both with immedite effect.
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: The Cotswold Company
(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 hush, was CEO at Feelunique and Sephora
UK and has held Executive roles in Amazon and Diageo.
As a Non-Executive Director, she brings a wealth of
commercial experience.
External appointments: hush (Chief Executive Officer),
Member of the Board of The British Retail Consortium.
Martin Court
Senior Independent
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)
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.
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51
Corporate Governance Statement
Corporate Governance Statement
CORPORATE GOVERNANCE STATEMENT
"ON BEHALF OF THE BOARD, I AM PLEASED TO INTRODUCE THE
CORPORATE GOVERNANCE REPORT FOR THE YEAR ENDED
1 APRIL 2023. OUR AIM IS TO PROVIDE A MODERNISED APPROACH TO
OUR WORKING ENVIRONMENTS WHILST MAINTAINING BEST PRACTICE
FOR A GROUP OF OUR SIZE AND COMPLEXITY. TO BUILD A DIVERSE
BUSINESS ACROSS MULTIPLE MARKETS AND GEOGRAPHIES."
Chairman’s introduction to Corporate Governance
Throughout 2022, our focus has been
about repositioning the Company for
greater sustained growth. To build a
diverse business across multiple markets
and geographies. Leading with our
purpose, and in line with our values,
the Board strives to be caring, responsible
and forward-thinking, as we adapt
and deliver our strategy at pace.
We continue to listen to our stakeholders,
review how we operate as a Board,
introduce and update our policies to build
a stronger employee value proposition.
Our aim, as ever, is to provide a modernised
approach whilst maintaining best practice
for a Group of our size and complexity.
As a Board, we remain committed to
maintaining the highest standards of
corporate governance, placing significant
emphasis in ensuring we have the
appropriate governance structures in place.
Moving forward, and as we foresee more
complexity in transitioning to an advanced
materials and paper products group, we
will provide strength in our leadership in
compliance and corporate governance by
creating a new role of General Counsel
and Company Secretary to support the
delivery in our accelerated growth strategy.
Throughout the year, the Board continues
to address the negative voting issues raised,
consulting with key shareholders, external
advisors and our NOMADs. The matters
raised mainly concerned the independence
of one of our Non-Executive Directors,
and myself, with concurrent tenure on
the Board exceeding nine years and also
includes the construct of my remuneration.
This resulted 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 as Chairman.
With respect to independence, a
succession plan is underway for Jim Sharp.
An announcement will be forthcoming
within the financial year 2023-2024.
Since the appointment of Steve Adams as
Chief Executive Officer in August 2022,
both I and the Non-Executive Directors are
fully supportive of the strategic direction
being taken by the Executive team in
repositioning James Cropper to capitalise
on growth opportunities within its core and
emerging end-markets. The CEO Review is
on pages 10 to 16 in the Annual Report.
Sub-committees
There are six sub-committees reporting
to the Board:
And finally, with Board approval, we
have closed the year operating our
long-term and annual incentive plans for
the Executive Directors with better
alignment to our strategic objectives,
personal targets and ESG goals.
• Executive Committee
• Remuneration Committee
• Audit Committee
• Nomination Committee
• Pensions Committee
• ESG Committee
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.
All sub-committees exercise their duties
in compliance with all relevant legislation,
regulation and guidance.
All sub-committees are supported by
both internal and, where relevant,
external advisers to ensure their duties are
satisfactorily and professionally fulfilled.
Stakeholder engagement
The Board is keen to ensure ongoing
and effective communication with all
stakeholders. Further reading on
stakeholder engagement can be found
in our Section 172 (1) statement on pages
26 to 27.
Mark Cropper
Chairman
23 August 2023
Governance Statement
The Non-Executive Directors
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). 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 (three of these are
independent) and four 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.
One of the Non-Executive Directors and
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.
Division of responsibilities
Board Committees
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.
The Chief Executive Officer
Steve Adams is the Company’s Chief
Executive Officer. 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 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 twice 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 was the Chair of the
Pension Committee, with the responsibility
handed over to the CEO, Phil Wild
in April 2022. This also comprises
Mark Cropper, Jim Sharp and Patrick
Willink. Steve Adams took the Chair
responsibility with his appointment as
CEO in August 2022.
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 was the Chair of the
ESG Committee during the period, with
responsibility handed over to the CEO,
Phil Wild on 6 July 2022, which also
comprises Mark Cropper. Steve Adams
took the Chair responsibility with his
appointment as CEO in August 2022.
Details of the actions of the ESG committee
can be found on page 37 to 47 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 period, 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.
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53
Corporate Governance Statement
Corporate Governance Statement
Board members are supplied with financial
and operational information in good time
for review in advance of meetings both via
an electronic portal and in hard copy.
All Directors have access to the advice
and services of the Company Secretary.
The Board approves the appointment
and removal of the Company Secretary.
The Non-Executive Directors are able to
contact the Executive Directors, Company
Secretary or Senior Managers at any time
for further information.
Attendance at Board and Committee Meetings during FY2023
Board Member
Board
Mark Cropper
Phil Wild*
Steve Adams
Isabelle Maddock*
James Gravestock
Patrick Willink
Jim Sharp
Lyndsey Scott
Martin Court
Sarah Miles
5/5
2/5
5/5
4/5
5/5
5/5
4/5
5/5
4/5
4/5
*No longer a member of the Board
Nomination
Committee
1/1
Audit
Committee
-
Remuneration
Committee
4/5
-
-
-
-
-
1/1
1/1
1/1
1/1
1/2
-
1/2
-
-
2/2
2/2
2/2
2/2
-
-
-
-
-
5/5
5/5
5/5
5/5
Effectiveness
Board Composition
A strong feature of the Board’s effectiveness
in delivering the strategy is our inclusive
and open style of management and a free
flow of information between the Executive
and Non-Executive Directors.
The size of our Board encourages
individuals to discuss matters openly and
freely and to make a personal contribution
through the exercise of their personal skills
and experience. No individual or group
of individuals dominate the Board’s
decision making process.
All Directors communicate with each
other on a regular basis and contact with
senior executives within the Group is
sought and encouraged.
Diversity
Vacancies on the Board are filled following
a rigorous evaluation of candidates who
possess the required balance of skills,
knowledge and experience, using
recruitment consultants where appropriate.
The process for the appointment of
Non-Executive Directors is managed
by the Nomination Committee.
The Company recognises the importance
of diversity at Board level and the Board
comprises individuals with a wide range
of skills and experience from a variety of
business backgrounds. At the period of
year end, our 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
recruitment agencies, to select individuals
who have a depth and breadth of relevant
experience, thus ensuring that the selected
candidates will be capable of making an
effective and relevant contribution to the
Board. The process for the appointment
of Non-Executive Directors is managed
by the Nomination Committee.
Terms of appointment and time
commitment
All Non-Executive Directors are employed
on contracts of one month’s notice by
either side. All Non-Executive Directors
are expected to devote such time as is
necessary for the proper performance of
their duties. Directors are expected to
attend all Board meetings and committee
meetings of which they are members
and any additional meetings as required.
Induction and professional development
New Directors are given a formal induction
process including details of how the Board
and committees operate, meetings with
senior management and information on
Group strategy, products and performance.
Training and development needs of
Directors are reviewed regularly.
The Directors are kept appraised of
developments in legal, regulatory and
financial matters affecting the Group
from the Company Secretary, the Chief
Executive, the 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.
Training
All Directors are aware of their
responsibility to regularly update their
skills and knowledge.
Board and Committee evaluation
The Board, its committee and Chairman’s
evaluations are completed by the Senior
Independent Director. With Non-Executive
Directors and CEO reviews completed by
the Chairman.
During the year, a comprehensive
evaluation of the Board and its committees
was undertaken. The process involved the
completion of a questionnaire by all
Directors, and individual discussions
with each Board member. A summary of
the results and key findings was discussed
at the Board with an action plan for
improvements agreed.
It was recognised that the structure and
quality of the board meetings was much
improved with new insight often arising
from the discussions. The subcommittee
format were confirmed as appropriate
although there are opportunities to enhance
their contribution to the broader Board
agenda, including the flow of information
between the Board and the subcommittees.
As there has been a number of recent
changes to the Board membership it was
felt that more interaction between the
Board outside of meetings would enhance
the cohesion of its membership.
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
Election and re-election of Directors
In accordance with the Company’s Articles
of Association all Directors will stand for
re-election at the Annual General Meeting.
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
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.
Mark Cropper
Chairman
8 August 2023
In carrying out their duties in respect of
going concern, the Directors carry out a
review of the Group and Company’s
financial position and cash flow forecasts
for at least 12 months from the date of
approval of the financial statements.
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 viability statement in the
Risk Management report (pages 21 to 25).
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.
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.
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55
Compliance with the QCA Corporate Governance Code
Report of the Audit Committee
COMPLIANCE WITH THE QCA CORPORATE GOVERNANCE CODE
PRINCIPLE
COMPLIANCE
1. Establish a strategy and
business model which
promote long-term value
for shareholders
2. Seek to understand and
meet shareholder needs
and expectations
3. Take into account
wider stakeholder and
social responsibilities
and their implications
for long-term success
4. Embed effective risk
management, considering
both opportunities
and threats, throughout
the organisation
5. Maintain the Board as a
well-functioning, balanced
team led by the Chair
6. Ensure that between
them the Directors
have the necessary
up-to-date experience,
skills and capabilities
7. Evaluate Board performance
based on clear and relevant
objectives, seeking
continuous improvement
• The Group strategy is set out on pages 05 to 48 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.
• Investor roadshow meetings are undertaken at least twice per year following the preliminary and interim announcements.
• Shareholders are invited to the AGM held in Burneside where all Board members interact with our shareholders on a one
to one basis and take questions as they arise.
• Shareholder feedback is received from our NOMADs and all shareholder feedback is discussed at Board meetings.
• Further reading: Section 172(1) statement on pages 26 to 27 of the Annual Report.
Employees
• Regular meetings take place
with employees to share strategy,
keep employees updated and
seek feedback.
• The Company conducts an annual
employee survey with the latest level
of engagement (2023) at 68%.
• The Company’s strategy is
communicated to all employees
at half yearly employee briefings.
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 Company has very close links
with the local community built on
our 178 year presence at Burneside.
The Group supports local
organisations through its community
support team with donations this
year amounting to £6,327.
Environment
• We are proud that our moulded fibre
operation has been awarded a gold
medal rating by EcoVadis the
world’s largest provider of business
sustainability rating. We have also
co-created the first 100% plastic free
poppy for the Royal British Legion.
• Further reading – Section 172 (1)
statement on pages 26 to 27 of the
Annual Report.
• 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 05 to 48.
• The Board is led by our Non-Executive Chairman, Mark Cropper.
• The Board comprises a Non-Executive Chairman, four Non-Executive Directors and four Executive Directors.
• The members of the Board maintain the appropriate balance of experience, independence and knowledge of the Company.
• Details of the composition, operation and responsibilities, together with details of the sub-committees can be found in
the governance section of the Annual Report on pages 49 to 68.
• 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 NOMADs and advisors, the Board training and development needs are maintained.
• Biographies on all Directors are shown on pages 50 to 51 of the Annual Report.
• A comprehensive Board evaluation is undertaken annually commencing with a questionnaire, compilation of a summary
of results and feedback at a board meeting. The results are discussed and actions taken to improve in areas where required.
• The process gives the Directors the opportunity to identify areas for improvement both jointly and individually through
the use of questionnaires and open discussion.
• The Remuneration Committee evaluates Executive Director performance alongside remuneration and reward.
• With regards to financial performance, the Audit Committee meets with the Auditors to 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 by the Nomination Committee.
8. Promote a corporate culture
• Our Values and culture are embodied in the Group’s management behaviour, our recruitment and employee
that is based on ethical values
and behaviours
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 on page 02 of the Annual Report.
9. Maintain governance
structures and processes
that are fit for purpose
and support good decision
making by the Board
• The Board meets five 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.
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 49 to 68.
• The website includes historical announcements, copies of the Annual and Interim Reports and copies of any
presentations made.
REPORT OF THE AUDIT COMMITTEE
"I AM PLEASED TO INTRODUCE THE AUDIT COMMITTEE REPORT FOR
THE PERIOD ENDED 1 APRIL 2023. DURING THE YEAR, IN ADDITION TO
CARRYING OUT ITS USUAL RESPONSIBILITIES, THE AUDIT COMMITTEE
UNDERTOOK A PROCESS TO RECOMMEND THE APPOINTMENT OF A
NEW AUDITOR FOLLOWING THE RESIGNATION OF BDO."
Statement from the Chair of the Audit Committee
The Audit Committee provides
independent scrutiny and challenge
to ensure that the Group presents a
true and fair view of its performance,
focusing on the accuracy, integrity and
communication of financial reporting.
Composition
The Committee comprises of the
following members:
• Jim Sharp (Chair)
• Lyndsey Scott
• Martin Court
• Sarah Miles
Three of the Committee members are
independent Non-Executive Directors.
The Chair has been a Non-Executive
Director for thirteen years.
Following a Board review, it was agreed by
the Board that Jim Sharp will remain the
Chair of the Committee for the next year.
He is considered to be independent in
judgement and character by the Board.
All Committee members have relevant
knowledge both of the sectors in which
the Group operates and of the Group itself,
and are considered to have appropriate
knowledge and understanding of financial
matters and risk management.
The Committee is regularly supported by
the Chief Executive Officer and Chief
Financial Officer. 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
Change of auditors
The Committee operates under formal
terms of reference, reviewed annually
and available on the Company’s website
jamescropper.com.
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 2022-2023, with the auditors
Grant Thornton UK LLP, which helps
ensure it has appropriately discharged its
responsibilities during the year, having
operated in compliance with relevant legal,
regulatory and other responsibilities.
The Committee reviewed the annual report
and other financial statements during the
year to ensure that they were fair, balanced
and understandable. It then recommended
those reports to the Board for approval.
The Committee has reviewed the
recommendations for improvement as
relevant to its operation, arising from
the Board evaluation undertaken during
the year and is taking action to improve
the relevance of information shared with
the Board.
Grant Thornton UK LLP was approved
as the Company’s auditor by the Board
on 14 October 2022 to fill the causal
vacancy that arose on the resignation of
BDO as Auditor. BDO resigned as auditor
for commercial reasons.
The Committee undertook a tender
exercise, inviting nine audit firms to submit
proposals to act as the Company’s auditor.
The Committee recommended to the
Board that Grant Thornton UK LLP be
appointed as auditor of the Company
and the Board approved their appointment
on 2 November 2022.
This decision was based on the strength of
their proposal which demonstrated their
ability to conduct the audit to the highest
standards at an acceptable cost.
Grant Thornton UK LLP has agreed to
stand for appointment at the Company’s
AGM on 26 September 2023.
External audit
The Committee is responsible for
overseeing relations with the external
auditor, including the approval of their
terms of engagement, and makes
recommendations to the Board on their
remuneration and appointment and,
where appropriate, reappointment,
based on reviews of audit effectiveness.
The Committee meets with the Auditor
every year to review and agree the audit
plan. Following the appointment of
Grant Thornton UK LLP and their
review of BDOs files a new audit plan
was approved by the Committee in
February 2023.
In addition, the Auditor reports back
to the Audit Committee on the outcome
and findings following each audit.
56
57
Report of the Audit Committee
Report of the Nominations Committee
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.
Non-audit services
Grant Thornton UK LLP have previously
carried out non-audit services related to a
finance function development project prior
to their appointment as auditors.
These services involved no management
decisions and a separate engagement team
from the audit team was used by
Grant Thornton UK LLP. No further
non-service work will be undertaken by
Grant Thornton UK LLP.
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
21 to 25 in the Strategic Report section of
the Annual Report.
We continue to develop our cultural
people-driven approach to risk
management, which we believe
encourages focus on prevention rather
than reaction to risks arising.
Whistleblowing
We are committed to building a responsible
culture where individuals who disclose
wrongdoing can do so confidently and
without fear of retaliation through our
whistleblowing policy. This is embodied in
our Code of Ethics and Behaviours, which
detail the standards and ways of working
expected of all employees and which are
applicable to all parts of the Group.
During this current year we will be
partnering with an external company which
specialises in operating confidential
telephone reporting systems to provide an
independent service and assurance to callers
of confidentiality and, where they request
it, anonymity.
Anyone reporting apparent misconduct
honestly, and in good faith, will be
supported by us.
Future matters for consideration
In addition to the standing agenda items,
the Committee intends to continue to
monitor legislative and regulatory
changes that may impact the work of
the Committee; implement areas for
improvements as identified in the
Board evaluation; and monitor the
effectiveness of the external audit process.
Jim Sharp
Chair to the Audit Committee
23 August 2023
REPORT OF THE NOMINATIONS COMMITTEE
"I AM PLEASED TO PRESENT THE NOMINATIONS COMMITTEE REPORT
FOR THE PERIOD ENDED 1 APRIL 2023. DURING THE FINANCIAL YEAR,
THERE HAS BEEN A CHANGE IN THE BOARD, WITH THE APPOINTMENT
OF STEVE ADAMS TO CHIEF EXECUTIVE OFFICER."
Statement from the Chair of the Nominations Committee
Composition
Board and Executive Changes
The Committee comprises of the
following members:
In August 2022, Phil Wild stepped down
as Chief Executive Officer.
• Mark Cropper (Chair)
• Jim Sharp
• Lyndsey Scott
• Martin Court
• Sarah Miles
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;
• Working with management in relation
to inclusion and diversity within the
Board; and
• Consideration of the succession plan
for the Board and senior management.
The Committee operates under
formal terms of reference, which are
reviewed annually.
Encouraging the development of existing
internal talent is beneficial to both the
Company and its people and we are
pleased to have appointed Steve Adams,
former Executive Director and Managing
Director of our Paper Division as Chief
Executive Officer.
Steve joined the Company in 2017 and
has a strong commercial background and
with leadership experience previously
gained at 3M, making him well placed to
lead the Company into its next chapter.
Martin Court was appointed Senior
Independent Non-Executive Director.
Biographies of all Directors can be
found on the Board of Directors section
(page 50 to 51).
Post year end, Jim Aldridge
departed the business in May 2023
as Company Secretary.
The Company also announced the
resignation of Isabelle Maddock, Chief
Financial Officer on 14 June 2023.
“I would like to thank Phil, Jim and
Isabelle for their contributions to the
Company. Each one of them were
long-serving valued members of James
Cropper and carefully led the business
through challenging times, including the
Covid pandemic, as well as creating the
strength and discipline that will enable
James Cropper to continue to deliver its
growth ambitions.”
In April 2023, the Board made a senior
level appointment with the move of
Patrick Willink from Managing Director
of ColourformTM to the new position of
Chief Innovation Officer for the Group.
At the end of this calendar year,
Andrew Goody will join the Board of
Directors as Chief Financial and
Operations Officer (CFOO).
Andrew has over 20 years’ experience
as a Finance Director across a variety
of sectors. He is currently the Finance
Director for Bibby Marine Ltd.
“I am delighted Andrew will be joining
James Cropper as CFOO, Andrew’s
extensive experience in financial,
commercial and business transformation
will be a great addition to the senior
team as James Cropper delivers on its
growth strategy.”
Finally, I am pleased to announce that
Matthew Ratcliffe will be joining James
Cropper in September 2023 into a newly
created role as General Counsel and
Company Secretary. Matthew will sit
on the Executive Committee.
Matthew is a solicitor and joins us from
Carr’s Group PLC where he has held
the position of Group Legal Director
and Company Secretary since 2016.
On an interim basis, the Company has
appointed Link Market Services Ltd to act
as Company Secretary for the Company.
58
59
Report of the Nominations Committee
Report of the Remuneration Committee
Board appointment process
Training
The Committee assesses the balance, skills,
knowledge, experience, independence and
diversity of the Board to identify any gaps
and consider the need for refreshment.
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.
An induction programme is in place
for new Board members including
meeting with Directors and senior
managers and visiting the main site.
Mark Cropper
Chair to the Nominations Committee
23 August 2023
For the recent Executive appointment,
regard was given to the succession plan.
For the external candidate appointments,
profiles were created in conjunction with a
specialist recruitment firm.
An initial long list of candidates were
interviewed by the CEO and Director of
People & Culture in the first instance.
The short list of candidates was then
further assessed against the candidate
profiles and also interviewed by
Committee members. Short listed
candidates were invited to a tour of
the main site and the opportunity to
meet some of the Executive Directors.
After careful consideration, the
Committee made proposals to the
Board, which were accepted.
Diversity
The Company is committed to diverse
and inclusive practices with 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.
REPORT OF THE REMUNERATION COMMITTEE
"I AM PLEASED TO INTRODUCE THE DIRECTORS’ REMUNERATION REPORT
FOR THE PERIOD ENDED 1 APRIL 2023. THIS REPORT INCORPORATES
INFORMATION ON HOW WE INTEND TO IMPLEMENT DIRECTORS’
REMUNERATION IN THE YEAR TO MARCH 2024, INFORMATION ON OUR
DIRECTOR’S REMUNERATION POLICY AND THE ANNUAL REMUNERATION
REPORT. AS AN AIM-QUOTED COMPANY, THE INFORMATION IS DISCLOSED
TO FULFIL THE REQUIREMENTS OF AIM RULE 19. JAMES CROPPER PLC IS NOT
REQUIRED TO COMPLY WITH THE LARGE AND MEDIUM-SIZED COMPANIES
AND GROUPS (ACCOUNTS AND REPORTS) (AMENDMENT) REGULATIONS
2013. THE INFORMATION IS UNAUDITED EXCEPT WHERE STATED."
Statement from the Chair of the Remuneration Committee
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 run the
Group successfully and achieve our
strategic objectives.
Our remuneration policy is closely
aligned with our long term strategic goals
and our approach to risk management.
The Remuneration Committee recognises
that a significant proportion of
remuneration should be structured so as to
link reward to corporate and individual
performance and be designed to promote
the long-term success of the Group.
As outlined in last year’s report, in 2022
the Company introduced a new executive
annual bonus and LTIP construct for our
Executive Directors for the period ended
1 April 2023 and future years.
Our policy, reflecting this new construct,
is set out in the policy section below.
Business context and Remuneration
Committee decisions on
remuneration
The Company has made significant
progress since 2022 in repositioning
James Cropper to capitalise on growth
opportunities within its core and emerging
end-markets.
The fast-growing renewable energy
and decarbonisation markets are creating
an ever-greater need for novel and
high-performance materials, while
sustainable fibres, and low, or zero,
carbon processing are driving growth
within paper and packaging.
The last twelve months have presented
challenges through market volatility and
economic turbulence, with high energy
and raw material costs prevalent.
We continue to show resilience towards
these external challenges as the Group
experienced strong demand and retained
contracts throughout the period across all
divisions, with over 24% revenue growth
in the year to 1 April 2023.
AGM and changes to
Directors’ remuneration
We put our Directors’ Remuneration
Report to an advisory vote at our AGM
in July 2022 and it was supported by
87.2% of votes cast with 12.8% of votes
cast against the resolution and a further
1.25m shares abstained.
One proxy adviser recommended
shareholders vote against this resolution on
the grounds that our Chairman received
LTIP awards and other remuneration
during the year to March 2022.
The remuneration construct of our
Chairman was reviewed during FY2022.
From 1 April 2022, executive benefits
and future LTIP awards were removed
from his remuneration. As such, our
Chairman received no LTIP awards in
FY2023. In considering this new construct,
the Committee commissioned independent
external advice and benchmarking for a
revised Chairman single fee.
This external advice was considered and the
Chairman’s fee was changed to a single fee
of £130,000 per annum.
In addition to these changes, the Company
now applies a two year post vesting holding
period to share awards to Executive
Directors made under both the Company’s
annual bonus plan and its LTIP.
Directors’ Remuneration in year to
March 2024
For FY2023, Executive Director salaries
were increased by 3.8% which is 50%
of the UK Company wide pay increase.
Following a formal national negotiation
and ballot the collectively bargained pay
award for the paper industry was settled
at 7.6% as from 1 April 2023.
The fees of the Chair and other
Non-Executive Directors will not be
increased for FY2024. The Chair’s fee will
remain at £130,000 and Non-Executive
Director fees will remain at £37,440.
Due to variances in the Non-Executive
Directors pay, a decision was made to
align and inact all pay in April 2022.
The Annual bonus and LTIP will be
operated in a similar way to last year
and in line with the policy table set out
on page 63.
The remainder of this report is split
into the following two sections:
• Directors’ Remuneration Policy
setting out the Group’s current
remuneration policy.
• Annual Report on Remuneration
providing details of the payments
made to Directors in the period.
Lyndsey Scott
Chair of the Remuneration Committee
23 August 2023
60
61
Report of the Remuneration Committee
Report of the Remuneration Committee
Annual Remuneration Report for 2023
Details of Directors’ Remuneration
Remuneration Committee
Remuneration policy
Malus and Clawback
Shares awarded under the stretch element
of annual bonus and under the LTIP are
subject to malus and clawback provisions.
Post vesting holding periods
A two year post vesting holding period
is attached to all awards to Executive
Directors including Annual Bonus
and LTIP awards.
Service Contracts
Director
I M Maddock
S A Adams
J Gravestock
P J Willink
Notice Period
6 months
6 months
6 months
12 months
The Chairman has a one year notice period.
Non-Executive Directors, except the
Chairman, have letters of appointment with
one month’s notice by either side.
The Remuneration Committee
comprises the following members:
• Lyndsey Scott (Chair)
• Mark Cropper
• Martin Court
• Sarah Miles
• Jim Sharp
Committee Responsibilities
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 considered and if
deemed appropriate, approved by the
Remuneration Committee.
No Director can take part in any discussion
concerning their own reward.
The Remuneration Committee meets
at least twice a year and otherwise as
required. The Committee operates
under formal terms of reference which
are reviewed annually.
The Remuneration Committee will
periodically review the policy to confirm
that our remuneration framework
continues to support the delivery of
our business objectives.
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.
Remuneration Policy Summary
Full details can be found on page 65.
£’000
Executive
S A Adams
I M Maddock
J Gravestock
(Appointed 15 November 2021)
174
Salary and Fees
2023
2022
Benefits
2023
2022
Annual Bonus
2022
2023
Pension Costs
2022
2023
Total
2023
2022
208
174
167
167
92
26
23
23
23
23
9
10
-
29
8
8
13
12
10
7
10
10
1
256
207
233
208
208
115
M Thompson
(Resigned 20 January 2022)
P J Willink1
P I Wild2
(Resigned 9 August 2022)
14
167
2
23
-
34
1
10
17
234
162
85
155
211
23
9
23
43
12
-
27
11
-
20
11
13
197
114
216
278
Non-Executive
M A J Cropper
M Court
(Appointed 9 November 2021)
130
37
83
14
S Miles
(Appointed 9 November 2021)
37
14
L J Scott
J E Sharp
37
37
33
38
-
-
-
-
-
11
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5
-
-
-
-
130
37
37
37
37
99
14
14
33
37
1,095
1,162
106
155
51
101
50
60
1,302
1,478
1 P J Willink is accruing defined benefit pension entitlements based on a pensionable salary.
2 In addition to payments in table, P Wild was paid £110,206 payment in lieu of notice, benefits package accrued and pension contribution
and £90,909 as a severance payment.
Salary
Steve Adams’ salary was increased from £167,000 to £233,550 on his appointment as CEO on 10 August 2022. The annual salary
and fee levels paid to other Directors during the year are as stated in the table above.
Annual bonus
80% of the annual incentive for Executive Directors is determined by financial performance both at a Group and divisional level with the
remaining 20% determined by the achievement of key individual strategic objectives. Financial performance measures are agreed by the
Committee at the beginning of the year, with performance levels set at target and stretch in line with the Business Plan.
For the year ended 1 April 2023, while targets in Technical Fibre Products were met, financial measures across other divisions and Group fell
short of the performance threshold. The key strategic objectives for each Executive Director were achieved in year and accordingly payments
made as set out in the table above.
62
63
Report of the Remuneration Committee
Report of the Remuneration Committee - Remuneration Policy Summary
Long Term Incentive Plan
Share awards outstanding and made during the financial period to 1 April 2023 under the Plan to Executive Directors were as follows:
REMUNERATION POLICY SUMMARY
All figures in £’000
S A Adams
I M Maddock
J Gravestock
P I Wild1
1 Resigned 9 August 2022
Options at
26 March
2022
Options
granted
in period
Mid-market
price (£)
of options
granted
Options
exercised
in period
Options Options at
1 April
2023
lapsed in
period
13,561
13,561
-
25,765
13,640
8,390
8,390
-
£10.59
£10.59
£10.59
-
-
-
-
-
(7,449)
19,752
(7,449)
14,502
-
8,390
(25,765)
-
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
26 March
2022
Options
granted
in period
Mid-market
price (£)
of options
granted
Options
exercised
in period
Options Options at
1 April
2023
lapsed in
period
6,523
12,648
-
-
7,825
£10.59
-
-
(3,583)
2,940
(6,948)
13,525
Share and cash awards detailed above were granted on 22 September 2022 subject to performance conditions measured over three
years 2023 to 2025. 40% of awards are subject to an adjusted EPS target with threshold vesting at growth from FY2022 at RPI plus
45% per annum and maximum vesting at growth at RPI plus 65% per annum.
30% of awards are subject to a gross operating cash flow target with threshold vesting at 80% of target for the period rising to maximum
vesting at 100% of target. 30% of awards are subject to ESG targets relating to the reduction in the carbon emissions intensity ratio
(as per the Streamlined Energy and Carbon Report (SECR) reporting) over the three-year period with threshold vesting at 80% of target
for the period rising to maximum vesting at 100% of target.
10% of awards subject to each condition grant at threshold performance rising on a straight line to 100% at Maximum performance.
LTIP awards made in FY2022 were 100% subject to an adjusted three-year EPS target with threshold vesting (25% of the award)
vesting at growth of RPI plus 6% rising on a straight line to full vesting at growth of RPI plus 20%.
Advisors to the Committee
The Committee has engaged the services of H2Glenfern Remuneration Advisory to provide independent remuneration advice specifically
on the construct of senior management and Board compensation including LTIP and annual incentive construct and arrangements.
PURPOSE AND LINK TO STRATEGY
OPERATION, OPPORTUNITY & PERFORMANCE METRIC
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.
Operation:
• 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.
Opportunity:
There is no prescribed maximum annual base salary or salary increase.
Benefits
To attract and retain the right individuals and
level of talent required to support achievement
of both short- and long-term goals.
Operation:
• 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.
Opportunity:
No maximum potential value.
Pension
Operation:
To attract and retain the right individuals and
level of talent required to support achievement
of both short- and long-term goals.
• Executive Directors are either members of the Company’s defined benefit scheme, the Company’s
defined contribution scheme or receive a pension allowance.
Opportunity:
Director pension arrangements are in line with the pension arrangements for the general workforce,
depending on what pension scheme they are a member of.
Annual Incentive Plan
To reward the delivery of the Group’s annual
financial and strategic goals.
To align the interests of the Executives and
shareholders in the short and medium term.
Operation:
• The Annual Bonus is earned on the achievement of performance targets ordinarily set by the
Remuneration Committee at the start of each financial year.
• Payments up to target performance are made in cash.
• Amounts due under the stretch incentive are awarded in shares which vest three years from award.
Annual bonus amounts are subject to malus and clawback provisions covering a three-year period.
Opportunity:
The target bonus opportunity for all Executive Directors is 25% of base salary. Under the stretch
opportunity, the CEO may receive up to a further 25% of salary, taking the maximum opportunity to
50% of salary and for other Executive Directors – a further 15% of basic salary, taking their maximum
opportunity to 40% of salary.
Long Term Incentive Plan (LTIP)
To incentivise the delivery of key performance
measures over the long term.
To retain key Executives and increase their
share ownership in the Company, aligning
their interests with those of shareholders.
Operation:
• 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.
• Awards vest after three years subject to performance conditions measured over a three-year period.
• LTIP awards will be vested in shares with the exception of any concert party member who will be
vested a cash equivalent.
• Awards to Executive Directors are subject to a two year post vesting holding period.
Shareholding Guideline
Alignment of the Executive Directors’ interests
with those of the Group’s shareholders.
Non-Executive Director Remuneration
To attract and retain the right individuals
required to support the achievement of both
short and long-term goals.
Opportunity:
75% of salary for the CEO and 50% of salary for other Executive Directors.
Operation:
• Requirement to purchase 500 to 1,000 Company shares minimum upon joining the Company
and to be retained during service.
Opportunity:
Not applicable.
Operation:
• Effective FY2023, the Chairman receives a flat fee in cash.
• The other Non-Executive Directors receive flat fees in cash.
Note:
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 £400,000 per annum, or such larger amount as the Company may by
ordinary resolution decide.
6464
65
Directors’ Report
DIRECTORS’ REPORT
Directors’ Report
The Directors present their Annual
Report and the audited financial
statements of James Cropper Group
for the 53 weeks ended 1 April 2023.
Principal activities
The principal activity of the Group
comprises the manufacture of specialist
paper and advanced materials. There have
not been any significant changes in the
Group’s principal activities in the year
under review.
The Directors are not aware, at the date of
this report, of any likely major changes in
the Group’s activities in the next year.
Review of business and future
developments
The Chairman’s Statement on pages 08 to 09
and the CEO Review on pages 10 to 16
report on the performance of the Group
for the period ended 1 April 2023 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 (resigned 9 August 2022)
• Steve Adams
• Isabelle Maddock (resigned 14 June 2023)
• James Gravestock
• Patrick Willink
• Martin Court
• Sarah Miles
• Lyndsey Scott
• Jim Sharp
Details of the Directors’ remuneration are
shown in the Report of the Remuneration
Committee on pages 61 to 65. 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.
Results and dividends
The results for the period are shown in
the Statement of Comprehensive Income
on page 77.
An interim dividend of 2.0p per ordinary
share was paid on 13 January 2023.
The Directors are recommending a final
dividend of 4.0p per ordinary share, subject
to approval at the Annual General Meeting
of the Company, making the total dividend
for the year 6.0p per share (2022: 10.0p).
Full details of dividends in respect of the
year ended 1 April 2023 are given in note 7
of the financial statements.
Corporate governance
A report on Corporate Governance is set
out on pages 52 to 55, and forms part of
this report by reference.
Health & Safety
The Group is committed to providing
a safe working environment for all
employees. Group policies are reviewed
regularly to ensure that policies relating
to training, risk assessment and accident
management are appropriate.
Health & Safety issues are reported at
each Board meeting and Executive
Committee meeting.
Charitable and political donations
It is the Group’s policy not to make any
donations to, or incur expenditure on
behalf of political parties, other political
organisations or independent election
candidates and the Board does not intend
to change this policy.
Donations totalling £6,327
(2022: £9,000) were made for various
local charitable purposes.
Engagement with key stakeholders
Environmental policy
Authority to allot shares
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 CEO Review on
pages 26 to 27 (also known as the
Section 172 statement).
The section 172 statement also
summarises how the Directors have
had regard to the need to foster the
Group’s business relationships.
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 26 to 27.
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.
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.
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 37 to 47
and the streamlined energy carbon report
on page 40.
Events post the reporting period
As referred to in note 25 to the annual
financial statements, The Group’s trading
update communicated to the Markets on
19 April 2023, outlined a strategic
repositioning to accelerate revenue and
profit growth across the Group.
The streamlining of the Paper division is
one of the three pillars central to the
repositioning. As part of this process,
restructuring costs will likely be incurred
in financial year 2024. The quantum of
restructuring costs is, however, unknown
at the time of this report.
Financial instruments
Disclosure around financial risks, financial
instruments and hedging is included in
note 19 to the annual financial statements.
Research and development
The Group invests in research projects and
the development of new technology.
Research and development expenditure
and the related tax credits are disclosed in
note 4 to the annual financial statements.
Share capital
Full details of the issued share capital of
the Company are set out in note 22 to the
consolidated financial statements.
The holders of ordinary shares are entitled
to one vote per share at the Company’s
general meetings.
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 accounting policy relating to
going concern is set out in note 1 to
the financial statements.
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 financial forecasts with
specific consideration to the trading
position of the Group in the context of
the current inflationary pressures and
energy costs. Stress tests and sensitivities
have been performed on the forecast
including any impact on covenants.
The Directors, after reviewing the Group’s
operating forecasts, investment plans and
financing arrangements, consider that the
Group and Company will have sufficient
funds to continue to meet their liabilities as
they fall due for at least 12 months from the
date of approval of the financial statements
and therefore have prepared the financial
statements on a going concern basis.
Accordingly, the Directors are satisfied
that it is appropriate to adopt the going
concern basis in preparing the Annual
Report and Accounts.
Disclosure of information
to the Auditor
Grant Thornton UK LLP has expressed
its willingness to continue in office.
Its appointment and authority for the
Directors to agree its remuneration will be
proposed at the Annual General Meeting.
Each of the Directors as at the date
of approval of this Annual Report
confirms that:
• So far as the Director is aware there is
no relevant audit information of which
the Company’s Auditor is unaware; and
• The Director has taken all steps he/she
ought to have taken as a Director in
order to make himself/herself aware of
any relevant audit information and to
establish that the Company’s Auditor is
aware of that information.
Annual General Meeting
Notice of Annual General Meeting, which
sets out the resolutions to be proposed at
the forthcoming Annual General Meeting
will be posted to shareholders at least three
weeks before the date of the AGM.
The meeting will be held at The Bryce
Institute, Burneside, Kendal, Cumbria,
LA9 6QZ on Tuesday 26 September 2023
at 11am followed by an optional tour of
the new Embossing Centre of Excellence.
66
67
Directors’ Report
Substantial Interests
Shareholdings in excess of 3% of the issued capital at June 2023 were as follows:
Name of Shareholding
Number of Shares
% holding
Note
Cropper Family – Beneficial and Non Beneficial Interests
Willink Family – Beneficial and Non Beneficial Interests
Acland Family – Beneficial Interests
Total
Liontrust Asset Management Ltd
3,185,129
461,550
52,386
3,699,065
1,246,854
33.3
4.8
0.6
38.7
13.05
1
1 The Cropper, Willink and Acland families are related and are deemed to be acting in concert with a total holding of 38.7% in the Company.
At 1 April 2023
Options on
Ordinary
Shares
Ordinary
Shares
At 26 March 2022
Options on
Ordinary
Shares
Ordinary
Shares
Director
Interest
M A J Cropper1
Beneficial
Non-beneficial
1,833,850
559,571
-
-
1,856,896
559,571
I M Maddock
Beneficial
10,448
22,033
S A Adams
J Gravestock
P J Willink
J E Sharp
L J Scott
M Court
S Miles
Beneficial
Beneficial
Beneficial
Non-beneficial
Beneficial
Non-beneficial
Beneficial
Non-beneficial
Beneficial
Non-beneficial
Beneficial
Non-beneficial
1,099
27,221
500
8,390
58,079
111,684
11,380
81,751
500
81,751
500
81,751
500
81,751
-
-
-
-
-
-
-
-
-
-
9,741
1,099
500
58,079
69,434
11,380
82,251
500
82,251
500
82,251
500
82,251
1 As at 23 August 2023, M J Cropper held 1,891,850 ordinary shares beneficially
and 559,571 ordinary shares non-beneficially.
-
-
13,561
13,561
-
-
-
-
-
-
-
-
-
-
-
Details of Directors’ Interests
The interests in the shares of the
Company of those Directors serving
at 1 April 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 61.
Non-beneficial interests include
shares held jointly as trustee with
other Directors.
The Company has purchased and
maintained throughout the period
Directors’ and officers’ liability
insurance in respect of the Directors.
Approved by the Board of Directors
on 23 August 2023 and were signed
on its behalf by
Mark Cropper
Chairman
68
CONTENTS
STRATEGIC REPORT
05
Financial Highlights
Financial Summary
Chairman’s Letter
Chief Executive’s Review
The Pension Report
Risk Management
Promoting the Success of Our Group
- S172(1) Statement
Technical Fibre Products
ColourformTM
Paper Products
Sustainability - ESG
Our People
49
GOVERNANCE
Board of Directors
Corporate Governance Statement
Compliance with the QCA
Corporate Governance Code
Report of the Audit Committee
Report of the Nominations Committee
Report of the Remuneration Committee
Directors’ Report
FINANCIAL STATEMENTS
69
Statement of Directors’ Responsibilities
Group 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
70
71
77
78
79
80
82
119
Statement of Directors’ Responsibilities
Independent Auditor’s Report
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for
preparing the Annual Report and the
financial statements in accordance
with applicable law and regulations.
• prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
company will continue in business.
Company law requires the directors to
prepare financial statements for each
financial year. Under that law the directors
have to prepare the financial statements in
accordance with UK-adopted international
accounting standards.
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 and profit or loss
of the company and group for that period.
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 applicable UK-adopted
international accounting standards have
been followed, subject to any material
departures disclosed and explained in
the financial statements; and
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 confirm that:
• so far as each director is aware, there is no
relevant audit information of which the
company’s auditor is unaware; and
• the directors have taken all the steps that
they ought to have taken as directors in
order to make themselves aware of any
relevant audit information and to
establish that the company’s auditor is
aware of that information.
To the best of our knowledge:
• the group financial statements, prepared
in accordance with UK-adopted
international accounting standards, give a
true and fair view of the assets, liabilities,
financial position and profit or loss of the
company and the undertakings included
in the consolidation taken as a whole; and
• the Strategic Report and Directors’
Report include a fair review of the
development and performance of the
business and the position of the company
and the undertakings included in the
consolidation taken as a whole, together
with a description of the principal risks
and uncertainties that they face.
Approved by the Board of Directors on
23 August 2023 and were signed on its
behalf by
Mark Cropper
Chairman
GROUP INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF JAMES CROPPER PLC
including assessing the impact on cash
flow and covenants; and
• Corroborating the existence of the
Group’s loan facilities and related
covenant requirements for the period
covered by management’s forecasts.
We have analysed and considered the level
of headroom on covenants throughout the
going concern period.
In our evaluation of the directors’
conclusions, we considered the inherent
risks associated with the Group’s
and the parent company’s business
model including effects arising from
macro-economic uncertainties such as
inflationary pressures and energy prices,
we assessed and challenged the
reasonableness of estimates made by the
directors and the related disclosures and
analysed how those risks might affect the
Group’s and the parent company’s financial
resources or ability to continue operations
over the going concern period.
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.
Based on the work we have performed,
we have not identified any material
uncertainties relating to events or conditions
that, individually or collectively, may cast
significant doubt on the Group’s and the
parent company’s ability to continue as
a going concern for a period of at least
twelve months from when the financial
statements are authorised for issue.
Our responsibilities and the responsibilities
of the directors with respect to going
concern are described in the relevant
sections of this report.
Opinion
Our opinion on the financial statements
is unmodified
We have audited the financial statements of
James Cropper Public Limited Company
(the ‘parent company’) and its subsidiaries
(the ‘Group’) for the period from 27 March
2022 to 1 April 2023, which comprise the
Group Statement of Comprehensive
Income, the Group and parent Statement
of Financial Position, the Group Statement
of Cash Flows, the Group and parent
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).
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 1 April 2023
and of the Group’s profit for the 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.
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 are 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.
We believe that the audit evidence we
have obtained is sufficient and appropriate
to provide a basis for our opinion.
Conclusions relating to going concern
We are responsible for concluding on the
appropriateness of the directors’ use of the
going concern basis of accounting and, based
on the audit evidence obtained, whether a
material uncertainty exists related to events
or conditions that may cast significant doubt
on the Group’s and the parent company’s
ability to continue as a going concern.
If we conclude that a material uncertainty
exists, we are required to draw attention
in our report to the related disclosures
in the financial statements or, if such
disclosures are inadequate, to modify
the auditor’s opinion.
Our conclusions are based on the audit
evidence obtained up to the date of our
report. However, future events or conditions
may cause the Group or the parent company
to cease to continue as a going concern.
Our evaluation of the directors’ assessment
of the Group’s and the parent company’s
ability to continue to adopt the going
concern basis of accounting included:
• Analysing and challenging management’s
forecasts and supporting assessment;
• Assessing subsequent events following the
year-end in order to establish any areas
that could affect the Group’s ability to
report as a going concern, including a
review of the board minutes in relation to
the strategic business plans;
• Analysing management’s reverse stress test
of the forecasts and assessing the
likelihood of a downward scenario;
• Comparing forecasted amounts against
current year performance and the most
recent management accounts, prior to the
approval of the financial statements;
• Performing sensitivity analysis of revenue
and EBITDA to account for each
assessment performed by management,
70
71
Independent Auditor’s Report
Independent Auditor’s Report
OUR APPROACH TO THE AUDIT
KEY AUDIT MATTER - GROUP AND PARENT
HOW OUR SCOPE ADDRESSED THE MATTER - GROUP
Overview of our audit approach
Overall materiality:
Group
Group: £325,000, which represents 0.25%
of the Group’s revenue.
Parent company: £130,000, which represents
40% of the Group’s materiality.
Key audit matters were identified as:
• Pension benefit obligation.
We did not issue the audit report for
the period ended 26 March 2022.
Key audit matters reported by the
predecessor auditor in the auditor’s report
for the period ended 26 March 2022 were:
• Defined Benefit Pension
Scheme Valuations
The Group engagement team performed;
full-scope audit procedures on the financial
information of two components, audit of
one or more classes of transaction, account
balance or disclosures relating to significant
risks of material misstatement for two
components and specified audit procedures
relating to significant risks of material
misstatement for four components.
The Group engagement team performed
analytical procedures on the financial
information of the remaining 8 components.
In total, our procedures covered 87%
of the Group’s revenue and 96% of the
Group’s total assets.
DESCRIPTION
AUDIT RESPONSE
KEY AUDIT MATTERS
DISCLOSURES
KEY OBSERVATIONS
MATERIALITY
KEY AUDIT
MATTERS
SCOPING
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.
These matters included those that had the
greatest effect on: the overall audit strategy;
the allocation of resources in the audit; and
directing the efforts of the engagement team.
These matters were addressed in the context
of our audit of the financial statements as a
whole, and in forming our opinion thereon,
and we do not provide a separate opinion on
these matters.
In the graph below, we have presented the key audit matters, significant risks and other risks relevant to the audit.
High
Revenue recognition
(occurence) including
completeness of rebates
Going concern
P
o
t
e
n
t
i
a
l
fi
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
i
m
p
a
c
t
Low
Low
Purchases/
cost of sales
Revenue (accuracy)
Pension benefit obligation
Trade creditors,
accruals and
contigent consideration
Inventory
Cash
Trade receivables
Interest rate cap/
hedge accounting
Management
override of control
Share options
Key audit matter
Significant risk
Other risk
Extent of management judgement
High
Pension benefit obligation is not valued correctly
in the financial statements.
We assessed the pension benefit obligation not being
complete within the financial statements as one of the
most significant assessed risks of material misstatement
due to error.
As described in Note 1 (accounting policies) and Note 20
(retirement benefits), the Group has two funded pension
schemes providing defined benefits for a number of its
employees; the James Cropper PLC Pension Scheme
(‘Staff Scheme’) and the James Cropper PLC Works
Pension Plan (‘Works Scheme’).
As at 1 April 2023, the net pension obligation amounted to
£16.1m (2022: £13.1m, which includes the effect of limit on
recoverable surplus of £1.4m), the loss recognised in other
comprehensive income amounted to £3.9m (2022: gain of
£4.8m), the fair value of the plan assets is £73.2m (2022:
£109.9m), and the present value of the defined benefit
obligation is £89.3m (2022: £121.7m).
We note that the valuation of the net obligation is
dependent on the underlying assumptions and inputs
made from the actuary, as well as movements within
market conditions, specifically being the discount rate,
inflation expectations and life expectancy assumptions.
The inputs surrounding these assumptions are considered to
be complex, and as such, require significant management
judgement to be made, with the support of third-party
actuaries. A minor change within any of the underlying
assumptions and estimates used to calculate the Group’s
pension obligation could have a significant impact on the
Group’s net pension deficit.
In responding to the key audit matter, we performed the following
audit procedures:
• Assessed the competence, capabilities and objectivity of the pension
scheme actuary in addition to checking the completeness and reliability
of the data provided;
• Obtained and analysed the pension report from the actuary and confirmed
the disclosures agree to the disclosures made in the financial statements;
• Obtained a list of employee data from the scheme administrator, that is
used by management’s actuarial expert in their pension liability calculations
and undertook testing to confirm the data used was complete and accurate;
• For a sample of assets, we tested the valuation of the asset by agreeing
to supporting documentation such as quoted asset prices or recent
transactions around the period-end, depending on the type of asset;
• Obtained third-party confirmation of the value of the pension scheme
assets from both the investment manager and custodian;
• Tested the movement in the member data by agreeing to information
provided by the scheme administrator, to ensure that there have not been
any material or abnormal movements to the membership profile; and
• Engaged our internal actuarial specialists to assess the reasonableness
of assumptions made in relation to the scheme focussing primarily on
the discount rate, inflation, and mortality assumptions.
Relevant disclosures in the Annual Report
and Accounts 2023
• Financial statements; The Pension Report
• Financial statements; Group’s key sources of
significant estimates; Retirement benefits
• Financial statements; Note 20; Retirement benefits
Our results
Based on our audit work, we found the valuation methodologies and the
actuarial assumptions inherent within them to be balanced and consistent
with the expectation of our actuarial specialists. We consider that the group’s
disclosures within note 20 appropriately describe the significant degree of
inherent precision in the assumptions and estimates and the potential impact
on future periods of revisions to these estimates. No material misstatements
were identified within the calculation.
72
73
Independent Auditor’s Report
Independent Auditor’s Report
Our application of materiality
We apply the concept of materiality both in planning and performing the audit, and in evaluating the effect of identified misstatements on the
audit and of uncorrected misstatements, if any, on the financial statements and in forming the opinion in the auditor’s report.
Materiality was determined as follows:
MATERIALITY MEASURE
GROUP
PARENT COMPANY
Materiality for financial
statements as a whole
We define materiality as the magnitude of misstatement in the financial statements that,
individually or in the aggregate, could reasonably be expected to influence the economic
decisions of the users of these financial statements. We use materiality in determining the
nature, timing and extent of our audit work.
Materiality threshold
£325,000, which is 0.25% of the
Group’s revenue.
£130,000 which was 40% of Group
materiality and the lower of our capped
materiality and 1% of the parent
company’s total assets at the planning
stage of the audit (£169,000).
Significant judgements
made by auditor in
determining the materiality
In determining materiality, we made the
following significant judgements:
In determining materiality, we made
the following significant judgements:
• We determine revenue to be the most
appropriate benchmark for the Group
due to this having importance in both
external financial reporting and internal
management reporting. This is a key
driver of business activity and is a
measure on which growth is monitored.
• A market-based measurement percentage
was chosen which reflected our knowledge
from the risk assessment of the business.
We did not determine the materiality
for the period ended 26 March 2022.
• The primary objective of the parent
company is to hold the investments
in the Group undertakings, as well
as to provide financing throughout
the Group.
We did not determine the materiality
for the period ended 26 March 2022.
Performance materiality used to
drive the extent of our testing
We set performance materiality at an amount less than materiality for the financial
statements as a whole to reduce to an appropriately low level the probability that the
aggregate of uncorrected and undetected misstatements exceeds materiality for the
financial statements as a whole.
Performance materiality threshold
£211,000, which is 65% of
financial statement materiality.
£85,000, which is 65% of
financial statement materiality.
Significant judgements made
by auditor in determining
the performance materiality
Specific materiality
Specific materiality
Communication of misstatements
to the audit committee
Threshold for communication
In determining performance materiality, we made the following significant judgements for both
the Group and Parent Company:
• Our risk assessment procedures did not identify any significant changes in business
objectives and strategy of the Group or Parent Company; and
• We considered the findings identified as part of the review of the predecessor’s auditors work.
• We assessed the effectiveness of the control environment from the procedures performed in
the planning stage of the audit and did not identify any significant deficiencies.
We determine specific materiality for one or more particular classes of transactions, account
balances or disclosures for which misstatements of lesser amounts than materiality for the
financial statements as a whole could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial statements.
We determined a lower level of specific materiality for the following areas for both the Group
and Parent Company:
• Related party transactions (excluding intercompany transactions); and
• Directors’ remuneration.
We determine a threshold for reporting unadjusted differences to the audit committee.
£16,250 and misstatements below that
threshold that, in our view, warrant
reporting on qualitative grounds.
£8,000 and misstatements below that
threshold that, in our view, warrant
reporting on qualitative grounds.
The graph below illustrates how performance materiality interacts with our overall materiality and the tolerance for potential
uncorrected misstatements.
Overall materiality – Group
Overall materiality – Parent company
Revenue
£130m
FSM
£325k, 0.25%
PM
£211k 65%
TFPUM
£114k, 35%
Group
Materiality
£325k
FSM
£130k, 40%
PM
£85k, 65%
TFPUM
£45k, 35%
KEY FSM: Financial statements materiality PM: Performance materiality TFPUM: Tolerance for potential uncorrected misstatements
An overview of the scope of our audit
We performed a risk-based audit that
requires an understanding of the Group’s
and the parent company’s business and in
particular matters related to:
Understanding the Group, its components,
and their environments, including
Group-wide controls
• The engagement team obtained an
understanding of the Group and its
environment, including Group-wide
controls, and assessed the risks of material
misstatement at the Group level; and
• The engagement team further considered
the effect of the Group organizational
structure on the scope of the audit and
used this to inform our assessment of risk.
Identifying significant components
• In order to assess the risks identified, the
engagement team performed an evaluation
of identified components to assess the
significant components and to determine
the planned audit response based on a
measure of materiality, calculated by
considering the component’s significance
as a percentage of the Group’s revenue,
profit before taxation and total assets.
Type of work to be performed on
financial information of parent and other
components (including how it addressed
the key audit matters)
• Of the Group’s components, we
identified two of which, in our view,
required an audit of their financial
information using component materiality
(full scope audit), either due to their size
or their risk characteristics. As a result of
this, we performed an audit of the
financial statements of James Cropper
Speciality Papers Limited and Technical
Fibre Products Limited.
• We identified a single key audit matter,
which is in relation to the valuation
that underpins the defined benefit
obligation. The audit procedures
performed in respect of these are detailed
within the key audit matters section of
our report.
• We performed specific audit procedures
in respect of six components, being; the
Parent Company (James Cropper Public
Limited Company), Electro Fibre
Technologies LLC, James Cropper
Converting Limited, Tech Fibers Inc.,
Technical Fibre Products Inc. and TFP
Hydrogen Products Limited.
• We performed analytical procedures at
Group level over the remaining eight
components. These procedures, together
with the additional procedures outlined
above, were designed to give us the audit
evidence needed for our opinion on the
Group financial statements as a whole.
Performance of our audit
In order to gain sufficient appropriate
audit evidence to address the risks
identified above, an audit of financial
information was carried out at each
individually significant reporting
component: audits for Group reporting
purposes were carried out at two
significant components located in the
United Kingdom. Additionally, specific
audit procedures for Group reporting
purposes were performed at a further
six components.
Audit Approach
Full-scope audit
Specified audit procedures
Analytical procedures
No of
Components
2
6
8
% coverage
revenue
74%
13%
13%
% coverage
total assets
64%
32%
4%
Other information
The other information comprises the
information included in the annual report,
other than the financial statements and
our auditor’s report thereon. The directors
are responsible for the other information
contained within the annual report.
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 audit
or otherwise appears to be materially
misstated. If we identify such material
inconsistencies or apparent material
misstatements, we are required to
determine whether there is 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.
Our opinion on other matters
prescribed by the Companies
Act 2006 is unmodified
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.
74
75
Matter on which we are required
to report under the Companies
Act 2006
In light of the knowledge and
understanding of the Group and the parent
company and their environments 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 directors’
responsibilities statement set out on page
70 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
Independent Auditor’s Report
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.
Irregularities, including fraud, are
instances of non-compliance with laws
and regulations. The extent to which
our procedures are capable of detecting
irregularities, including fraud, is
detailed below:
• We obtained an understanding of the
legal and regulatory frameworks
applicable to the parent company and
the Group and the industries in which
they operate. We determined that the
most significant laws and regulations are
the Companies Act 2006, UK-adopted
international accounting standards,
United Kingdom Generally Accepted
Accounting Practice and tax legislation
in the jurisdictions in which the Group
operates, including the application of
local and overseas sales taxes.
• We obtained an understanding of how
the parent company and the Group are
complying with those legal and regulatory
frameworks by making inquiries of
management, those responsible for legal
and compliance procedures and the
company secretary. We corroborated
our inquiries through our review of
board minutes and papers provided to
the Audit Committee.
• We assessed the susceptibility of the
parent company’s and the Group’s
financial statements to material
misstatement, including how fraud might
occur. Audit procedures performed by
the Group engagement team included:
– Assessing the design and
implementation of controls management
has in place to prevent and detect fraud;
– Obtaining an understanding of how
those charged with governance
considered and addressed the potential
for override of controls or other
inappropriate influence over the
financial reporting process;
– Challenging assumptions and
judgements made by management in
significant accounting estimates;
– Identifying and testing journal entries,
in particular any journals with unusual
characteristics, to increase our testing in
areas of higher risk identified during our
audit; and
– Designing audit procedures to
incorporate unpredictability around the
nature, timing or extent of our testing.
• These audit procedures were designed
to provide reasonable assurance that the
financial statements were free from fraud
or error. The risk of not detecting a
material misstatement due to fraud is
higher than the risk of not detecting
one resulting from error and detecting
irregularities that result from fraud is
inherently more difficult than detecting
those that result from error, as fraud may
involve collusion, deliberate concealment,
forgery or intentional misrepresentations.
Also, the further removed non-
compliance with laws and regulations is
from events and transactions reflected in
the financial statements, the less likely we
would become aware of it;
• The engagement partner’s assessment of
the appropriateness of the collective
competence and capabilities of the Group
engagement team including consideration
of the Group engagement team’s
knowledge of the industry in which the
Group operates, and the understanding
of, and practical experience with, audit
engagements of a similar nature and
complexity through appropriate training
and participation; and
• We communicated relevant 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.
A further description of our responsibilities
for the audit of the financial statements is
located on the Financial Reporting
Council’s website at: www.frc.org.uk/
auditorsresponsibilities. This description
forms part of our auditor’s report.
Use of our report
This report is made solely to the company’s
members, as a body, in accordance with
Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken
so that we might state to the company’s
members those matters we are required to
state to them in an auditor’s report and for
no other purpose. To the fullest extent
permitted by law, we do not accept or
assume responsibility to anyone other than
the company and the company’s members
as a body, for our audit work, for this
report, or for the opinions we have formed.
David White
Senior Statutory Auditor for and
on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Manchester
23 August 2023
Group Statement of Comprehensive Income
James Cropper PLC
Group Statement of Comprehensive Income
53 week period to
1 April 2023
£’000
52 week period to
26 March 2022
£’000
129,664
104,922
Note
2
Revenue
Provision for impairment reversal
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
Fair value movement on derivatives
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
Cash flow hedges – cost of hedging
Foreign tax adjustment
Items that will never be reclassified to profit or loss
23
4
4
2
3
3
4
5
6
15,17
15
Retirement benefit liabilities – actuarial (losses) / gains
20
Deferred tax on actuarial losses / (gains) on retirement benefit liabilities
Other comprehensive (expense) / income for the period
Total comprehensive (expense) / income for the period
attributable to equity holders of the Company
134
650
817
(48,556 )
(15,162 )
(34,459 )
(4,278 )
(25,471)
3,339
(330 )
(1,697 )
1
1,313
(797 )
516
5.4 p
516
222
-
1,040
(355 )
-
(3,888 )
972
(2,009 )
(1,493 )
184
744
385
(39,577 )
(7,428 )
(30,535 )
(4,051 )
(20,960 )
3,684
-
(924 )
17
2,777
(1,419 )
1,358
14.2p
1,358
49
(501 )
10
-
(13 )
4,777
(179 )
4,143
5,501
76
77
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
Statement of Financial Position
Statement of Cash Flows
James Cropper PLC
Statement of Financial Position
Assets
Goodwill
Intangible assets
Property, plant and equipment
Right-of-use assets
Investments in subsidiary undertakings
Other financial assets
Deferred tax assets
Total non-current assets
Inventories
Trade and other receivables
Provision for impairment
Other financial assets
Cash and cash equivalents
Corporation tax
Total current assets
Total assets
Liabilities
Trade and other payables
Other financial liabilities
Loans and borrowings
Total current liabilities
Long-term borrowings
Retirement benefit liabilities
8
9
10
11
12
15
21
13
14
14
15
16
17
18
18
20
Contingent consideration on business acquisition 16
21
22
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Equity
Share capital
Share premium
Translation reserve
Reserve for own shares
Cash flow hedging reserve
Cost of hedging reserve
Retained earnings
Total shareholders’ equity
Total equity and liabilities
Group as at
Group as at
1 April 2023
£’000
26 March 2022 Company as at
1 April 2023
£’000
Restated
£’000
Note
Company as at
26 March 2022
Restated
£’000
1,264
1,524
32,717
6,765
-
654
4,198
47,122
18,304
24,763
(643 )
428
7,679
815
51,346
98,468
21,106
58
1,758
22,922
22,515
16,140
1,423
3,403
43,481
66,403
2,389
1,588
775
(1,407 )
1,040
(355 )
28,035
32,065
98,468
1,264
1,584
30,551
7,358
-
-
3,534
44,291
17,593
21,906
(777 )
-
7,750
1,838
48,310
92,601
20,936
6
1,595
22,537
18,449
13,130
578
3,393
35,550
58,087
2,389
1,588
553
(1,407 )
-
-
31,391
34,514
92,601
-
788
1,758
402
7,350
654
4,118
15,070
-
53,991
-
428
3,506
582
58,507
73,577
7,465
58
217
7,740
13,019
16,140
-
112
29,271
37,011
2,389
1,588
-
(1,407 )
1,092
(355 )
33,259
36,566
73,577
-
769
1,630
343
7,350
-
3,459
13,551
-
54,749
-
-
4,011
968
59,728
73,279
16,324
6
133
16,463
7,904
13,130
-
123
21,157
37,620
2,389
1,588
-
(1,407 )
-
-
33,089
35,659
73,279
The Parent Company reported a profit for the period ended 1 April 2023 of £4,042k (2022: £4,554k).
The financial statements on pages 66 to 118 were approved by the Board of Directors on 23 August 2023 and were signed on its behalf by:
M A J Cropper
Chairman
Company Registration No: 30226
James Cropper PLC
Statement of Cash Flows
For the period ended 1 April 2023 (2022: for the period ended 26 March 2022)
Cash flows from operating activities
Profit for the period
Adjustments for:
Tax expense
Depreciation and amortisation
Earn out adjustment on contingent consideration on business acquisition
Net IAS 19 pension adjustments within profit
Past service pension deficit payments
Foreign exchange differences
Profit on disposal of property, plant and equipment and intangible assets
Interest receivable and similar income
Interest payable and similar charges
Share based payments
Fair value movements on derivatives
Changes in working capital:
Increase in inventories
Increase in trade and other receivables
Increase in trade and other payables
Tax received
Net cash generated from operating activities
Cash flows from investing activities
Purchase of intangible assets
Purchase of property, plant and equipment
Deferred consideration on business acquisition paid
Contingent consideration on business acquisition paid
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of new loans
Repayment of borrowings
Fees paid on raising finance
Repayment of lease liabilities
Interest received
Interest paid
Non-deliverable forward contract payment
Payments on interest rate cap
Purchase of own shares
Dividends paid to shareholders
Net cash generated from financing activities
Net (decrease) / increase in cash and cash equivalents
Effects of exchange rate fluctuations on cash held
Net (decrease) / increase in cash and cash equivalents
Cash and cash equivalents at the start of the period
Cash and cash equivalents at the end of the period
Cash and cash equivalents consists of:
Cash at bank and in hand
Cash and cash equivalents at the end of the period
Note
Group 2023
£’000
Group 2022
Restated
£’000
516
1,358
5
4
4
4
3
3
10
16
16
18
18
18
7
797
4,278
986
442
(1,665 )
(136 )
(589 )
(1 )
1,697
(59 )
330
(696 )
(3,614 )
2,396
868
5,550
(1,126 )
(5,267 )
-
(250 )
(6,643 )
5,050
(288 )
-
(1,561 )
1
(858 )
(330 )
(495 )
-
(897 )
622
(471 )
400
(71 )
7,750
7,679
7,679
7,679
1,419
4,051
-
914
(1,443 )
-
-
(17 )
926
(107 )
-
(2,103 )
(5,942 )
5,945
(972 )
4,029
(56 )
(6,142 )
(400 )
-
(6,598 )
9,191
(3,123 )
(278 )
(1,170 )
17
(709 )
-
-
(256 )
(236 )
3,436
867
118
985
6,765
7,750
7,750
7,750
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
78
79
Statement of Changes in Equity
Statement of Changes in Equity
James Cropper PLC
Statement of Changes in Equity - Group
James Cropper PLC
Statement of Changes in Equity - Company
All figures in £’000
At 27 March 2021
- as previously reported
Restatement - note 28
Share
capital premium
Share Translation
reserve
Reserve
Cost of
for Own Hedging
reserve
Shares
2,389
1,588
504
(1,151 )
-
-
-
-
At 27 March 2021 - Restated
2,389
1,588
504
(1,151 )
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 - Restated
2,389
1,588
553
(1,407 )
-
-
Comprehensive income
for the period
Total other comprehensive income
Dividends paid
Share based payment charge
Total contributions by and
distributions to owners of the Group
-
-
-
-
-
-
-
-
-
-
Cash flow
Hedging Retained
earnings
reserve
Total
501
26,070
29,901
-
(300 )
(300 )
501
25,770 29,601
-
1,358 1,358
(501 )
4,595
4,143
-
-
-
-
-
-
(236 )
-
(96 )
(236 )
(256 )
(96 )
(332 )
(588 )
31,391
34,514
516
516
-
-
-
-
-
-
-
-
-
-
-
222
-
(355 )
1,040
(2,916 )
(2,009 )
-
-
-
-
-
-
-
-
-
-
-
-
(897 )
(59 )
(897 )
(59 )
(956 )
(956 )
Share
Share
capital premium
Reserve
Cost of
for Own Hedging
reserve
Shares
Cash flow
Hedging
reserve
Retained
earnings
Total
All figures in £’000
At 27 March 2021
2,389
1,588
(1,151 )
Comprehensive income for the period
-
-
Total other comprehensive income
- -
Dividends paid
Share based payment charge
Purchase of own shares
Total contributions by and
distributions to owners of the Group
-
-
-
-
-
-
-
-
-
-
-
-
(256 )
(256 )
At 26 March 2022
2,389
1,588
(1,407 )
Comprehensive income for the period
-
-
Total other comprehensive income
- -
Dividends paid
Share based payment charge
Total contributions by and
distributions to owners of the Group
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
24,253
27,079
-
4,554
4,554
4,614
(236 )
(96 )
-
(332 )
4,614
(236 )
(96 )
(256 )
(588 )
33,089
35,659
-
-
-
-
-
-
-
4,042
(355 )
1,092
(2,916 )
-
-
-
-
-
-
(897 )
(59 )
(956 )
4,042
(2,179 )
(897 )
(59 )
(956 )
At 1 April 2023
2,389
1,588 (1,407 )
(355 )
1,092
33,259
36,566
At 1 April 2023
2,389
1,588
775
(1,407 )
(355 )
1,040
28,035
32,065
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
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 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”) and the following
disclosure exemptions have been adopted:
• A statement of cash flows has not
been presented; and
• An analysis of revenue from contracts
with customers has not been given.
Basis of preparation
The accounting “year” for the Group is a
53 week accounting period ended 1 April
2023 (2022: 52 week accounting period
ended 26 March 2022).
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 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.
Going concern
The Board has concluded that it is
appropriate to adopt the going concern
basis, having undertaken a rigorous
assessment of the financial forecasts for
the 2-year period ending 31 March 2025
with specific consideration to the trading
position of the Group in the context of
the current inflationary pressures and
energy costs. Stress tests and sensitivities
have been performed on the forecast
including any impact on covenants.
The Directors, after reviewing the
Group’s operating forecasts, investment
plans and financing arrangements,
consider that the Group and company
will have sufficient funds to continue to
meet their liabilities as they fall due for at
least 12 months from the date of approval
of the financial statements and therefore
have prepared the financial statements on
a going concern basis.
Accordingly, the Directors are
satisfied that it is appropriate to adopt
the going concern basis in preparing
the Annual Report and Accounts.
Basis of consolidation
The financial statements of the Group
consolidate the accounts of the parent
company and all of its subsidiaries.
All subsidiaries have a reporting date
1 April 2023.
All transactions and balances between
Group companies are eliminated on
consolidation, including unrealised gains
and losses on transactions between
Group companies. Where unrealised losses
or intra-group asset sales are reversed on
consolidation, the asset is also tested for
impairment from a Group perspective.
Amounts reported in the financial
statements of subsidiaries have been
adjusted where necessary to ensure
consistency with the accounting policies
of the Group.
Profit or loss and other comprehensive
income of subsidiaries acquired or disposed
of during the year are recognised from the
date of acquisition, or up to the effective
date of disposal as applicable.
(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).
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; and
• 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. Rebates payable
to customers are contingent on the
occurrence or non-occurrence of a future
event, e.g. the customer meeting certain
agreed criteria. Rebates are recorded using
the most likely method (the single most
likely amount in a range of possible
consideration amounts).
Management makes estimates on an
ongoing basis, primarily based on current
customer spending and historic data, in
order to assess customer revenues and to
calculate total rebates earned to be
recorded as deductions from revenue.
Where rebates are expected to be given to
these customers, the rebates are quantified
and charged directly to the Consolidated
Statement of Comprehensive Income over
the period to which they relate and are
recognised as a deduction from revenue.
Revenue is only recognised to the extent
that it is highly probable that a significant
reversal will not occur. A contract liability
is recognised for expected volume
discounts payable to customers in relation
to sales made until the end of the
reporting period. The estimated volume
discount is revised at each reporting date.
(b) Operating segments
(d) Foreign currencies
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
four 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.
(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.
Emission allowances are assessed
annually for impairment based on
latest market prices.
The consolidated financial statements
are presented in Pounds Sterling, which is
the Group’s presentation 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 ineffective portion of gain or loss on
foreign currency borrowings that are used
to hedge a net investment in a foreign
operation is recognised immediately in the
Statement of Comprehensive Income.
(e) Intangible fixed assets
Intangible assets are stated at cost less
accumulated amortisation and
accumulated impairments losses, if any.
The following useful lives have been
determined for intangible assets.
Trade secrets such as
processes or unique recipes
Customer relationships
Technology*
Brands
10 years
10 years
10 years
3 years
Computer software
3 – 10 years
* Internally developed hydrogen production
technology related to platinum group
materials coatings and electrolysis.
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
82
83
(f) Property plant and equipment
(i) Research & development tax credit
Notes to the Financial Statements
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 buildings
14 – 40 years
Plant and machinery
2 – 20 years
Residual values and useful lives
are reviewed annually. Land is
not depreciated.
(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 it is demonstrable that the
asset will generate future economic
benefits; it is the intention to complete
the intangible asset so that it will be
available for use or sale; adequate
resources are available to complete the
development; the asset can be used or sold;
it is technically feasible to complete the
asset; and the expenditure attributable to
the asset during development can be
reliably measured.
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.
Research and development expenditure
credit (RDEC) is recognised within other
operating income on an accrual basis.
(j) IFRS 16 ‘Leases’
The Group leases various warehouses,
machinery, production lines and motor
vehicles. Lease terms are negotiated on an
individual basis and contain a range of
different terms and conditions. The lease
agreements do not impose any covenants,
but leased assets may not be used as
security for borrowing purposes.
Assets and liabilities arising from a
lease are initially measured on a present
value basis. Lease liabilities are secured
on the assets leased. Lease liabilities
include the net present value of the
following lease payments:
(i) fixed payments (including in-
substance fixed payments), less
any lease incentives receivable;
(ii) variable lease payments that are
Depreciation is provided on all right-of-
use assets at rates calculated to write off
the cost less residual value of each asset
evenly over the lease term.
There are no short term leases and leases
of low-value assets are recognised on a
straight-line basis as an expense in the
statement of consolidated income.
The Group has no leases with variable
payments.
(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.
based on an index or rate;
(l) Grants
(iii) amounts expected to be payable by the
lessee under residual value guaranteed;
(iv) the exercise price of a purchase option
if the lessee is reasonably certain to
exercise that option; and
(v) payments of penalties for terminating
the lease, if the lease term reflects the
lessee exercising that option.
The lease payments are discounted using
the interest rate implicit in the lease.
If that rate cannot be determined, the
lessee’s incremental borrowing rate is
used, being the rate that the lessee
would have to pay to borrow the funds
necessary to obtain an asset of similar
value in a similar economic environment
with similar terms and conditions.
The liability is subsequently stated at
amortised cost using the effective interest
rate method.
Right-of-use assets are measured at cost
comprising the following:
(i) the amount of the initial measurement
of the lease liability;
(ii) any lease payments made at or before
the commencement date less any lease
incentives received;
(iii) any initial direct costs; and
(iv) restoration costs.
Right-of-use assets are subsequently
carried at cost less accumulated
depreciation and impairment losses.
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 in subsidiary
undertakings and amount owed
by Group undertakings
Investments in subsidiary undertakings
are stated at cost less any impairment
in value.
Amounts owed by Group undertakings
are recognised initially at fair value and
are subsequently carried at amortised cost
using the effective interest method, less
any impairment.
(n) Trade receivables
Trade receivables are recorded at their
initial transaction price after appropriate
revision for impairment. A provision
for impairment is calculated using an
expected credit loss impairment model.
Under this impairment model approach,
per IFRS 9, it is not necessary for a credit
event to have occurred before credit losses
are recognised. Instead, an entity 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 held at
amortised 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.
(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.
Notes to the Financial Statements
(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 an equity settled
share based payment scheme: A Long-
Term Incentive Plan (LTIP) for certain
Directors and senior managers.
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 the EBT are shown as movements
against equity.
The EBT is not treated as an extension
of the parent and is therefore not included
in the parent’s individual accounts and
is only consolidated in the group
accounts. The costs of purchasing own
shares held by the EBT are shown as a
deduction within shareholders’ equity
in the consolidated statement of changes
in 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.
The Group and Company manage the
capital structure and adjust 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 shareholders, return capital to the
shareholders, issues new shares, or sell
assets to reduce debt. Details of borrowings
can be seen in note 18 and shares can
be referred to in note 22. The Group and
Company are not subject to any externally
imposed capital requirements. There have
been no material changes in the
management of capital during the period.
(w) Taxation
Tax on the Statement of Comprehensive
Income for the year comprises current
and deferred tax. Tax is recognised in the
Statement of Comprehensive Income,
according to the accounting treatment of
the related transaction.
Deferred tax is provided on temporary
differences between the carrying amounts
of assets and liabilities for financial
reporting purposes and the amounts used
for taxation purposes.
The following temporary differences are
not provided for: the initial recognition of
goodwill; the initial recognition of assets
or liabilities that affect neither accounting
nor taxable profit other than in a business
combination, and differences relating to
investments in subsidiaries to the extent
that they will probably not reverse in the
foreseeable future.
The amount of deferred tax provided is
based on the expected manner of
realisation or settlement of the carrying
amount of assets and liabilities, using tax
rates enacted or substantively enacted at
the Statement of Financial Position date.
A deferred tax asset is recognised only to
the extent that it is probable that future
taxable profit will be available against
which the asset can be utilised.
(v) Capital Management
(x) Retirement benefits
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 shareholders and benefits to other
stakeholders. The Group and Company
invest in financial assets that will provide an
adequate level of return to the shareholders
commensurate with the level of risk.
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 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
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, removing the impact of
exceptional items and IAS 19 adjustments
that can distort core operating
profitability of the Group and make
year-on-year comparison of
performance challenging.
Non-GAAP measures should be
considered in addition to, and are not
intended to be a substitute for, or superior
to, IFRS measures.
Exceptional items are material income
or costs which derive from events or
transactions which are unusual or
infrequent in their nature and are
disclosed separately in the notes to the
financial statements.
Exceptional items are presented in the
statement of comprehensive income in the
income or expense to which they relate.
(z) Use of estimates and judgements
The preparation of financial statements
in conformity with IFRS requires the use
of estimates and judgements that affect
the reported amounts of assets and
liabilities at the date of the financial
statements and the reported amounts
of revenue 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 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
and a sensitivity analysis highlighting
the impact of a change in variables.
(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 since
year ended 31 March 2019. An allowance of
0.15% of liabilities has been included in the
valuation. If the ultimate impact is greater or
lesser, the difference will be taken as an
experience adjustment through the Other
Comprehensive Income in the relevant year.
The impact on the liability as at 1 April 2023
for a range of reasonable sensitivities is set
out below.
Scheme Liabilities
All figures in £’000
0.005%
0.015%
0.025%
89,216
89,305
89,394
The liability recognised in the Statement of
Financial Position in respect of defined
benefit pension plans is the present value of
the defined benefit obligation at the
Statement of Financial Position date less
the fair value of plan assets. The defined
benefit obligation is calculated annually by
independent actuaries using the projected
unit credit method.
The present value of the defined benefit
obligation is determined by discounting
the estimated future cash flows using
interest rates of high-quality corporate
bonds that are denominated in the
currency in which the benefits will be
paid, and that have terms to maturity
approximating to the terms of the related
pension liability.
If there is a net surplus on the schemes,
the defined benefit of the asset is measured
at the economic benefit, calculated as the
difference between the expected value of
future service costs to the Staff Scheme
and the total contributions required
from the Company under the Schedule
of Contributions.
If a material surplus occurs, the Company
will seek external legal advice to
determine whether the Company has
an unconditional right to a refund of
surplus in the future.
Actuarial gains and losses arising from
experience adjustments and changes in
actuarial assumptions are recognised in
the period in which they occur outside
of Statement of Comprehensive Income
in the Statement of Changes in Equity.
Past service costs are recognised
immediately in income, unless the changes
to the pension plan are conditional on the
employees remaining in service for a
specified period of time (the vesting
period). In this case, the past-service costs
are amortised on a straight-line basis over
the vesting period.
For defined contribution plans, the
Group pays agreed contributions to the
schemes. The Group has no further
payment obligations once the contributions
have been paid. The contributions are
recognised as an employee benefit expense
when they are due.
(y) Non-GAAP performance measures
In the reporting of financial information,
the Group has adopted certain non-
GAAP measures of historical or future
financial performance, position or cash
flows other than those defined or specified
under International Financial Reporting
Standards (IFRS).
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 segments,
principally based in the UK:
• James Cropper Paper Products
(Paper): comprising James Cropper
Speciality Papers, a manufacturer
of specialist paper and boards, and
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
revenue, profit and investments.
“Adjusted Operating Profit before
exceptional items and IAS 19” refers to
operating profit prior to exceptional items
and the IAS 19 pension adjustment.
The “IAS 19 pension adjustment” refers
to the impact on operating profit of the
pension schemes’ operating 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 1 April 2023
All figures in £’000
Paper
Colourform TM
TFP
Group
Services
Continuing
Eliminations Operations
Revenue
External
Segment Profit
Adjusted Operating (Loss) / Profit
before exceptional items and IAS 19
Exceptional costs
IAS 19 Pension adjustments to profit
88,151
88,151
4,326
37,187
4,326
37,187
-
-
(2,847 )
(1,057 )
9,244
(642 )
-
-
-
-
(986 )
-
-
(442 )
Operating (Loss) / Profit
(2,847 )
(1,057 )
8,258
(1,084 )
-
-
69
-
-
69
Fair value movement on derivatives
Interest payable and similar charges
Interest receivable and similar income
Profit before tax
Tax expense
Profit for the period
Total Assets
Total Liabilities
69,590
67,627
5,133
68,482
15,795
56,874
73,577
37,011
(118,314 )
(110,904 )
129,664
129,664
4,767
(986 )
(442 )
3,339
(330 )
(1,697 )
1
1,313
(797 )
516
98,468
66,403
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
Operating Segments
Period ended 26 March 2022
All figures in £’000
Paper
Colourform TM
TFP
Group
Continuing
Services Eliminations Operations
Revenue
External
Segment Profit
Adjusted Operating (Loss) / Profit
before exceptional items and IAS 19
Exceptional costs
IAS 19 Pension adjustments to profit
70,350
70,350
3,363
31,209
3,363
31,209
-
-
-
-
104,922
104,922
(2,338)
(754 )
8,684
(993 )
(14 )
4,585
-
-
-
-
(354 )
-
-
(547 )
-
-
(14 )
Operating (Loss) / Profit
(2,338 )
(754 )
8,330
(1,540 )
Interest payable and similar charges
Interest receivable and similar income
Profit before tax
Tax expense
Profit for the period
Total Assets - Restated
Total Liabilities - Restated
71,146
65,782
5,066
62,981
68,536
(115,128 )
14,556
52,501
32,877
(107,629 )
(354 )
(547 )
3,684
(924 )
17
2,777
(1,419 )
1,358
92,601
58,087
The Group’s country of domicile is the UK. Revenue from external customers is based on the customer’s location. Non-current assets
are based on the location of the assets and exclude financial assets, deferred tax assets and post-employment benefit net assets.
All figures in £’000
UK
Europe
US
Asia
Rest of the Americas
Australasia
Africa
Total
Revenues from
external customers
Non-current assets
excluding deferred tax
2023
53,517
35,986
27,209
10,997
966
762
227
2022
41,193
29,091
22,240
11,114
294
851
139
2023
37,424
-
4,846
-
-
-
-
2022
36,225
-
4,532
-
-
-
-
129,664
104,922
42,270
40,757
All figures in £’000
Additions to non-current assets
Paper Colourform TM
3,717
277
TFP
1,051
Group
Services
734
Total
5,779
3 Finance Costs
Finance costs include costs in respect of interest payable on borrowings and our defined benefit pension schemes.
Finance income includes interest received from short term deposits.
All figures in £’000
Finance costs
Interest payable on bank borrowings
Interest payable in relation to lease liabilities
Net finance costs arising on defined benefit schemes
Other finance charges
Fair value adjustment on contingent consideration
Fair value adjustments on derivatives
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
All figures in £'000
The following items have been charged / (credited) in arriving at profit before tax:
Employee benefit costs
Depreciation and amortisation:
- Property, plant and equipment
- Right-of-use assets
- Intangible assets
Other income:
- Research and development tax credits
- Royalty income
- Storage
- Government grants received
Other expenses:
- Repairs and maintenance expenditure on property, plant and equipment
- Environmental taxation
- Distribution costs
- Administration costs
- Sales and marketing costs
- Research and development expenditure
- Profit on disposal of property, plant and equipment and intangible assets
- Foreign exchange differences
- Earn-out adjustment on contingent consideration on business acquisition
Provision for impairment reversal – Trade receivables
2023
2022
705
268
345
127
109
143
1,697
1
1
1,696
Note
2023
23
34,459
10
11
9
3,065
1,008
205
(338 )
-
(5 )
(307 )
6,326
2,089
4,869
7,504
1,314
3,207
(589 )
(235 )
986
(134 )
260
209
367
12
76
-
924
17
17
907
2022
30,535
3,063
802
186
(555 )
(37 )
-
(152 )
4,991
1,121
4,448
6,031
1,093
2,896
-
(90 )
354
(184 )
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
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)
Other non-audit services
2023
2022
98
250
348
10
36
92
128
-
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
5 Taxation
Analysis of charges 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
Group
2023
Group
2022
419
70
489
179
76
53
308
797
298
250
548
264
(38 )
645
871
1,419
21
6 Earnings per share
Basic earnings per share is calculated on the Group profit for the period attributable to equity shareholders of £516k (2022: £1,358k)
divided by 9.6m (2022: 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 and held within the Group. At 1 April 2023 there were no potential dilutive share options
outstanding (2022: nil).
2023
Earnings
£’000
Weighted
average
number
of share
‘000
516
9,555
Earnings attributable to
ordinary shareholders
Basic and diluted EPS
516
9,555
2022
Earnings
£’000
Weighted
average
number
of share
‘000
Amount
per share
pence
1,358
9,555
14.2
1,358
9,555
14.2
Amount
per share
pence
5.4
5.4
Deferred tax on actuarial gains on retirement benefit liabilities
(972 )
179
Tax on items charged to equity
Deferred tax on share options
10
(8 )
7 Dividends
All figures in £’000
The tax for the period is higher (2022: higher) than the standard rate of corporation tax in the UK of 19% (2022: 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% (2022: 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 not recognised in overseas jurisdictions
Other
Total tax charge for the period
Group
2023
Group
2022
1,313
2,777
249
146
53
64
309
15
(39 )
797
528
212
645
11
115
(72 )
(20 )
1,419
Final paid for the period ended 26 March 2022 / 27 March 2021
Interim paid for the period ended 1 April 2023 / 26 March 2022
Total dividends paid in the year
Final dividend per share for the period ended 26 March 2022 / 27 March 2021
Interim dividend per share for the period ended 1 April 2023 / 26 March 2022
2023
2022
708
189
897
7.5 p
2.0 p
-
236
236
-
2.5 p
In addition, the Directors are proposing a final dividend in respect of the period ended 1 April 2023 of 4.0p per share
(2022: 7.5p per share) which will absorb an estimated £378k (2022: £708k) of shareholders’ funds.
If approved by members at the Annual General Meeting, it will be paid on or before 20 October 2023 to shareholders who are on the
register of members at 8 September 2023. 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
Cost and carrying value
At 26 March 2022 / 27 March 2021
At 1 April 2023 / 26 March 2022
Group
Company
2023
2022
2023
2022
1,264
1,264
1,264
-
1,264
-
-
-
Goodwill arose on 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 have been determined from value in use calculations
based on cash flow projections from formally approved budgets covering the three year period to 31 March 2026. The discount rate used
to calculate value in use was 17% and the long-term growth rate used to calculate the terminal value was 2%. 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 at the reporting date.
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
9 Intangible assets
Group
All figures in £’000
Software
Costs Secrets Relationships Technology Brands Allowances Total
Computer Development
Trade
Customer
Emission
Cost
At 26 March 2022
Additions
4,334
231
Transfer to property, plant and equipment
(6 )
Disposals/surrender of allowance
(229 )
Derecognition of fully amortised assets
-
457
310
567
359
31
570 6,628
-
-
-
-
-
-
-
(310 )
-
-
-
-
-
-
-
-
-
567
359
At 1 April 2023
4,330
457
Aggregate amortisation
At 26 March 2022
Charge for Period
Transfer to property, plant and equipment
Derecognition of fully amortised asset
Disposals
At 1 April 2023
Net book value at 1 April 2023
Net book value at 26 March 2022
4,135
110
4
-
(229 )
4,020
310
199
456
310
1
-
-
-
457
-
1
-
-
(310 )
-
-
-
-
69
57
-
-
-
126
43
37
-
-
-
80
441
279
498
316
-
-
-
(31 )
-
31
-
-
(31 )
-
-
-
-
3,145 3,376
-
(6 )
(3,221 ) (3,520 )
-
(341 )
494 6,207
- 5,044
-
-
-
-
205
4
(341 )
(229 )
- 4,683
494 1,524
570 1,584
Group
All figures in £’000
Software
Costs Secrets Relationships Technology Brands Allowances Total
Computer Development
Trade
Customer
Emission
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
7
36
43
5
26
31
-
-
-
4,858
186
5,044
Company
All figures in £’000
Cost
At 26 March 2022
Additions
Transfer to property, plant and equipment
Disposals/surrender of allowances
At 1 April 2023
Aggregate amortisation
At 26 March 2022
Charge for Period
Transfer to property, plant and equipment
Disposals
At 1 April 2023
Computer
Emission
Software Allowances
Total
4,764
3,360
(6)
570
3,145
-
(3,221 )
(3,444 )
494
4,674
-
-
-
-
-
3,995
110
4
(223 )
3,886
4,194
215
(6 )
(223 )
4,180
3,995
110
4
(223 )
3,886
Net book value at 1 April 2023
294
494
788
Net book value at 26 March 2022
199
570
769
Company
All figures in £’000
Cost
At 27 March 2021
Additions
Disposals/surrender of allowances
Computer
Emission
Software Allowances
Total
4,941
2,623
4,138
56
-
803
2,567
(2,800 )
(2,800)
At 26 March 2022
4,194
570
4,764
Aggregate amortisation
At 27 March 2021
Charge for Period
At 26 March 2022
3,928
67
3,995
-
-
-
3,928
67
3,995
Net book value at 26 March 2022
199
570
769
498
316
-
570
1,584
Net book value at 27 March 2021
210
803
1,013
555
352
26
802
1,946
The computer software capitalised principally relates to the ongoing development of the Group’s Enterprise Resource Planning
and Financial systems.
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
92
93
Notes to the Financial Statements
Notes to the Financial Statements
10 Property plant and equipment
Group
All figures in £’000
Cost
Note
Freehold land
& buildings
Plant &
machinery
Assets under
construction1
Total
Company
All figures in £’000
Cost
Freehold land
& buildings
Note
Plant &
machinery
Total
At 26 March 2022 - restated
28
15,243
94,250 2,896
112,389
At 26 March 2022 - restated
28
1,694
2,548
4,242
Transfers
Transfer from Intangible assets
Additions at cost
Disposals
Effects of movements in foreign exchange
48
2,497
(2,545 )
-
6
-
-
6
74
3,681
1,512
5,267
-
(474 )
-
263
-
-
(474 )
263
At 1 April 2023
15,365
100,223
1,863
117,451
Accumulated Depreciation
At 26 March 2022 - restated
Charge for period
Transfers
Transfer from Intangible assets
Disposal
28
7,970
73,868
4
347
2,718
(201 )
201
-
-
(4 )
(260 )
-
81,838
-
3,065
-
-
-
-
(4 )
(260 )
Effects of movements in foreign exchange
-
95
-
95
At 1 April 2023
8,116
76,618
-
84,734
Net book value at 1 April 2023
Net book value at 26 March 2022
7,249
7,273
23,605
20,382
1,863
32,717
2,896
30,551
1 Assets under construction comprise the expenditure to date on a new gas compressor.
Group
All figures in £’000
Cost
Notes
Freehold land
& buildings
Plant &
machinery
Assets under
construction1
Total
At 27 March 2021 - as previously reported
14,963
90,112 6,694
111,769
Restatement2
28
-
(2,298 )
-
(2,298 )
At 27 March 2021 - restated
14,963
87,814 6,694
109,471
Transfers
Transfers to right-of-use assets3
11
-
6,694
-
(3,337 )
(6,694 )
-
-
(3,337 )
Additions at cost
280
2,965 2,896
6,141
Effects of movements in foreign exchange
-
114
-
114
At 26 March 2022
Accumulated Depreciation
15,243
94,250
2,896
112,389
At 27 March 2021 - as previously reported
7,678
73,395
-
81,073
Restatement2
At 27 March 2021 - restated
Charge for period
At 26 March 2022
Net book value at 26 March 2022
Net book value at 27 March 2021
28
-
(2,298 )
4
7,678
292
7,970
7,273
7,285
71,097
2,771
73,868
20,382
16,717
-
-
-
-
(2,298 )
78,775
3,063
81,838
2,896
30,551
6,694
30,696
1 Assets under construction comprise the expenditure to date on an embosser and a gas compressor.
2 The restatement relates to the correction of an overstatement of cost and accumulated depreciation identified relating to plant
& machinery with a nil effect on net book value.
3 Assets transferred to right-of-use assets are assets held under finance leases.
Transfers
Transfers to Intangible assets
Additions at cost
At 1 April 2023
Accumulated Depreciation
At 26 March 2022 - restated
Transfers
Transfers to Intangible assets
Charge for period
At 1 April 2023
Net book value at 1 April 2023
Net book value at 26 March 2022
Company
All figures in £’000
Cost
At 27 March 2021 - as previously reported
Restatement2
At 27 March 2021 - restated
Additions at cost
At 26 March 2022
Accumulated Depreciation
At 27 March 2021 - as previously reported
Restatement2
At 27 March 2021 - restated
Charge for period
At 26 March 2022
Net book value at 26 March 2022
Net book value at 27 March 2021
28
14
-
74
(14 )
6
200
-
6
274
1,782
2,740
4,522
552
10
-
22
584
1,198
1,142
2,060
2,612
(10 )
(4 )
134
-
(4 )
156
2,180
2,764
560
488
1,758
1,630
Freehold land
& buildings
Note
Plant &
machinery
28
28
1,694
-
1,694
-
1,694
530
-
530
22
552
1,142
1,164
Total
4,503
(266 )
4,237
5
2,809
(266 )
2,543
5
2,548
4,242
2,199
(266 )
1,933
127
2,060
488
610
2,729
(266 )
2,463
149
2,612
1,630
1,774
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
11 Right-of-use assets
Group
All figures in £’000
Cost
At 26 March 2022
Additions
Disposals
Effects of movements in foreign exchange
At 1 April 2023
Accumulated Depreciation
At 26 March 2022
Charge for the period
Disposals
Effects of movements in foreign exchange
At 1 April 2023
Net book value at 1 April 2023
Net book value at 26 March 2022
All figures in £’000
Cost
At 27 March 2021
Additions
Transfers from property, plant & equipment1
Disposals
RoU 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
Plant,
equipment
buildings & vehicles
Land &
Note
Total
3,944
5,651
9,595
26
-
167
255
(47 )
-
281
(47 )
167
4,137
5,859
9,996
979
423
-
24
1,258
585
(38 )
-
2,237
1,008
(38 )
24
1,426
1,805
3,231
2,711
4,054
6,765
2,965
4,393
7,358
4
Plant,
equipment
buildings & vehicles
Land &
Note
Total
10
4
3,585
222
-
-
37
100
2,182
5,767
304
526
3,337
3,337
(172 )
(172 )
-
-
37
100
3,944
5,651
9,595
586
393
-
979
2,965
2,999
1,021
1,607
409
(172 )
802
(172 )
1,258
2,237
4,393
7,358
1,161
4,160
1 Assets where ownership is transferred to the Group/Company upon completion of the lease liability are transferred into Property,
plant and equipment (Note 10).
Company
All figures in £’000
Cost
At 26 March 2022
Additions
Disposals
At 1 April 2023
Accumulated Depreciation
At 26 March 2022
Charge for the period
Disposals
At 1 April 2023
Net book value at 1 April 2023
Net book value at 26 March 2022
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
Note
Plant,
equipment
& vehicles
Total
538
245
(47 )
736
195
177
(38 )
334
402
343
538
245
(47 )
736
195
177
(38 )
334
402
343
Note
Plant,
equipment
& vehicles
Total
459
251
(172 )
538
223
144
(172 )
195
343
236
459
251
(172 )
538
223
144
(172 )
195
343
236
Total cash outflow of leases in the year was £1,561k. There were no expenses relating to variable lease payments not included in lease
liabilities or expenses relating to short-term or low value assets.
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
12 Investments
Investments in subsidiary undertakings
All figures in £’000
At 1 April 2023 and 26 March 2022
Group
2023
-
Group
2022
Company
2023
Company
2022
-
7,350
7,350
Investments in subsidiary undertakings are stated at cost. A list of principal subsidiary undertakings is given below:
13 Inventories
All figures in £’000
Materials
Work in progress
Finished goods
Group
2023
7,251
2,677
8,376
Group
2022
8,795
3,069
5,729
18,304
17,593
Company name
Country of
incorporation
Registered % holding
office of ordinary
shares
(see below)
Direct or
indirect
holding
James Cropper Speciality Papers Limited
England
(i )
100
Direct
James Cropper (Guangzhou) Trading Co Limited China
(iii )
100
Indirect
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
Metal Coated Fibers Inc
Electro Fiber Technologies LLC
USA
USA
USA
USA
James Cropper EBT Limited
England
Melmore Limited
England
James Cropper Paper Limited
England
The Paper Mill Shop Company Limited
England
James Cropper Overseas Trading Limited
England
(i )
(i )
(i )
(i )
(ii )
(ii )
(ii )
(ii )
(i )
(i )
(i )
(i )
(i )
Nature of business
Manufacturer of
specialist paper and board
Sales and marketing
organisation
Paper converter
Manufacturer of
moulded fibre products
Manufacturer of
advanced materials
Manufacturer of
electrochemical materials
100
Direct
100
Direct
100
Direct
100
Indirect
100
Indirect
Holding company
100
Indirect
100
Indirect
100
Indirect
Sales and marketing
organisation
Manufacturer of metal
coated carbon fibres
Manufacturer of metal
coated fibres
100
Direct
Dormant company
100
Direct
Dormant company
100
Direct
Dormant company
100
Direct
Dormant company
100
Direct
Marketing organisation
Inventories are stated after a provision for impairment of £1,576k (2022: £1,308k).
The cost of inventories recognised as expenses and included in raw materials and consumables used, changes in inventories of finished
goods and work in progress, energy costs, employee benefit costs and other expenses for the year ended 1 April 2023 was £93,383k
(2022: £76,383k).
The Company does not hold any inventories.
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
Other receivables
Prepayments
Group
2023
21,646
(643 )
21,003
-
914
2,203
24,120
Group
2022
Company
2023
Company
2022
18,555
(777 )
17,778
-
-
-
-
52,197
945
2,406
910
884
21,129
53,991
-
-
-
52,468
929
1,352
54,749
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 £26,000k (2022: £27,519k) with a fixed term of one year with an interest charge
of 3.2% (2022: 3.6%) per annum. Intercompany funding accounts of £20,867k (2022: £22,675k) and intercompany current accounts of
£5,330k (2022: £2,274k) are settled within 30 days.
James Cropper Germany GmbH
Germany
(iv )
100
Indirect
Dormant company
15 Other Financial Assets
(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.
All figures in £’000
Interest Rate Cap
Non-current asset
Current asset
Group
2023
Group
2022
Company
2023
Company
2022
1,082
- 1,082
654
-
654
428
-
428
-
-
-
The loss arising in the Statement of Comprehensive Income on fair value hedging instruments was £143k (2022: £nil). The net gain arising in
the Statement of Other Comprehensive Income on fair value hedging instruments was £737k (2022: £nil).
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
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
Contingent consideration1
Due within one year
Group
2023
11,188
-
673
1,114
7,881
250
Group
2022
11,640
-
2,178
687
6,181
250
Company
2023
Company
2022
1,179
3,960
141
935
1,249
-
2,724
11,777
382
352
1,089
-
21,106
20,936
7,464
16,324
The fair values of trade and other payables approximate their carrying values presented.
All figures in £’000
Contingent consideration1
Due after one year
Group
2023
1,423
1,423
Group
2022
Company
2023
Company
2022
578
578
-
-
-
-
Deferred / contingent consideration
Group
Deferred consideration
Group
Contingent consideration
All figures in £’000
Note
2023
Balance as at 26 March 2022 / 27 March 2021
Payments made
Earn-out adjustment
Fair value adjustment
Balance at 1 April 2023 / 26 March 2022
Due after one year
Due within one year
4
3
-
-
-
-
-
-
-
2022
397
(400 )
-
3
2023
828
(250 )
986
109
- 1,673
- 1,423
-
250
2022
401
-
354
73
828
578
250
18 Borrowings
All figures in £’000
Current
Note
Group
2023
Group
2022
Restated
Company
2023
Company
2022
Restated
Bank loans and overdrafts due within one year or on demand:
Unsecured bank loans1
Lease liabilities
Non-current loans
Unsecured bank loans1
Lease liabilities
464
1,294
1,758
16,933
5,582
22,515
256
1,339
1,595
11,966
6,483
18,449
68
149
217
12,797
222
13,019
-
133
133
7,722
182
7,904
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
26 March
2022
Restated
Loans repayable within 1 year
256
Loans repayable after 1 year
11,966
12,222
Lease liabilities repayable
within 1 year
Lease liabilities repayable
after 1 year
Total borrowings
Cash and cash equivalents
Cash Non-cash
additions
flow
Finance
costs
Interest
Exchange
paid Reclassify movement
1 April
2023
(288 )
5,050
4,762
1,339
(1,561 )
-
-
-
-
816
-
816
268
(713 )
-
(713 )
393
(393 )
-
-
464
310
16,933
310
17,397
(116 )
1,364
-
1,294
6,483
-
281
-
-
(1,364 )
182
5,582
7,822
(1,561 )
20,044
7,750
12,294
3,201
(471 )
3,672
281
281
-
281
268
1,084
-
(116 )
(829 )
-
1,084
(829 )
-
-
-
-
182
492
400
6,876
24,273
7,679
92
16,594
1 Contingent consideration is the fair value of earn out considerations on the acquisition of PV3 Technologies Ltd (now known as TFP
Net Debt
Hydrogen Products Ltd), based on the estimated future performance of the subsidiary against earn out targets. The actual performance of
TFP Hydrogen Products for the period ended 1 April 2023 and 26 March 2022 exceeded expectations as at acquisition, resulting in an earn
out payment falling due for payment in the following financial year which is presented within trade and other payables. In addition, future
projections for the subsidiary have resulted in an increase in provision of further potential earn out payments.
The fair value is determined by discounting the expected payment to present value using a risk adjusted discount rate. Payment is dependent
on achieving predetermined targets based on future performance and profitability. The key assumptions in assessing the fair value are that
the business will perform in line with formally approved budgets for year-ending March 2024. A risk adjusted discount rate of 19% has been
applied. Reasonable sensitivities have been assessed and a change in discount rates, or under or over performance in terms of achieving the
key targets would have minimal impact on the current valuation.
17 Other Financial Liabilities
Group and Company
All figures in £0’000
Foreign exchange rate swaps for hedging
Current liabilities
Note
19
2023
2022
58
58
6
6
The liabilities are held at fair value. The net loss arising in the Statement of Other Comprehensive Income on fair value hedging
instruments was £52k (2022: profit of £10k).
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
100
101
Notes to the Financial Statements
Notes to the Financial Statements
19 Financial Instruments and Risk
The Group has exposure to the following risks from its use of financial instruments: Credit risk, Liquidity risk, Currency risk and 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
Non-Current
Other financial assets
Current
Trade receivables
Other receivables
Other financial assets - Derivatives
Cash and cash equivalents
Financial liabilities
Current
Trade payables
Other payables
Accruals
Contingent consideration
Other financial liabilities - Derivatives
Loans and borrowings
Non-current
Loans and borrowings
Contingent consideration
Fair value through
profit or loss
Note
2023
2022
Amortised cost
loans and receivables
2023 2022 - restated
15
14
14
15
16
16
16
16
17
18
18
16
654
654
-
-
428
-
428
-
-
-
250
58
-
308
-
1,423
1,423
-
-
-
-
-
-
-
-
-
-
250
6
-
256
-
578
578
-
-
21,003
914
-
7,679
29,596
11,188
1,114
7,881
-
-
1,758
21,941
22,515
-
22,515
-
-
17,778
945
-
7,750
26,473
11,640
687
6,181
-
-
1,595
20,103
18,449
-
18,449
The fair values of the financial assets and liabilities of the Company are as follows:
Company
All figures in £’000
Financial assets
Non-Current
Other financial assets
Current
Amounts owed by Group undertakings
Other receivables
Other financial assets - Derivatives
Cash and cash equivalents
Financial liabilities
Current
Trade payables
Amounts owed to Group undertakings
Other payables
Accruals
Other financial liabilities - Derivatives
Loans and borrowings
Non-current
Loans and borrowings
Fair value through
profit or loss
Note
2023
2022
Amortised cost
loans and receivables
2023 2022 - restated
15
14
14
15
16
16
16
16
17
18
18
654
654
-
-
428
-
428
-
-
-
-
58
-
58
-
-
-
-
-
-
-
-
-
-
-
-
6
-
6
-
-
-
52,197
910
-
3,506
56,613
1,179
3,960
935
1,249
-
217
7,540
-
-
52,468
929
-
4,011
57,408
2,724
11,777
352
1,089
-
133
16,075
13,019
7,904
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. Fair value estimates of derivatives are based on relevant market information and information about the financial instruments
which are subjective in nature. The fair value of these instruments is determined using widely accepted valuation techniques including
discounted cash flow analysis on the expected cash flows for each derivative. This analysis reflects the contractual terms of the derivatives,
including the period to maturity, and uses observable market-based inputs, including interest rate curves, spot and forward rates, as
well as option volatility. To comply with provisions of IFRS 13, the Company incorporates credit valuation adjustments to appropriately
reflect both its own non-performance risk and the respective counterparty’s non-performance risk in the fair value measurements.
In adjusting the fair value of its derivative contracts for the effect of non-performance risk, the Company has considered the impact of
netting and any applicable credit enhancements such as collateral postings, thresholds, mutual puts and guarantees.
All figures in £’000
Financial assets (Group and Company)
Derivatives
Financial liabilities (Group and Company)
Derivatives
2023
Level 2
2023
Total
2022
Level 2
2022
Total
1,082
1,082
58
58
-
6
-
6
The details below summarise the Company’s risk management positions to fluctuations in reasonably possible changes in the underlying
benchmark prices, with all other variables held.
All figures in £’000
-100bps
-50bps
Total Value
+0bps
+50bps
+100bps
Financial assets (Group and Company)
Derivatives
19.2 Credit risk
716
898
1,082
1,266
1,449
Credit risk is the risk of financial loss to the Group if a customer or counterparty fails to meet its contractual obligations. The Group is
exposed to credit risk from financial assets including cash and cash equivalents held at banks, and trade and other receivables. Credit risk
arising from the Group’s normal commercial activities are controlled by individual business units operating in accordance with Group
policies and procedures. The credit risk in respect of cash balances held by banks are managed by only engaging with major reputable
financial institutions. 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 uninsured 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. Ongoing credit risk is managed through regular review of ageing analysis, together with credit limits per customer.
Trade receivables consist of a large number of customers in various industries and geographical areas. The Group does not hold any collateral
relating to other financial assets at each annual reporting date.
Trade receivables as at 1 April 2023 / 26 March 2022 were:
Group
All figures in £’000
James Cropper Speciality Papers
James Cropper Converting
James Cropper 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.
2023
11,408
2,032
1,112
7,094
21,646
(643 )
21,003
2022
9,721
1,452
733
6,649
18,555
(777 )
17,778
All trade receivables have been reviewed under the expected credit loss impairment model and a provision of £643k (2022: £777k)
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. The Group has identified gross domestic product (GDP) and unemployment rates of the countries in which the customers are
domiciled to be the most relevant factors and accordingly adjust historical loss rates for expected changes in these factors.
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
However, given the short period exposed to credit risk, the impact of these macroeconomic factors has not been considered significant
within each annual reporting period. Trade receivables are written off (i.e. derecognised) when there is no reasonable expectation
of recovery. Specific provisions are made and if the case leads to court to claim the amounts due, this will be pursued, and then any
remaining balances outstanding at this point will be written off.
On the above basis the expected credit loss for trade receivables at 1 April 2023 and 26 March 2022 was determined as follows:
2023
All figures in £’000
Expected credit loss rate
Gross carrying amount
Lifetime expected credit loss
2022
All figures in £’000
Expected credit loss rate
Gross carrying amount
Lifetime expected credit loss
Trade Receivables days past due
More than
30 days
More than
60 days
6 %
1,990
123
24 %
212
50
More than
90 days
Total
48 %
398
193
3 %
21,646
643
Trade Receivables days past due
More than
30 days
More than
60 days
6 %
1,196
76
17 %
377
64
More than
90 days
Total
21 %
334
69
4 %
18,554
777
Current
1 %
19,046
277
Current
3 %
16,647
568
Movements in provision for impairment on trade receivables are as follows:
Group
All figures in £’000
At 26 March 2022 / 27 March 2021
Decreased during the period
Utilised during the period
At 1 April 2023 / 26 March 2022
Provision for impairment - Company disclosure:
Intra-group loan receivables are as follows:
All figures in £’000
James Cropper Speciality Papers Limited
James Cropper Converting Limited
James Cropper 3D Products Limited
Technical Fibre Products Limited
Provision for impairment
Net Intra-group loans
Movements in provision for impairment on intra-group loan receivables are as follows:
Company
All figures in £’000
At 26 March 2022 / 27 March 2021
Released during the period
At 1 April 2023 / 26 March 2022
2023
777
(134 )
-
643
2022
961
(184 )
-
777
2023
2022
12,000
12,000
3,000
4,000
7,000
26,000
-
3,000
4,000
8,519
27,519
-
26,000
27,519
2023
-
-
-
2022
260
(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 1 April 2023 / 26 March 2022 was as follows:
Group
All figures in £’000
In less than one year
In more than one year but not more than two years
In more than two years but not more than five years
11,418
In more than five years
5,200
2023
Lease
2022
Lease
Debt liabilities Derivatives Total Debt liabilities Derivatives Total
498
517
1,344
1,062
2,447
2,694
58 1,900
- 1,579
256
370
- 13,865
6,567
- 7,894
5,307
1,339
1,222
2,317
2,944
6 1,601
- 1,592
- 8,884
- 8,251
Company
All figures in £’000
In less than one year
In more than one year but not more than two years
In more than two years but not more than five years
In more than five years
17,633
7,547
58 25,238 12,500
7,822
6 20,328
2023
Lease
2022
Lease
Debt liabilities Derivatives Total Debt liabilities Derivatives Total
102
-
7,800
5,200
13,102
160
137
92
-
389
58
-
320
137
-
-
- 7,892
2,693
- 5,200
5,307
58 13,549
8,000
133
92
90
-
315
6
-
139
92
- 2,783
- 5,307
6 8,321
Trade payables
Trade payables at the reporting date was:
All figures in £’000
Trade payables
Total contractual cash flows
Borrowing facilities
Group
2023
11,188
11,188
Group
2022
11,640
11,640
Company
2023
Company
2022
1,179
1,179
2,074
2,074
The Group has the following undrawn committed borrowing facilities available at 1 April 2023 / 26 March 2022:
All figures in £’000
Expiring within one year
Expiring after one year
Group 2023
Floating rate
3,500
12,000
Group 2022
Floating rate
3,500
17,000
The Group’s expiry profile of the drawn down facilities is as follows:
All figures in £’000
March 2024
December 2026
March 2030
Group
2023
42
4,500
13,000
17,542
Group
2022
Company
2023
Company
2022
-
4,500
8,000
12,500
42
-
13,000
13,042
-
-
8,000
8,000
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
19.4 Currency risk
The Group publishes its consolidated financial statements in sterling and has subsidiaries that operate in the United States of America and
China. The group trades with certain debtors and creditors 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.
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 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
1 April 2023.
2023 - Group
All figures in £’000
Trade Receivables
Trade Payables
Net exposure
USD
4,342
2,243
2,099
Euro
Other
5,034
84
1,989
3,045
4
80
Local
Currency
11,543
6,952
4,591
At 26 March 2022 the Group's exposure to foreign currency risk was as follows:
2022 - Group
All figures in £’000
Trade Receivables
Trade Payables
Net exposure
USD
3,161
2,503
658
Euro
4,270
1,201
3,069
Local
Other
Currency
-
-
-
10,347
7,936
2,411
This represents the net exposure to foreign currencies, reported in pounds Sterling, and arising from all Group activities.
At 1 April 2023, the Company’s exposure to foreign currency risk was as follows:
2023 - Company
All figures in £’000
Trade Receivables
Trade Payables
Net exposure
USD
Euro
Other
-
16
(16 )
-
8
(8 )
-
-
-
At 26 March 2022, the Company's exposure to foreign currency risk was as follows:
Local
Currency
-
1,155
(1,155 )
Local
2022 - Company
All figures in £’000
Trade Receivables
Trade Payables
Net exposure
USD
Euro
Other
Currency
-
6
(6 )
-
13
(13 )
-
-
-
-
2,705
(2,705 )
Total
21,003
11,188
9,815
Total
17,778
11,640
6,138
Total
-
1,179
(1,179)
Total
-
2,724
(2,724 )
A one percent strengthening of the pound against the Euro and the US Dollar at 1 April 2023 / 26 March 2022 would have had the following
impact on profit.
All figures in £’000
USD
Euro
Group
Company
Profit
2023
(23 )
(34 )
Profit
2022
(21 )
(30 )
Profit
2023
-
-
Profit
2022
-
-
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, remain constant.
19.5 Interest rate risk
Interest rate risk derives from the Group’s exposure to changes in value of an asset or liability or future cash flow through changes in interest
rates. The Group finances its operations through a mixture of retained profit 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 instruments.
The net exposure to interest rates at the reporting date can be summarised as follows:
All figures in £’000
Interest bearing liabilities - floating
Borrowings
Interest bearing liabilities - fixed
Lease liabilities
Interest bearing liabilities
Group
2023
Group
2022
Company
2023
Company
2022
17,396
12,222
12,866
7,722
6,877
7,822
370
315
24,273
20,044
13,236
8,037
The effective interest rates as at 1 April 2023 / 27 March 2022 were as follows:
Bank overdraft
Borrowings
2023
%
3.5
4.3
2022
%
2.75
1.50
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 £43k for the Group and £nil for the Company in interest
expense being incurred. The impact of a decrease in rates would be an identical reduction in the annual charge.
Group
1 April 2023
26 March 2022
Statement of comprehensive income
£’000
Company
Statement of comprehensive income
£’000
43
125
1 April 2023
26 March 2022
-
83
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
19.6 Derivative contracts
Group and Company
Derivative assets
All figures in £’000
Derivatives designated as hedging instruments
Interest rate cap
Total derivatives designated as hedging instruments
Total derivative financial assets
Non-current portion
Current portion
Derivative liabilities
All figures in £’000
Derivatives designated as hedging instruments
Forward foreign exchange contracts
Total derivatives designated as hedging instruments
Total derivative financial liabilities
Current portion
2023
2022
1,082
1,082
1,082
654
428
-
-
-
-
-
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 1 April 2023 (2022: 26 March 2022) are recognised in the group
statement of comprehensive income and tracked separately in the period or periods during which the hedged forecast transactions affects the
group 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 1 April 2023 (2022: 26 March 2022).
No ineffective portion of the forward foreign exchange contract was recognised in the group statement of comprehensive income in
the period.
2023
2022
The effects of the cash flow forward foreign exchange contract hedging relationships are as follows as at 1 April 2023 / 26 March 2022:
58
58
58
58
6
6
6
6
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
2023
2022
58
52
(52 )
12,032
6
6
(6 )
7,659
Maturity date
18 March 2024 20 March 2023
The Group has elected to adopt the hedge accounting requirements of IFRS 9 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 the
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 cap
The Group has entered into a SONIA interest rate cap, with an effective date of 28 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 arrears. The Cap is set at
1.5% per annum 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 1 April 2023 / 26 March 2022:
All figures in £’000
2023
2022
Carrying amount of the derivatives
Change in fair value of the designated hedging instrument
Notional amount
Maturity date
1,083
1,083
15,000
30 March 2026
-
-
-
-
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
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
2023
905
97
2022
893
38
Other pension costs totalled £731k (2022: £732k) 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 2022 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
2023
2022
2023
2.95
3.40
1.70
4.85
3.75
2.15
3.30
3.75
1.80
2.75
3.90
2.25
2.95
3.35
1.70
4.90
3.50
2.15
2022
3.25
3.65
1.80
2.75
3.65
2.25
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 2022 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 2022 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 2022 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 2.9% for the staff scheme and 3.5% for
the works scheme.
Pension payments are not expected to peak until 2040, and expected to continue until 2080.
All figures in £’000
Defined benefit obligation (“DBO”)
Fair value of assets (“FVA”)
Deficit
2023
(89,305 )
73,165
(16,140 )
2022
Restated *
(121,651 )
109,909
2021
Restated
(136,140 )
117,704
2020
2019
(121,470 )
113,968
(132,646 )
109,998
(11,742 )
(18,436 )
(7,502 )
(22,648 )
Effect of limit on recoverable surplus
-
(1,388 )
-
(1,880 )
-
Net liability recognised in the SFP
(16,140 )
(13,130 )
(18,436 )
(9,382 )
(22,648 )
Staff Scheme
Works Scheme
Deficit
(2,144 )
(13,996 )
(16,140 )
1,623
(13,365 )
(1,383 )
(17,053 )
(11,742 )
(18,436 )
1,880
(9,382 )
(7,502 )
(7,664 )
(14,984 )
(22,648 )
Effect of limit on recoverable surplus
-
(1,388 )
-
(1,880 )
-
Net liability recognised in the SFP
(16,140 )
(13,130 )
(18,436 )
(9,382 )
(22,648 )
* Details of the restatement are included in note 28 to the financial statements.
Overall, the combined funding position on an IAS19 measure for the combined schemes has worsened over the year from a deficit of £13.1m
(after the allowance for the restriction of the surplus that appeared on the Staff Scheme as at 26 March 2022) to a deficit of £16.1m. The mean
term of the liabilities of the Staff scheme as at 1 April 2023 was 11 years (26 March 2022: 14 years) and 14 years for the Works scheme
(26 March 2022: 17 years). The key risks relating to the pension schemes can be found in the Pension Report on pages 18 to 20.
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
2023
2022
2023
58.9
3.5
2.9
34.7
71.1
2.6
1.3
25.0
58.6
1.0
2.5
37.9
2022
Restated
72.9
0.9
1.1
25.1
The pension plan assets do not include any investments in the shares of the Company (2022: 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
2023
Total included within employee benefit costs - current service costs, past service costs and administration costs 974
Interest income on plan assets
Interest cost on the defined benefit obligation
Interest cost on irrecoverable surplus
Total included within interest
Total
2022
1,203
(2,300 )
2,667
-
367
(2,954 )
3,261
38
345
1,319
1,570
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
Analysis of the movement in the Statement of Financial Position liability
Sensitivity analyses
All figures in £’000
At 26 March 2022 / 27 March 2021
Total expense as above
Contributions paid
Actuarial (losses) / gains recognised in Other Comprehensive Income
At 1 April 2023 / 26 March 2022
2023
2022
(13,130 )
(1,319 )
2,197
(3,888 )
(18,436 )
(1,570 )
2,099
4,777
(16,140 )
(13,130 )
The actual return on plan assets was £32,849k deficit (2022: £3,056k deficit). The Schedule of Contributions in force required the company
to make payments of £91k (2022: £119k) in contributions to the Staff Scheme and £1,193k (2022: £1,053k) in contributions to the Works Scheme
during the 2024 financial year. Subsequent to the year end, the Schedule of Contributions was revised to require contributions of £111k
to the Staff Scheme and £1,630k to the Works Scheme. This post year end revision does not result in any changes to the recognised assets
and liabilities of the Schemes at year end. 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 per annum 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 £16,036k
(2022: £12,148k).
All figures in £’000
Works Scheme
2023
FVA
2023
DBO
Staff Scheme
2023
FVA
2023
DBO
Works Scheme
2022
FVA
2022
DBO
Staff Scheme
2022
FVA
2022
DBO
At 26 March 2022 / 27 March 2021 restated
59,763
(73,128 )
50,146
(48,523 )
62,608
(79,661 )
55,096
(56,479 )
Interest income on plan assets
1,600
-
1,354
-
1,267
-
1,033
-
Current service costs
Benefits paid
Contributions by plan participants
Employer contributions
Interest cost on the DBO
Return on plan assets
-
(772 )
-
(202 )
(182 )
(712 )
(41 )
(268 )
(4,097 )
4,097
(2,324 )
2,324
(2,098 )
2,098
(4,895 )
4,895
257
(257 )
1,739
-
72
458
(72 )
-
272
(272 )
1,477
-
106
622
(106 )
-
-
(1,955 )
-
(1,306 )
-
(1,610 )
-
(1,057 )
(20,654 )
-
(15,149 )
-
(3,581 )
-
(1,775 )
-
Actuarial (loss)/gain on DBO
-
19,411
-
11,078
-
7,029
-
4,492
At 1 April 2023 / 26 March 2022
38,608
(52,604 )
34,557
(36,701 )
59,763
(73,128 )
50,146
(48,523 )
Experience adjustments
All figures in £’000
Arising on plan assets
Percentage of scheme assets
Arising on plan liabilities
Percentage of scheme liabilities
2023
2022
Restated
2021
Restated
2020
2019
(35,803 )
(48.93 %)
30,489
34.14 %
(5,356 )
(4.87 %)
5,669
4.82 %
2,693
2,503
2.36 %
2.28 %
11,521
(14,419 )
12,244
(5,761 )
9.47 %
(10.59 %)
10.08 %
(4.34 %)
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
4.85%pa
3.40%pa (RPI)
2.95%pa (CPI)
0.25% decrease
1,058
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
4.9%pa
3.35%pa (RPI)
2.95%pa (CPI)
0.25% decrease
1,832
0.25% increase
Mortality
142% of SAPS “S3” series table
Increase in life expectancy of 1 year
+2.9%
+0.6%
+4.6%
+3.5%
+0.7%
+4.1%
226
1,696
353
2,167
21 Deferred taxation
The movement on the deferred tax account is shown below:
All figures in £’000
At 26 March 2022 / 27 March 2021
Credit/(charge) to other comprehensive income
(Charge)/credit to equity
Adjustments in respect of prior years
(Charge) to statement of comprehensive income
At 1 April 2023 / 26 March 2022
Group
2023
Group
2022
Company
2023
Company
2022
141
972
(10)
(76 )
(232 )
795
1,183
(179 )
8
38
(909 )
141
3,336
972
(10 )
1
(293 )
4,006
3,604
(179 )
8
(8 )
(89 )
3,336
Deferred tax assets
All figures in £’000
At 27 March 2021
Adjustment in respect of prior years
(Charge)/credit to statement
of comprehensive income
Credit to equity
Charge to other comprehensive income
At 26 March 2022
Adjustment in respect of prior years
(Charge)/credit to statement
of comprehensive income
Credit to equity
Charge to other comprehensive income
At 1 April 2023
Group
Company
Share
Pension options Other
Total
Share
Pension options Other
Total
3,503
13
(54 )
-
(179 )
3,283
-
(220 )
-
972
4,035
73
43
(10 )
8
-
114
35
(85 )
(10 )
-
54
153
3,729
3,503
(54 )
38
-
-
137
(35 )
7
-
-
2
(26 )
13
(54 )
8
-
(179 )
(179 )
3,534
3,283
-
-
(298 )
(220 )
(10 )
972
-
972
109
4,198
4,035
73
43
(10 )
8
-
114
35
(85 )
(10 )
-
54
130
3,706
(67 )
(1 )
-
-
62
(33 )
-
-
-
(11 )
(65 )
8
(179 )
3,459
2
(305 )
(10 )
972
29
4,118
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
112
113
Notes to the Financial Statements
Notes to the Financial Statements
Deferred tax liabilities
All figures in £’000
Group
Accelerated capital
allowances
Company
Accelerated capital
allowances
Total
At 27 March 2021 - as previously reported
Restatement - note 28
At 27 March 2021 - restated
Adjustment in respect of prior years
Charge to statement of comprehensive income
At 26 March 2022
Adjustment in respect of prior years
Charge to statement of comprehensive income
At 1 April 2023
(2,246 )
(300 )
(2,546 )
37
(884 )
(3,393 )
(76 )
66
(3,403 )
(2,246 )
(300 )
(2,546 )
37
(884 )
(3,393 )
(76 )
66
(3,403 )
(102 )
-
(102 )
-
(21 )
(123 )
-
11
(112 )
Total
(102 )
-
(102 )
-
(21 )
(123 )
-
11
(112 )
Deferred tax assets have been recognised in respect of temporary differences giving rise to deferred tax assets where it is probable that
these assets will be recovered, given forecast profits. The group has not recognised a deferred tax asset on the tax losses incurred by its
US subsidiaries of £2,944k (2022: £2,866k).
23 Employees and Directors
Employee benefit costs during the period
All figures in £’000
Wages and salaries
Social Security costs
Pension costs (note 20)
Group
2023
29,340
2,945
2,174
34,459
Group
2022
25,934
2,391
2,210
30,535
Company
2023
Company
2022
2,899
433
615
3,947
2,401
315
711
3,427
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
24 Capital commitments
All figures in £’000
Full Time Equivalent
Headcount
2023
2022
2023
2022
390
41
156
58
645
375
33
135
44
587
398
41
159
70
668
384
34
143
67
628
Group
2023
1,196
Group
2022
2,308
Company
2023
Company
2022
34
14
22 Share capital
Group and Company
Issued and fully paid
At 1 April 2023 and 26 March 2022
Potential issue of ordinary shares
Number of ordinary shares
9,554,803
£’000
2,389
Contracts placed for future capital expenditure
not provided in the financial statements
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 68,173 ordinary shares of 25p by September 2025 (2022: 71,748 ordinary shares of 25p by
August 2024). There were no share options exercised in the period (2022: nil). Further information on directors share options can be
seen in the Remuneration Committee Report.
Long Term Incentive Plan
25 Contingencies and events post the reporting period
There were no contingent liabilities at the period end for the Group.
The Group’s trading update communicated to the Markets on 19 April 2023, outlined a strategic repositioning to accelerate revenue and
profit growth across the Group. The streamlining of the Paper division is one of the three pillars central to the repositioning. As part of
this process, restructuring costs will likely be incurred in financial year 2024. The quantum of restructuring costs is, however, unknown
at the time of this report.
Options at Options granted Options exercised
in the period
in the period
26 March 2022
Options not Options lapsed
in the period
expected to vest
Options at
1 April 2023
Share options
71,748
62,214
nil
nil
(65,789 )
68,173
26 Exceptional items
The amount of gains made by Directors on share options exercised in the year totalled £nil (2022: £nil).
The Statement of Comprehensive Income includes an LTIP credit of £69,039 for the year in relation to Directors (2022: £73,689 credit).
Cash-Settled Options
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 Executive Directors as follows:
All figures in £’000
Earn-out adjustment on contingent
consideration on business acquisition
Exceptional items in Other expenses
Options at Options granted Options exercised
in the period
in the period
26 March 2022
Options not Options lapsed
in the period
expected to vest
Options at
1 April 2023
Fair value adjustment on contingent consideration
Exceptional items in Interest payable and similar charges
Group
2023
Group
2022
Company
2023
Company
2022
986
986
109
109
354
354
-
-
-
-
-
-
-
-
-
-
Cash-settled options
19,171
7,825
nil
nil
(10,531 )
16,465
Due to future projections exceeding original projections on acquisition of TFP Hydrogen Products Ltd, additional provisions for earn
out were required.
Adjustments to the contingent consideration on business acquisition are treated as exceptional items as they distort core operating
profitability of the Group and make year-on-year comparison of performance challenging.
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
114
115
Notes to the Financial Statements
Notes to the Financial Statements
27 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 (2022: £22,000) 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 (2022: £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 £1,305 (2022: £nil) 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 £23,935
(2022: £23,528) 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 company.
The Company also has the following transactions and balances with related entities:
2023
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
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
Management
charges
Receivable/
(Payable)
Loans & net
intercompany
funding
4,715
404
686
2,784
-
8,589
4,126
106
147
812
139
5,330
8,100
3,363
19,039
12,466
(60 )
42,908
Management
charges
Receivable/
(Payable)
Loans & 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
Compensation for Key Management and Directors’ Remuneration
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 remuneration of the directors is disclosed in the Report of the Remuneration
Committee (pages 61 to 65). There are 6 Directors who accrued retirement benefits under money purchase and defined benefit schemes in
the year (2022: 7 Directors).
All figures in £’000
Salaries and fees
Short term employee benefits
Short term bonuses
Pension costs
Termination benefits
Total
2023
1,095
106
51
50
201
2022
1,162
155
101
60
-
1,503
1,478
28 Prior period restatement
The comparatives detailed below have been restated. No adjustment impacts prior year profit. Net assets have reduced by £300k.
Statement of Financial Position - Group
All figures in £’000
Trade and other receivables - pre-payments1
Long-term borrowings - unsecured bank loans1
Deferred tax liability2
Retained earnings2
Statement of Financial Position - Company
All figures in £’000
Trade and other receivables - pre-payments1
Long-term borrowings - unsecured bank loans1
Statement of Cash flows - Group
All figures in £’000
Increase in trade and other receivables1
Increase in trade and other payables3
Net cash generated from operating activities
Purchase of property, plant and equipment4
Deferred consideration on business acquisition paid3
Net cash used in investing activities
Proceeds from issue of new loans4
Fees paid on raising finance1
Net cash used in financing activities
As previously
reported 2022
Restatement
2022
Restated
2022
22,184
18,727
3,093
31,691
(278 )
(278 )
300
(300 )
21,906
18,449
3,393
31,391
As previously
reported 2022
Restatement
2022
Restated
2022
55,027
8,182
(278 )
(278 )
54,749
7,904
As previously
reported 2022
Restatement
2022
Restated
2022
(6,220 )
5,545
3,351
(6,705 )
-
(6,761 )
9,754
-
4,277
278
400
678
563
(400 )
163
(563 )
(278 )
(841 )
(5,942 )
5,945
4,029
(6,142 )
(400 )
(6,598 )
9,191
(278 )
3,436
1 Fees paid on raising finance previously allocated to prepayments within trade and other receivables have been reallocated against
borrowings in the statement of financial position and the related cash flow has been separately disclosed under financing activities.
There is no impact on net assets or cash and cash equivalents. The opening balance in the reconciliation of net cash flow to net debt
in note 18 Borrowings has been restated accordingly.
2 The opening balance of the deferred tax liability for FY2022, has been increased by £300k, following the finalisation of previous years
computations due to errors identified at the tax provisioning stage. This results in a corresponding reduction in retained earnings.
Earnings per share for FY2021 have been restated accordingly from 16.4p to 13.2p.
3 The deferred consideration on business acquisition paid previously disclosed within increase in trade and other payables has been
separately disclosed under investing activities to more appropriately reflect the nature of the cash flow. There is no impact on net assets
or cash and cash equivalents.
4 The cash flow relating to additions to property, plant and equipment previously included additions to right-of-use assets which are
financed via lease and are therefore non-cash. The correction has resulted in a decrease in purchase of property, plant and equipment
and a decrease in proceeds from issue of new loans.
The amount of gains made by Directors on share options exercised in the year totalled £nil (2022: £nil).
The accompanying notes form part of the financial statements
The accompanying notes form part of the financial statements
116
117
Notes to the Financial Statements
Property, plant and equipment
As disclosed in note 10 Property, plant and equipment, the opening cost and accumulated depreciation balances for plant and
machinery in the comparative were reduced by £2,298k for the group and £266k for the company to correct an overstatement identified.
The correction has a nil effect on net book value.
Group
All figures in £’000
Plant and machinery - cost at 27 March 2021
Plant and machinery - accumulated depreciation at 27 March 2021
Plant and machinery - net book value at 27 March 2021
Company
All figures in £’000
Plant and machinery - cost at 27 March 2021
Plant and machinery - accumulated depreciation at 27 March 2021
Plant and machinery - net book value at 27 March 2021
As previously
reported 2022
Restatement
2022
Restated
2022
90,112
73,395
16,717
(2,298 )
(2,298 )
-
87,814
71,097
16,717
As previously
reported 2022
Restatement
2022
Restated
2022
2,809
2,199
610
(266 )
(266 )
-
2,543
1,933
610
Retirement benefit liabilities
The gross amount of the Works scheme fair value of assets has been increased by £521k to account for the annuities held but not
previously recognised. The defined benefit obligation has been increased by the corresponding amount resulting in a nil impact on the
retirement benefit liabilities disclosed.
Group & Company
All figures in £’000
Fair value assets
Defined benefit obligation
Retirement benefit liabilities
Effect of limit on recoverable surplus
Retirement benefit liabilities
As previously
reported 2022
Restatement
2022
Restated
2022
109,388
121,130
11,742
(1,388 )
(13,130 )
521
521
-
-
-
109,909
121,651
11,742
(1,388 )
(13,130 )
2022 – 2023 Shareholder Information
Reporting
Interim Results announced and sent to
Ordinary Shareholders
Final results announced
Notification of AGM issued by
Annual General Meeting
Dividends on Ordinary Shares
15 November 2022
24 August 2023
4 September 2023
Tuesday 26 September 2023 at 11.00am.
Held at Bryce Institute, Burneside Mills, Kendal LA9 6QZ.
Interim dividend paid on 13 January 2023 to Ordinary Shareholders registered on 9 December 2022.
Final dividend proposed to be paid on or before 20 October 2023 to Ordinary Shareholders registered on 8 September 2023.
Advisers
Independent Auditor
Grant Thornton UK 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
The accompanying notes form part of the financial statements
118
119
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120