robinson17-cover-4mm-spine-artwork.qxd:robinson09-cover.qxd 29/03/2018 11:35 Page 1 Financial Statements 2017 Robinson plc Field House, Wheatbridge, Chesterfield, S40 2AB United Kingdom www.robinsonpackaging.com Robinson plc Registered Number: 39811 Design: fizogdesign.co.uk www.robinsonpackaging.com robinson17-cover-4mm-spine-artwork.qxd:robinson09-cover.qxd 29/03/2018 11:37 Page 2 Robinson plc is a custom manufacturer of plastic and paperboard packaging, predominately serving the food & drink, toiletries & cosmetics and household sectors. Our packaging solutions have been used by our customers to differentiate their brands in the UK and internationally for over 178 years. In both plastic and paperboard formats, Robinson has established a distinguished reputation for innovation and technical excellence and operates with a customer service ethos reflective of the family business from which the Group originated. Our customers include Avon, McBride, Bakkavor, British Pepper & Spice, Fiddes Payne, Hain Daniels, Kraft, Nestle, Proctor & Gamble, Quaker Oats, Mars, Dr Oetker, Reckitt Benckiser, SC Johnson, Two Sisters and Unilever. Robinson aims to ensure our products reliably meet our customers’ requirements whilst minimising their impact on the environment. All our manufacturing facilities are BRC (British Retail Consortium) accredited to food packaging standards and, in the UK, we have long held the ISO 9001 Quality Standard. Directors’ report Highlights Five year record Our market Our added value Innovative design solutions Chairman’s report Strategic report Directors’ report Financial statements 2016 Group income statement Statement of financial position Statement of changes in equity Statement of cash flows Notes to the financial statements Independent auditor’s report 03 03 04 05 06 07 08 11 16 17 18 19 20 40 Directors and advisors Corporate governance and responsibility Report on corporate governance Report on social responsibility Annual general meeting Form of proxy Annual general meeting attendance form Notice of annual general meeting 44 47 49 50 51 Robinson plc Registered Office: Field House, Wheatbridge, Chesterfield, S40 2AB Incorporated in England, registered no. 39811 www.robinsonpackaging.com Financial: www.robinsonpackaging.com/investors Directors Richard John Clothier Non-executive Chairman Adam Jonathan Formela Chief Executive Charles William Guy Robinson Finance Director Charles Compton Anthony Glossop Non-executive Director Alan McLean Raleigh Non-executive Director Nominated Adviser/Broker FinnCap 60 New Broad Street, London EC2M 1JJ Registrar Neville Registrars Ltd 18 Laurel Lane, Halesowen, B63 3DA Solicitor DLA Piper UK LLP 1 St Paul’s Place, Sheffield, S1 2JX Banker HSBC 1 Bond Court, Leeds, LS1 2JZ Auditor Mazars LLP 45 Church Street, Birmingham, B3 2RT Notice of Annual General Meeting Notice is hereby given that the Annual General Meeting of Robinson plc will be held at Chesterfield Football Club, 1866 Sheffield Road, Whittington Moor, Chesterfield, S41 8NZ on Thursday 10 May 2018 at 11:30 am for the following purposes: Resolutions To consider and, if thought fit, pass the following resolutions which will be proposed as ordinary resolutions: 1 to receive and adopt the report of the directors and the audited financial statements for the year ended 31 December 2017 2 to declare a final dividend of 3p per ordinary share 3 to re-elect Guy Robinson as a director of the Company 4 to re-elect Richard Clothier as a director of the Company 5 to re-appoint Mazars LLP as auditors of the Company and to authorise the directors to determine their remuneration To transact any other ordinary business of an annual general meeting. By order of the Board Guy Robinson Director 17 April 2018 A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and, on a poll, vote in his or her stead. A proxy need not be a member of the Company. To be valid, Forms of Proxy must be deposited at the Registered Office of the Company not less than 48 hours before the time of the meeting. Only those members in the register of members of the Company as at 11.30 am on 8 May 2018 or, if the meeting is adjourned, in the register of members 48 hours before the time of any adjourned meeting shall be entitled to attend or vote at the meeting in respect of the number of shares registered in their name at that time. Changes to entries in the register of members after 11.30 am on 8 May 2018 or, if the meeting is adjourned, after 48 hours before the time of any adjourned meeting shall be disregarded in determining the rights of any person to attend or vote at the meeting. Directions to the AGM By Road Travelling north or south on M1, exit at junction 29 and take the A617 towards Chesterfield. At the end of the dual carriageway at the edge of the town centre, turn right onto the A61 towards Sheffield. At the first roundabout turn left into Lockoford Road then right onto the B6057. The stadium is located on the right. By Train Chesterfield is serviced by the intercity network from main centres in the UK including a regular fast service from London. A taxi rank is located outside the station. SHEFFIELD A 6 1 D A O R D L E I F F E H S 7 5 0 6 B LOCKOFORD RD B 6 0 5 7 A 6 1 CHESTERFIELD FOOTBALL CLUB A619 ROTHER WAY TOWN CENTRE CHESTERFIELD A619 A632 A617 1 6 A DERBY M1 J29 2 Robinson plc Financial Statements for the year ended 31 December 2017 Robinson plc Financial Statements for the year ended 31 December 2017 51 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:30 Page 3 Highlights > Revenue increased by 9% to £29.8m > The Board recommends a final dividend for the year of 3.0p per share (2016: 3.0p) - the total dividend per share declared in respect of 2017 is 5.5p (2016: 5.5p) > Triennial actuarial valuation of our pension fund has concluded it remains in surplus. (2016: £27.5m) > Gross margin reduced from 23% to 19% > Operating costs increased by £0.3m mainly because of investments in people > Operating profit before exceptional items and amortisation of intangible assets reduced to £1.3m (2016: £2.1m) Five year record Year ended 31 December 2013 £’000 2014 £’000 2015 £’000 2016 £’000 2017 £’000 Income statement (continuing operations) Revenue Gross profit % of revenues Operating profit before exceptional items and amortisation of intangible asset Exceptional items Amortisation of intangible asset Operating profit Interest Finance income in respect of Pension Fund Profit before taxation Taxation Dividends Retained profit/(loss) Net assets excluding pension asset after deduction of related deferred tax 23,329 5,181 22% 28,071 6,402 23% 2,322 1,054 - 3,376 10 307 3,693 (599) (662) 2,432 2,912 (364) (392) 2,156 (79) 342 2,419 (418) (755) 1,246 29,138 6,995 24% 3,190 (1,694) (783) 713 (92) 153 774 (679) (837) (742) 27,459 6,258 23% 2,138 190 (783) 1,545 (116) 189 1,618 (390) (877) 351 29,813 5,778 19% 1,321 65 (783) 603 (103) 130 630 (317) (901) (588) 21,902 22,520 21,471 22,612 23,093 Depreciation EBITDA (earnings before interest, tax, depreciation and amortisation) Operating profit: revenue Basic earnings per share 969 1,176 1,423 602 4,345 14.8% 19.2p 3,332 7.7% 12.4p 2,919 2.4% 0.6p 3,713 5.6% 7.5p 733 2,119 2.0% 1.9p Robinson plc Financial Statements for the year ended 31 December 2017 3 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:30 Page 4 Our market Robinson plc is an innovative packaging solutions provider specialising in injection, blow and stretch-blow moulded plastic and rigid paperboard. Our focus is to optimise the primary role of packaging by conveying the brand values to the consumer at point of purchase. Our innovative solutions have been used by our customers to differentiate their brands in the UK and internationally for over 178 years and have added value in many market sectors particularly food & drink, toiletries & cosmetics and household. Our customers include leading multinational brand owners who seek creative “on shelf” differentiation to make their products stand out from the crowd – including Avon, McBride, Bakkavor, British Pepper & Spice, Fiddes Payne, Hain Daniels, Kraft, Nestle, Proctor & Gamble, Quaker Oats, Mars, Dr Oetker, Reckitt Benckiser, SC Johnson, Two Sisters and Unilever. Robinson aims to produce our products in a responsible manner ensuring they meet our customers’ requirements whilst minimising impact on the environment. Our focus is on primary packaging which is designed to facilitate product life extension, portion optimisation and consumer ease of use. British Retail Consortium (BRC) accreditation All our manufacturing facilities are BRC accredited to food packaging standards and, in the UK, we have long held the ISO 9001 Quality Standard. This includes our rigid paper box facility based in Chesterfield UK which is now one of the few UK based rigid box manufacturers with this accreditation. 4 Robinson plc Financial Statements for the year ended 31 December 2017 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:30 Page 5 Our added value Leading international brand owners require strategic supplier partners capable of serving all of their core consumer markets locally. This means that it is a strategic imperative to be logistically fully integrated with our customers’ operations to serve both geographically mature and emerging regions simultaneously. Supplying UK, European and worldwide markets Robinson is an established, respected, strategic/preferred supplier to our brand owner customers across Europe. Specialising in developing innovative packaging solutions from our design centres of excellence serving each focus market sector, yet manufacturing and supplying locally throughout the region. 1: Kirkby facility, Nottinghamshire UK Primarily focussed on innovative solutions for the food & drink markets manufacturing custom injection moulded packaging solutions. The majority of production from this unit serves the domestic UK food brands. 2: Stanton Hill facility, Nottinghamshire UK Manufactures high quality injection moulded specialist devices such as aerosol actuators. These products are produced mainly for international toiletries & cosmetics brands and are destined for both UK and international markets including Latin America and Asia. 3: Lodz facility, Poland Manufactures high quality injection moulded solutions for many global branded customers serving the emerging Central European markets. 4: Chesterfield facility, Derbyshire UK The dedicated design and production centre for Robinson Paperbox Packaging – our rigid paper box business, serving domestic confectionary, food, electronics and cosmetic gifting markets. 5: Warsaw facility, Poland Manufactures blow and injection moulded products primarily for the toiletries & cosmetics and household sectors in the region. Robinson plc Financial Statements for the year ended 31 December 2017 5 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:30 Page 6 Innovative design solutions At Robinson we believe that packaging innovation starts and ends with the consumer. We get directly involved with the consumer through our own market research and usage & attitude surveys before we talk to our brand owner customers. We add value to the new product development process (NPD) from the start of the brief and aim to turn NPD into a process driven “science”. This means our design solutions are always relevant from a cost and manufacturability perspective as well as delivering real consumer benefits. The benefits are not limited to the consumer though; often our ideas radically improve logistics costs or production (filling) line efficiencies. We are committed to investing in “in-house” capabilities to deliver innovative design. Our qualified and experienced design team have the most up to date tools and technology including computer aided design software & hardware and 3D printing capability for rapid model making. These investments allow Robinson to reduce lead times in the NPD process resulting in the optimum speed to market for the customers we work with. www.robinsonpackaging.com/innovation AT A GLANCE Consumer-focused market research and usage surveys We are committed to investing in “in-house” capabilities State-of-the-art design software & hardware including 3D printing Reduced lead times in the new product development process Optimum speed to market for our customers 6 Robinson plc Financial Statements for the year ended 31 December 2017 robinson17-pages-artwork.qxd:robinson09-pages.qxd 29/03/2018 11:31 Page 7 Chairman’s report The Board’s medium term plan to strengthen the capabilities of the business by recruitment of people and investing in manufacturing capability coincided in 2016 with the effects of the earlier loss of two major pieces of business. The resulting drop in revenues and increase in expenses has made 2017 a particularly challenging transitional year, however, I am pleased to report that new business has been secured that has offset the previously lost trade and is the basis for growth that has started to come through. Revenues The 9% increase in revenues to £29.8m is mainly attributable to exchange rate movements and increased resin prices which are passed on to our customers. Nevertheless, there has been some increase in volumes as the new business came into production and this is expected to become more evident in 2018. Profits The gross margin reduced from 23% to 19%, partly because of the lag effect of increasing resin prices passed on to our customers but also because of higher input costs, partly driven by the weakness of sterling and adverse product mix. Operating expenses increased by 8% (£0.3m) reflecting the investment in the new people we have recruited to deliver business growth. The result of these two effects is a reduction in operating profit before exceptional items and amortisation of intangible assets from £2.1m to £1.3m. Cash, finances, dividend and pension There was a net decrease in cash and cash equivalents of £2.0m in the year as we invested £3.2m (2016: £1.8m) in new plant and equipment to support new business and maintained the dividend at £0.9m (2016: £0.9m). Borrowings ended the year at £6.7m (2016: £5.8m), safely within our £10m facility and shareholders’ funds increased from £22.6m to £23.1m. The Board proposes a final dividend of 3.0p per share to be paid on 1 June 2018 (2017: 3.0p) to shareholders on the register at the close of business on 18 May 2018. The ordinary shares become ex-dividend on 17 May 2018. This brings the total dividend declared in respect of 2017 to 5.5p per share (2016: 5.5p). The triennial actuarial valuation of our pension fund as at 5 April 2017 showed a surplus of 2%, whilst the IAS19 valuation at the year-end reported a surplus of £8.5m (2016: £5.2m). Property Finding suitable buyers for the Boythorpe Works residential site and Walton Works mixed use site has been challenging in the current market. Large retail developments are now in low demand and residential development opportunities in the locality are in good supply. Outlook New business now in the pipeline will require more investment in plant and this will use more of our borrowing capacity. Higher earnings to justify this will be essential and we are actively working to achieve the efficiencies that are needed to rebuild margins to previous levels. This is receiving close attention and will take time but we do expect higher sales in 2018. Richard Clothier Chairman 22 March 2018 Robinson plc Financial Statements for the year ended 31 December 2017 7 robinson17-pages-artwork.qxd:robinson09-pages.qxd 29/03/2018 11:31 Page 8 Strategic report Review of business The Chairman’s report on page 7 is an integral part of the strategic report. The strategy of the business is to provide innovative custom packaging solutions which convey the brand values to consumer market sectors including food & drink, toiletries & cosmetics and household. Key financial indicators, including the management of profitability and working capital, monitored on an ongoing basis by management, are set out below: Indicator 2017 2016 2015 Measure Revenue (£’000) 29,813 27,459 28,071 Profitability ratios Gross margin Trading margin Working capital levels 19% 4% 28% 23% 8% 29% 23% Gross profit as a percentage of revenue 9% Operating profit before exceptional items and amortisation as a percentage of revenue 29% Inventory + trade receivables - trade payables as a percentage of revenue Group revenue increased by 9% to £29.8m due mainly to higher resin costs passed on and a favourable exchange rate. The gross margin fell, partly because of rising resin costs and unrecovered higher costs generally. The Group is committed to making sustainable improvements to the design, manufacture and distribution of products. The following indicators are used by the Group to measure its progress in achieving this objective: Indicator 2017 units per £’000 revenue 2016 units per £’000 revenue 2015 units per £’000 revenue Electricity consumed (‘000 kwh) Waste to recycling (tonnes) Waste to landfill (tonnes) 20,343 439 96 0.682 0.0154 0.003 19,431 394 156 0.708 0.014 0.006 19,345 326 140 0.705 0.012 0.005 There has been a small decrease in electricity consumption due to increased resin prices pushing up revenues. The Group’s primary commitment is to provide a safe and healthy environment for its employees. The number of accidents was as follows: 2017 2016 2015 Lost time accidents Reportable accidents 3 3 1 - 1 1 Whilst there has been a small increase in the number of accidents, these were relatively minor and don’t reflect a lack of determination towards safety at work. 8 Robinson plc Financial Statements for the year ended 31 December 2017 robinson17-pages-artwork.qxd:robinson09-pages.qxd 29/03/2018 11:31 Page 9 Strategic report The group employee gender diversity Male Female Directors Employees in other senior executive positions Total senior managers and directors of the group Other employees of the group Total employees of the group 5 10 15 200 215 - 1 1 97 98 Growth The Group targets consistent organic growth from existing businesses which will be achieved through market expansion and gaining new business through better service, product design and innovation. Property The Group has surplus properties and other properties not used in the manufacture of packaging products with a total value at the end of 2017 of £6.6m (2016: £6.6m). These properties arise from the transfer or sale of previous manufacturing businesses. Some of these properties are let out to tenants on contracts that vary in length between 1 month and 3 years. The annual gross rental income earned during the year was £0.4m (2016: £0.4m) representing a 5% yield. The intention of the Group is, over time, to realise the maximum value from surplus properties via disposal and reinvest receipts in developing its packaging business. Investments in AIM trading companies can attract 100% relief from Inheritance Tax (Business Property Relief). Tax counsel have previously advised that the Company qualifies for this relief since the properties held are residue from previous trading activities and there is an active plan to dispose of them. Pension Fund The Group had a surplus in its defined benefit scheme fund at the last actuarial valuation (5 April 2017). This scheme was closed to new entrants in 1997 and the intention is to buy out the liabilities when market conditions allow. Risk and uncertainty The directors have set in place a thorough risk management process that identifies the key risks faced by the Group and ensures that processes are adopted to monitor and mitigate such risks. The principal risks affecting the business and the Group’s responses to these risks are: > Customer relationships. A significant proportion of the Group’s turnover is derived from its key customers. The loss of any of these key customers, or a significant worsening in commercial terms, could adversely affect the Group’s results. This risk is mitigated through regular communication and cooperation. The Group seeks to reduce the risks presented by its consolidated customer base by ensuring high levels of service, maintaining strong commercial relationships and by working closely with customers on product development programmes to provide the customer with unique products and consumers with greater choice and convenience. The Group also monitors customer credit risk to manage exposure in the current challenging environment. > Fluctuations in input prices. Input prices such as plastic resin prices and electricity costs can fluctuate significantly. The Group seeks to structure contracts with customers to recover its costs and monitors the effect of such fluctuations closely. > Foreign currency risk. Foreign currency risk management occurs at a transactional level on revenues and purchases in foreign currencies and at a translational level in relation to the translation of overseas operations. Any significant fluctuations in exchange rates, particularly Polish Zloty and the Euro, could impact the Group’s profitability due to its presence in Poland. At present, the Group does not use any financial instruments to hedge against foreign currency movements; however, the potential impact of currency movements continues to be closely monitored. By order of the Board Guy Robinson Director 22 March 2018 Robinson plc Financial Statements for the year ended 31 December 2017 9 robinson17-pages-artwork.qxd:robinson09-pages.qxd 29/03/2018 11:31 Page 10 10 Robinson plc Financial Statements for the year ended 31 December 2017 robinson17-pages-artwork.qxd:robinson09-pages.qxd 29/03/2018 11:31 Page 11 Directors’ report The directors present their report and the audited financial statements of the Group for the year ended 31 December 2017. The financial statements of the Group and the Company have been prepared under International Financial Reporting Standards as adopted by the European Union. Dividends The directors recommend a final dividend of 3p per share to be paid on 1 June 2018 to shareholders on the register on 18 May 2018. Directors and directors’ interests The directors during the year, together with their interests in 0.5p ordinary shares in Robinson plc, were as follows: Guy Robinson Adam Formela Anthony Glossop Richard Clothier Alan Raleigh 31 December 2017 31 December 2016 1,159,635 309,944 196,922 54,548 Nil 889,500 200,803 196,922 37,822 Nil No director had any interest in the shares of any other Group company. The Group maintains insurance cover to protect directors in respect of their duties as directors of the Group. During the year, none of the directors had any material interest in any contract of significance in relation to the Group's business. In accordance with the Company's Articles of Association, Richard Clothier and Guy Robinson retire by rotation and offer themselves for re-election. Further details concerning directors are provided in the Report on Corporate Governance. Remuneration Policy The Group aims to attract, reward, motivate and retain senior executives with the objective of enhancing shareholder value. The current remuneration packages are intended to be competitive and incentivise senior executives. They comprise a mix of performance related and non-performance related remuneration. Directors’ Service Contracts The Executive Directors have service contracts with the Company. The Non-Executive Directors do not have service contracts with the Company. The remuneration of Non-Executive Directors is determined after consideration of appropriate external comparisons and the responsibilities and time involvement of individual Directors. No Director is involved in deciding his own remuneration. Remuneration Package The Executive Directors’ remuneration packages, which are reviewed annually by the Remuneration Committee, consist of annual salary, performance related bonuses, health and other benefits, pension contributions and share options. Summary of Director’s Remuneration Adam Formela Guy Robinson Richard Clothier Anthony Glossop Alan Raleigh 2017 2016 Salary and benefits-in-kind £’000 Pension contributions £’000 Bonus £’000 221 154 56 45 40 516 514 - - 32 32 45 2017 Total £’000 253 154 56 45 40 548 2016 Total £’000 264 154 56 45 40 559 Robinson plc Financial Statements for the year ended 31 December 2017 11 robinson17-pages-artwork.qxd:robinson09-pages.qxd 29/03/2018 11:31 Page 12 Directors’ report Bonus The Executive Directors participate in an annual bonus plan which allows them to earn up to 100% of their basic annual salary of which 60% is based on achieving profit targets and 40% on strategic objectives. Pensions Adam Formela is a member of a money purchase pension scheme and the Company contributes at a rate of 15% of salary. Long Term Incentives Share options have been granted to the Executive Directors under the Company’s Share Option Scheme. These are designed to reward the Directors for achieving growth in shareholder value over the longer term. Interests in Share Options The Company has an equity settled share option scheme for its Executive Directors and other key managers. Details of outstanding share options on 0.5p ordinary shares are as follows: Granted 04-May-11 450,000 Adam Formela Guy Robinson Other key managers Weighted average price Contractual life outstanding (weighted average) - years Granted 14-Nov-13 Granted 07-Apr-14 Granted 11-May-17 Outstanding 31-Dec-17 140,056 140,056 99,256 67,494 450,000 280,112 166,750 133,000 133,000 69p 43p 202p 130p 689,312 207,550 133,000 1,029,862 91p 5 On 29 March 2017 Guy Robinson exercised 109,944 share options with an exercise price of 69p and Adam Formela exercised 109,141 share options with an exercise price of 43p. Generally, the share options may be exercised in whole or in part at any time between the third and tenth anniversary of being granted subject to the achievement of certain performance criteria. 869,862 options were exercisable at the end of the period. The market value of the shares at 31 December 2017 was 100p per share. Employees The Group recognises the need to ensure effective communication with employees. During the year, they were provided with financial and other information affecting the Group and its various operations, by means of the house magazine and briefings. Consultative committees in the different areas of the Group enabled the views of employees to be heard and considered when making decisions likely to affect their interests. Employment of disabled persons In accordance with Group policy, full and fair consideration is given to the employment of disabled persons, having regard to their aptitudes and abilities and the responsibility and physical demands of the job. Disabled employees are provided with equal opportunities about training and career development. Financial risk management objectives and policies The Group’s financial instruments comprise borrowings, cash balances, liquid resources, receivables and payables that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group does not use derivative instruments. The principal financial risks the Group faces in its activities are: > Credit risk from debts arising from its operations. > Foreign currency risk, to which the Group is exposed through its investment in one unlisted company based overseas. 12 Robinson plc Financial Statements for the year ended 31 December 2017 robinson17-pages-artwork.qxd:robinson09-pages.qxd 29/03/2018 11:31 Page 13 Robinson plc Financial Statements for the year ended 31 December 2017 13 robinson17-pages-artwork.qxd:robinson09-pages.qxd 29/03/2018 11:31 Page 14 Directors’ report The Board reviews and agrees policies for managing each of these risks and they are summarised below. These policies have remained unchanged from previous years. The Group seeks to manage credit risk by careful review of potential customers and strict control of credit. The Group does not hedge its exposure of foreign investments held in foreign currencies. There is little trade between the UK and Poland. The Group has little exposure to liquidity risk and short term flexibility may be achieved using overdraft facilities with a floating interest rate. Further details are given in note 22 to the financial statements. Going concern In determining whether the Group’s annual consolidated financial statements can be prepared on a going concern basis, the directors considered the Group’s business activities, together with the factors likely to affect its future development, performance and position; these are set out in the Strategic Report. The Group meets its day to day working capital requirements through an overdraft facility which is due for renewal in February 2019. The Group’s forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current facility. The Group will seek to renegotiate this facility in due course and management is confident that a facility will be forthcoming on acceptable terms. As at the date of this report, the directors have a reasonable expectation that the Company and Group have adequate resources to continue in business for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the annual financial statements. Future developments See the Chairman’s report for an update on future developments. Subsequent events There have been no events since the balance sheet date that would have had a material impact on the financial statements. Capital structure As set out in note 20, the issued share capital of the Company is 17,687,223 ordinary shares of 0.5p each of which 1,073,834 are held in treasury. There have been no changes to the issued share capital since the year end. There is only one class of share in issue and there are no restrictions on the voting rights attached to these shares or the transfer of securities in the Company. Details of share options are set out above. Persons with a shareholding of over 3% in the Company as at 31 December 2017 were: C W G Robinson S J Robinson R B Hartley R A Shemwell S C Shemwell S E A Hardy H G Shaw J C Mansell Total 1,159,635 741,665 654,191 598,791 534,091 525,191 515,191 500,000 % 7.0% 4.5% 3.9% 3.6% 3.2% 3.2% 3.1% 3.0% 14 Robinson plc Financial Statements for the year ended 31 December 2017 robinson17-pages-artwork.qxd:robinson09-pages.qxd 29/03/2018 11:31 Page 15 Directors’ report Auditor In the case of each of the persons who are directors of the Company at the date of approval of this report: > so far as each of the directors is aware, there is no relevant audit information (as defined in the Companies Act 2006) of which the Company’s auditor is unaware; and > each of the directors has taken all the steps that he ought to have taken as a director to make himself aware of any relevant audit information (as defined) and to establish that the Company’s auditor is aware of that information. This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006. Directors' responsibilities statement The directors are responsible for preparing the Strategic Report, Directors’ Report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union and applicable law. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the Group for that period. In preparing these financial statements, the directors are required to: > select suitable accounting policies and then apply them consistently; > make judgments and accounting estimates that are reasonable and prudent; > state whether IFRS as adopted by the European Union have been followed subject to any material departures disclosed and explained in the financial statements; > provide additional disclosures when compliance with specific requirements in IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance; and > prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. By order of the Board Guy Robinson Director 22 March 2018 Robinson plc Financial Statements for the year ended 31 December 2017 15 robinson17-pages-artwork.qxd:robinson09-pages.qxd 29/03/2018 11:31 Page 16 Group income statement Revenue Cost of sales Gross profit Operating costs Operating profit before exceptional items and amortisation of intangible asset Exceptional items Amortisation of intangible asset Operating profit after exceptional items Finance income - interest receivable Finance costs - bank interest payable Finance income in respect of pension fund Profit before taxation Taxation Profit attributable to the owners of the Company Basic earnings per share Diluted earnings per share Group statement of comprehensive income Profit for the year Items that will not be reclassified subsequently to profit or loss: Remeasurement of net defined benefit liability Deferred tax relating to items not reclassified Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of foreign operations Other comprehensive income for the year Total comprehensive income for the year attributable to the owners of the Company Notes 1 to 27 form an integral part of the financial statements. Note 1 2 3 11 26 4 6 8 8 Note 26 16 2017 £’000 29,813 (24,035) 5,778 (4,457) 1,321 65 (783) 603 1 (104) 130 630 (317) 313 1.9p 1.9p 2017 £’000 313 61 (11) 50 818 868 1,181 2016 £’000 27,459 (21,201) 6,258 (4,120) 2,138 190 (783) 1,545 6 (122) 189 1,618 (390) 1,228 7.5p 7.3p 2016 £’000 1,228 (3,774) 683 (3,091) 766 (2,325) (1,097) 16 Robinson plc Financial Statements for the year ended 31 December 2017 robinson17-pages-artwork.qxd:robinson09-pages.qxd 29/03/2018 11:31 Page 17 Statement of financial position Non-current assets Goodwill Other intangible assets Property, plant and equipment Investments in subsidiaries Deferred tax asset Current assets Inventories Trade and other receivables Deferred tax asset Cash Total assets Current liabilities Trade and other payables Corporation tax payable Borrowings Non-current liabilities Borrowings Other payables Deferred tax liabilities Amounts due to group undertakings Provisions Total liabilities Net assets Equity Share capital Share premium Capital redemption reserve Translation reserve Revaluation reserve Retained earnings Equity attributable to shareholders Note 10 11 12 13 16 14 15 17 18 18 17 16 19 20 Group 2017 £’000 1,115 5,089 17,011 - 95 23,310 2,838 9,905 - 283 13,026 36,336 (5,612) (250) (6,662) (12,524) - (87) (488) - (181) (756) (13,280) 23,056 83 732 216 964 4,321 16,740 23,056 Group 2016 £’000 Company 2017 £’000 Company 2016 £’000 1,115 5,872 14,834 - 188 22,009 2,471 8,722 - 881 12,074 34,083 (4,518) (234) (5,570) (10,322) (201) (78) (660) - (185) (1,124) (11,446) 22,637 82 610 216 146 4,402 17,181 22,637 - - 9,649 20,782 503 30,934 - 2,747 - 148 2,895 33,829 (8,559) (8) (2,021) (10,588) - - - (9,208) (181) (9,389) (19,977) 13,852 83 732 216 - 388 12,433 13,852 - - 8,828 19,429 467 28,724 - 1,233 497 1 1,731 30,455 (8,455) - (4,885) (13,340) - - - (5,553) (185) (5,738) (19,078) 11,377 82 610 216 - 435 10,034 11,377 As permitted by section 408 of the Companies Act 2006, the parent Company's income statement has not been included in these financial statements and its loss for the financial year after tax amounted to £750,000 (2016: loss £58,000). Notes 1 to 27 form an integral part of the financial statements. The financial statements were approved by the directors and authorised for issue on 22 March 2018. They were signed on their behalf by: Adam Formela Director Guy Robinson Director Registered number: 39811 Robinson plc Financial Statements for the year ended 31 December 2017 17 robinson17-pages-artwork.qxd:robinson09-pages.qxd 29/03/2018 11:31 Page 18 Statement of changes in equity Share capital £’000 Share premium £’000 Capital redemption reserve £’000 Translation reserve £’000 Revaluation reserve £’000 Retained earnings £’000 Total £’000 Group At 1 January 2016 Profit for the year Other comprehensive income/(expense) Transfer from revaluation reserves as a result of property transactions Tax on revaluation Credit in respect of share based payments Total comprehensive expense for the year Dividends paid Transactions with owners At 31 December 2016 Profit for the year Other comprehensive income/(expense) Transfer from revaluation reserves as a result of property transactions Credit in respect of share based payments Total comprehensive income for the year Shares issued Dividends paid Transactions with owners At 31 December 2017 Company At 1 January 2016 Loss for the year Other comprehensive expense Transfer from revaluation reserve as a result of property transactions Tax on revaluation Credit in respect of share based payments Total comprehensive expense for the year Dividends paid Transactions with owners At 31 December 2016 Loss for the year Dividends received Other comprehensive income Transfer from revaluation reserves as a result of property transactions Credit in respect of share based payments Total comprehensive income for the year Shares issued Dividends paid Transactions with owners At 31 December 2017 82 610 216 (620) 4,510 766 766 - 146 818 - - 216 - 818 (123) 15 (108) - 4,402 (81) (81) - 216 - 964 - 4,321 - - 82 - 1 1 83 - - 610 - 122 122 732 19,759 24,557 1,228 (2,325) 1,228 (3,091) 123 39 (1,701) (877) (877) - 15 39 (1,043) (877) (877) 17,181 22,637 313 868 313 50 81 16 460 - 16 1,197 123 (901) (778) 16,740 23,056 (901) (901) 82 610 216 - 554 13,891 15,353 (58) (3,091) (58) (3,091) - - 82 - 1 1 83 - - 610 - 122 122 732 - - 216 - - 216 (130) 11 (119) - 435 (47) (47) - 388 - - - - - - 130 39 (2,980) (877) (877) - 11 39 (3,099) (877) (877) 10,034 11,377 (750) 3,937 50 (750) 3,937 50 47 16 3,300 - 16 3,253 123 (901) (778) 12,433 13,852 (901) (901) The share premium account is the amount paid for shares issued in excess of the nominal value. The capital redemption reserve represents the amount by which the Company’s share capital has been diminished by the cancellation of shares held in treasury. The retained earnings reserve represents the accumulated realised earnings from the prior and current periods as reduced by losses and dividends from time to time. Exchange differences relating to the translation from the functional currencies of the group’s foreign subsidiary from Polish Zloty are brought to account by recognising those exchange differences in other comprehensive income and accumulating them in a separate component of equity under the header of translation reserve. The property revaluation reserve arises on the revaluation of land and buildings. Where revalued land or buildings are sold, the portion of the property revaluation reserve that relates to that asset, and is effectively realised, is transferred directly to retained earnings. Land and buildings are held at deemed cost in the Group and at revalued amounts in the Company. 18 Robinson plc Financial Statements for the year ended 31 December 2017 robinson17-pages-artwork.qxd:robinson09-pages.qxd 29/03/2018 11:31 Page 19 Statement of cash flows Cash flows from operating activities Profit/(loss) for the year Adjustments for: Depreciation of property, plant and equipment Profit on disposal of other plant and equipment Impairment/amortisation of goodwill and customer relationships Increase/(decrease) in provisions Other finance income in respect of Pension Fund Finance costs Finance income Taxation charged Other non-cash items: Pension current service cost and expenses Charge for share options Operating cash flows before movements in working capital (Increase)/decrease in inventories (Increase)/decrease in trade and other receivables Increase/(decrease) in trade and other payables Cash generated by/(used in) operations Corporation tax paid Interest paid Net cash generated by/(used in) operating activities Cash flows from investing activities Interest received Deferred consideration paid on acquisition Acquisition of plant & equipment Proceeds on disposal of property, plant and equipment Net cash used in investing activities Cash flows from financing activities Loans repaid Loans repaid by subsidiaries Shares issued Finance lease payments Dividends paid Net cash (used in)/generated from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at 1 January Effect of foreign exchange rate changes Cash and cash equivalents at 31 December Cash Overdraft Cash and cash equivalents at 31 December Notes 1 to 27 form an integral part of the financial statements. Group 2017 £’000 Group 2016 £’000 Company 2017 £’000 Company 2016 £’000 313 1,228 1,492 (85) 783 (4) (130) 104 (1) 317 191 16 2,996 (263) (875) 411 2,269 (405) (104) 1,760 1 - (2,614) 151 (2,462) (531) - 123 (28) (901) (1,337) (2,039) (4,206) 87 (6,158) 283 (6,441) (6,158) 1,385 (189) 932 2 (189) 122 (6) 390 162 39 3,876 (399) 222 (499) 3,200 (466) (122) 2,632 6 (4,265) (1,782) 481 (5,560) (1,226) - - - (877) (2,103) (5,031) 825 - (4,206) 881 (5,087) (4,206) (750) 260 (82) - (4) (130) 180 (34) 108 191 16 (245) - 571 49 375 (202) (180) (7) 34 - (25) 132 141 - 3,655 123 - (901) 2,877 3,011 (4,884) - (1,873) 148 (2,021) (1,873) (58) 264 (169) - 2 (189) 149 (36) (10) 162 39 154 - 48 (4,990) (4,788) - (149) (4,937) 36 - (451) 364 (51) - 1,613 - - (877) 736 (4,252) (632) - (4,884) 1 (4,885) (4,884) Robinson plc Financial Statements for the year ended 31 December 2017 19 robinson17-pages-artwork.qxd:robinson09-pages.qxd 29/03/2018 11:31 Page 20 Notes to the financial statements 1 Segmental information The directors consider the one operating segment of the Group to be solely plastic and paperboard packaging. Accordingly, the disclosures in respect of this segment are those of the Group as a whole. The Group’s internal reports about components of the Group which are those reported to the Board of Directors are based on geographical segments. Results were derived from and assets and liabilities held in the following locations: United Kingdom Poland UK- Head Office 2017 £’000 16,828 12,985 - 29,813 Revenue 2016 £’000 16,167 11,292 - 27,459 2017 £’000 2016 £’000 Operating profit/(loss)* 772 1,644 990 1,115 (441) (621) 1,321 2,138 *before exceptional items and amortisation of intangible asset. Included in revenues arising from Poland are revenues from the Group’s largest customer amounting to £2,888,000 (2016: £2,867,000). No single customer contributed 10% or more to group revenue. Offsetting the UK- Head Office operating loss is external property rental income and other income (see note 2). Assets Liabilities 9,980 15,368 10,988 36,336 10,231 13,425 10,427 34,083 (6,780) (4,088) (2,412) (13,280) (3,528) (3,915) (4,003) (11,446) Depreciation and amortisation Capital expenditure Taxation 1,274 1,894 26 3,194 599 748 928 2,275 827 505 450 1,782 597 692 879 2,168 66 275 (24) 317 United Kingdom Poland UK- Head Office United Kingdom Poland UK- Head Office 2 Operating costs Selling, marketing and distribution costs Administrative expenses Property rental income Other income Loss on foreign exchange 3 Exceptional items The following are items outside the normal course of business: Profit on disposal of properties Costs relating to deferred consideration on acquisition of Madrox 20 Robinson plc Financial Statements for the year ended 31 December 2017 363 186 (159) 390 2016 £’000 986 3,511 (365) (72) 60 4,120 2016 £’000 167 23 190 2017 £’000 1,267 3,569 (352) (94) 67 4,457 2017 £’000 65 - 65 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:34 Page 21 Notes to the financial statements 4 Profit before taxation The profit before taxation has been stated after charging/(crediting): Depreciation Amortisation of intangible asset Gains on disposal of plant and equipment Gains on disposal of properties (see note 3) Loss on foreign exchange movements Fees payable to the Company’s auditor: for the audit of the UK companies for the audit of the overseas companies Total audit fees tax compliance services other services Total non-audit fees Total auditor's remuneration Audit fees in respect of the Robinson pension scheme (charged to the scheme) 5 Employee information The average monthly number of persons (including executive directors) employed by the Group and Company during the year was: Group Staff costs (for the above): Wages and salaries Social security costs Pension costs Share based charges Company Staff costs (for the above): Wages and salaries Social security costs Pension costs Share based charges 2017 £’000 1,516 783 (20) (65) 67 26 8 34 7 - 7 41 4 2016 £’000 1,385 783 (22) (167) 60 30 21 51 8 7 15 66 5 2017 Number 2016 Number 312 309 £’000 6,454 764 196 16 7,430 £’000 5,921 694 322 39 6,976 Number 10 Number 9 £’000 868 120 53 16 1,057 £’000 716 106 59 39 920 Robinson plc Financial Statements for the year ended 31 December 2017 21 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:34 Page 22 Notes to the financial statements 6 Taxation Current corporation tax is calculated at 19.25% (2016: 20.25%) of the estimated assessable profit for the year. In addition, deferred tax of £11,000 (2016: £683,000) has been debited/credited directly to equity in the year (see note 16). The tax charge for the year can be reconciled to the profit per the income statement as follows: Current tax on profit for the year Adjustments for current tax of prior periods Total current tax charge Decrease/(increase) in deferred tax assets (Decrease)/increase in deferred tax liability Total current deferred tax charge Total tax charge Profit before taxation At the effective rate of tax of 19.25% (2016: 20.25%) Difference in rate on overseas taxation Items disallowable for tax Depreciation on assets ineligible for capital allowances Prior year adjustments - corporation tax Prior year adjustments - deferred tax Book value of property disposals less than / (in excess of) capital gains Other differences Tax charge for the year 2017 £’000 269 116 385 93 (161) (68) 317 630 121 8 (18) 38 116 41 12 (1) 317 2016 £’000 547 58 605 (55) (160) (215) 390 1,618 324 5 (19) 18 58 45 (34) (7) 390 The total tax recognised in other comprehensive income in the year was £11,000. There are unrecognised capital losses carried forward of £638,000 (2016: £690,000). With this exception, the directors are not aware of any material factors affecting the future tax charge. The reduction in the main rate of corporation tax to 17% from 1 April 2020 has been announced. Accordingly, deferred tax balances have been revalued to the lower rate of 17% in these accounts to the extent that timing differences are expected to reverse after this date. 7 Dividends Ordinary dividend paid: 2016 final of 3p per share (2015: 3p per share) 2017 interim of 2.5p per share (2016: 2.5p per share) The Directors have proposed a final dividend of 3p per share for 2017. 2017 £’000 485 416 901 2016 £’000 479 398 877 8 Earnings per share The calculation of basic and diluted earnings per ordinary share for continuing operations shown on the income statement is based on the profit after taxation of £313,000 (2016: £1,228,000) divided by the weighted average number of shares in issue, net of treasury shares which rose to 16,561,169 (2016: 16,394,304) on 29 March 2017 after 219,085 ordinary shares were issued through share options, and for diluted earnings per share of 16,857,023 (2016: 16,903,281) after the potentially dilutive effect of further shares issued through share options is applied. 9 Operating lease arrangements At the balance sheet date, the Group had contracted with tenants for the following future minimum lease receipts: Receivable: Within one year In the second to fifth years inclusive 2017 £’000 125 198 323 2016 £’000 226 119 345 22 Robinson plc Financial Statements for the year ended 31 December 2017 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:34 Page 23 Notes to the financial statements 10 Goodwill Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs) that are expected to benefit from that business combination. The total goodwill balance relates to the Madrox business in Poland, acquired in 2014, which forms a part of the Poland operating segment. Group: Cost At 1 January 2016 and 31 December 2017 Accumulated impairment losses At 1 January 2016 Impairment losses for the year At 31 December 2016 Impairment losses for the year At 31 December 2017 Carrying amount At 31 December 2017 At 31 December 2016 £’000 1,487 223 149 372 - 372 1,115 1,115 The Group tests goodwill annually for impairment, or more frequently if there are indications that an impairment may be required. The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for these calculations are those regarding discount rates, sales and operating profit growth rates. The Directors estimate discount rates using pre-tax rates that reflect current market assessments of the time value of money for the Group. In respect of the other assumptions, external data and management's best estimates are applied. The Group performs goodwill impairment reviews by forecasting cash flows based upon the following year's budget, which anticipates sales growth, and a projection of sales and cash flows based upon industry growth expectations over a further period of four years. The forecasts used in the annual impairment reviews have been prepared taking into account current economic conditions. After this period, the sales growth rates applied to the cash flow forecasts are no more than 2% (2016: 2%) in perpetuity. The pre-tax rate used to discount the forecast cash flows is 10% (2016: 10%). The carrying value of the Group’s CGUs remain supportable. The Group has conducted a sensitivity analysis on the impairment test of the CGU carrying value. The Directors believe that any reasonably possible change in the key assumptions on which the recoverable amount of goodwill is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the CGU. 11 Other intangible assets Group: Cost At 1 January 2016 and 31 December 2017 Amortisation At 1 January 2016 Charge for the year At 31 December 2016 Charge for the year At 31 December 2017 Carrying amount At 31 December 2017 At 31 December 2016 The amortisation period for customer relationships acquired is 10 years. Customer relationships £’000 7,830 1,175 783 1,958 783 2,741 5,089 5,872 Robinson plc Financial Statements for the year ended 31 December 2017 23 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:34 Page 24 Notes to the financial statements 12 Property, plant and equipment Land and buildings £’000 Surplus Properties £’000 Plant and Assets under Construction machinery £’000 £’000 Group: Cost or deemed cost At 1 January 2016 Additions at cost Disposals Movement between categories Reclassified to prepayments Exchange movement At 31 December 2016 Additions at cost Disposals Movement between categories Exchange movement At 31 December 2017 Depreciation At 1 January 2016 Charge for year Disposals Exchange movement At 31 December 2016 Charge for year Disposals Exchange movement At 31 December 2017 Net book value At 31 December 2017 At 31 December 2016 Company: Cost or deemed cost At 1 January 2016 Additions at cost Disposals At 31 December 2016 Additions at cost Intergroup transfer Disposals At 31 December 2017 Depreciation At 1 January 2016 Charge for year At 31 December 2016 Charge for year Intergroup transfer Disposals At 31 December 2017 Net book value At 31 December 2017 At 31 December 2016 8,411 92 - - - 511 9,014 15 - 26 496 9,551 1,580 246 - 100 1,926 286 - 113 2,325 7,226 7,088 3,200 - - 3,200 - 1,456 - 4,656 835 236 1,071 236 350 - 1,657 2,999 2,129 3,855 415 (195) - - - 4,075 21 (50) - - 4,046 208 - - - 208 - - - 208 3,838 3,867 6,548 415 (195) 6,768 21 - (50) 6,739 133 - 133 - - - 133 6,606 6,635 19,962 1,033 (326) 115 - 901 21,685 2,034 (246) 216 866 24,555 16,465 1,139 (229) 673 18,048 1,206 (230) 708 19,732 4,823 3,637 319 36 - 355 4 - (38) 321 263 28 291 24 - (38) 277 44 64 177 242 - (115) (62) - 242 1,124 - (242) - 1,124 - - - - - - - - - 1,124 242 - - - - - - - - - - - - - - - - - Total £’000 32,405 1,782 (521) - (62) 1,412 35,016 3,194 (296) - 1,362 39,276 18,253 1,385 (229) 773 20,182 1,492 (230) 821 22,265 17,011 14,834 10,067 451 (195) 10,323 25 1,456 (88) 11,716 1,231 264 1,495 260 350 (38) 2,067 9,649 8,828 At 31 December 2017 had the surplus properties been carried at historical cost less accumulated depreciation and accumulated impairment losses, their carrying amount would have been approximately £763,000 (2016: £798,000); Company £763,000 (2016: £798,000). The Directors consider the fair value of the surplus properties held by the Group equates to a market value of £6.6m (2016: £6.6m). 24 Robinson plc Financial Statements for the year ended 31 December 2017 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:34 Page 25 Notes to the financial statements 13 Investments in subsidiaries Shares in group Loans to group undertakings undertakings £’000 £’000 Company: Cost At 1 January 2016 Exchange differences At 31 December 2016 Exchange differences Additional loans granted At 31 December 2017 Amounts written off At 1 January 2016 Released At 31 December 2016 Released At 31 December 2017 Net book value At 31 December 2017 At 31 December 2016 1 1 1 - - 1 1 21,849 91 21,940 87 1,261 23,288 2,930 (418) 2,512 (5) 2,507 20,781 19,428 Total £’000 21,850 91 21,941 87 1,261 23,289 2,930 (418) 2,512 (5) 2,507 20,782 19,429 The loans are classed as equity investments and repayment is neither planned nor likely in the foreseeable future. Provision has been made against amounts due from subsidiaries where there is a shortfall of net assets to satisfy the debtor. Interests in Group undertakings The Company has the following interest in subsidiaries: Name of undertaking Robinson (Overseas) Limited Robinson Paperbox Packaging Limited Robinson Plastic Packaging Limited Robinson Plastic Packaging (Stanton Hill) Limited Robinson Packaging Polska Sp. z o.o. Walton Mill (Chesterfield) Limited Furnace Hill Limited Griffin Estates (Chesterfield) Limited Lowmoor Estates Limited Mill Lane Properties Limited Portland Works Limited Robinson Industrial Properties Limited Walton Estates (Chesterfield) Limited Wheatbridge Limited Activities Holding Company Manufacture of Paperboard Packaging Manufacture of Plastic Packaging Manufacture of Plastic Packaging Manufacture of Plastic Packaging Property Company Dormant Company Dormant Company Dormant Company Dormant Company Dormant Company Dormant Company Dormant Company Dormant Company The country of incorporation of each of the above companies is England, except for Robinson Packaging Polska Sp z o.o which is incorporated in Poland. The registered address of all the companies is Field House, Wheatbridge, Chesterfield S40 2AB except for Robinson Packaging Polska Sp z o.o whose registered address is 238 Gen J Dabrowskiego Street, 93-231 Lodz, Poland. The percentage shareholding for all subsidiaries is 100% and all except Robinson Packaging Polska Sp z o.o are held directly. Robinson plc Financial Statements for the year ended 31 December 2017 25 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:34 Page 26 Notes to the financial statements 14 Inventories Raw materials Work in progress Finished goods and goods for resale Group 2017 £’000 1,803 10 1,026 2,838 Group 2016 £’000 1,472 56 943 2,471 The carrying value of inventories represents fair value less costs to sell. In 2017, a total of £20,675,214 (2016: £19,271,000) cost of inventories was included in the income statement as an expense. This includes an amount of £35,000 resulting from the write-down of inventories (2016: £40,000) and a credit of £98,000 (2016: £10,000) resulting from the reversal of previous write-downs. 15 Trade and other receivables Trade receivables Receivables from subsidiaries Other receivables Prepayments and accrued income Group 2017 £’000 9,011 - 721 173 9,905 Group 2016 £’000 7,892 - 564 266 8,722 Company 2017 £’000 Company 2016 £’000 260 2,364 41 82 2,747 223 740 56 214 1,233 Including other receivables due in greater than one year - 100 - - Receivables from one customer amounted to £978,000 at 31 December 2017 (2016: £924,000). The carrying value of trade or other receivables is considered a reasonable approximation of fair value. The average credit period taken is 79 days (2016: 78 days). The Group manages credit risk by credit checking new customers and defining credit limits. The Group reserves the right to charge interest on overdue amounts. All trade and other receivables have been reviewed for indicators of impairment. Certain trade receivables were found to be impaired and a doubtful debt provision of £25,000 (2016: £26,000) has been recorded accordingly. In addition, some of the unimpaired Group trade receivables are past due as at the reporting date. The age of financial assets past due but not impaired is as follows: Not more than 3 months More than 3 months but not more than 6 months Trade receivables that are not past due are not considered to be impaired. The movement in the allowance for doubtful debts was as follows: At 1 January Impairment losses recognised Amounts recovered during the year At 31 December Group 2017 £’000 2,639 101 2,740 Group 2017 £’000 26 7 (8) 25 Group 2016 £’000 1,096 52 1,148 Company 2017 £’000 Company 2016 £’000 - - - - - - Group 2016 £’000 Company 2017 £’000 Company 2016 £’000 17 9 - 26 - - - - - - - - Trade receivables are classified as loans and receivables and are therefore measured at amortised cost. 26 Robinson plc Financial Statements for the year ended 31 December 2017 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:34 Page 27 Notes to the financial statements 16 Deferred taxation The deferred tax liabilities and assets recognised by the Group and movements thereon during the current and prior reporting period are as follows: Group At 1 January 2016 Charge to income Charged through other comprehensive income At 31 December 2016 Charge to income Charged through other comprehensive income At 31 December 2017 Company At 1 January 2016 Charge to income Charged through other comprehensive income At 31 December 2016 Charge to income Charged through other comprehensive income At 31 December 2017 Accelerated tax depreciation £’000 Short term temporary differences £’000 Fair value gains £’000 Pension obligations £’000 Total £’000 1,370 (215) (683) 472 (90) 11 393 225 (9) (683) (467) (47) 11 (503) 41 (16) (1) 24 - - 24 28 (15) (1) 12 - - 12 675 7 (682) - (11) 11 - 675 7 (682) - (11) 11 - (79) 10 - (69) 52 - (17) (3) - - (3) - - (3) 733 (216) - 517 (131) - 386 (475) (1) - (476) (36) - (512) Group 2017 £’000 488 (95) 393 Deferred tax has been provided at 17%. Certain deferred tax liabilities have been offset. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes: Deferred tax liability Deferred tax asset Group 2016 £’000 660 (188) 472 Company 2017 £’000 Company 2016 £’000 - (503) (503) - (467) (467) The directors consider that the Group will generate sufficient taxable profits in future years with which to recover the deferred tax asset. Robinson plc Financial Statements for the year ended 31 December 2017 27 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:34 Page 28 Notes to the financial statements 17 Trade and other payables Trade payables Amounts due to subsidiaries Social security and other taxes Other creditors Accruals and deferred income Amount due for settlement within 12 months Amount due for settlement after 12 months Group 2017 £’000 3,549 - 771 712 667 5,699 5,612 87 Group 2016 £’000 Company 2017 £’000 Company 2016 £’000 2,529 - 634 456 977 4,596 4,518 78 90 7,440 116 345 568 8,559 8,559 - 44 7,566 113 62 670 8,455 8,455 - The carrying amount of trade and other payables approximates to their fair value. The Group has financial risk management policies in place to ensure that all payables are paid on a timely basis. The average credit period taken is 50 days (2016: 52 days). 18 Borrowings Held at amortised cost Bank overdraft Bank loan Amount due for settlement within 12 months Amount due for settlement after 12 months Group 2017 £’000 6,441 221 6,662 6,662 - Group 2016 £’000 Company 2017 £’000 Company 2016 £’000 5,087 684 5,771 5,570 201 2,021 - 2,021 2,021 - 4,885 - 4,885 4,885 - A bank overdraft facility is repayable on demand and bears interest at a rate that varies with HSBC sterling base rate. It is secured on a first charge over certain of the Group’s properties. The undrawn facility at 31 December 2017 was £3.6m. 19 Provisions for liabilities Group and Company At 1 January 2016 Movement in year At 31 December 2016 Movement in year At 31 December 2017 Post-retirement benefits £’000 183 2 185 (4) 181 The Group provides medical insurance to certain retired employees and to an executive director on retirement. A provision has been made to meet this liability. The principal assumptions used in determining the required provisions are a discount rate of 4% per annum, medical cost inflation of 8% per annum, and individual life expectancy assumptions. Based on those assumptions the provision is expected to be utilised over 33 years. 28 Robinson plc Financial Statements for the year ended 31 December 2017 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:34 Page 29 Notes to the financial statements 20 Share capital Authorised: 70,000,000 ordinary shares of 0.5p each Allotted, called up and fully paid (ordinary shares of 0.5p): 17,687,223 shares Held in Treasury: 1,073,834 shares (2016: 1,292,919) Net Issued Share Capital: 16,613,389 shares (2016: 16,394,304) 2017 £’000 2016 £’000 350 350 88 (5) 83 88 (6) 82 The Company has one class of ordinary shares which carry no right to fixed income. On 29th March 2017, 219,085 ordinary shares were issued through share options with a value of £122,792 (see Director’s Report). There are no special rights or restrictions associated with these ordinary shares. The shares held in Treasury arise from the buy-back of shares in 2004 and have not been cancelled as they are being used to satisfy share options and other future issues of shares. 21 Retained earnings An amount of £200,000 included in the retained earnings of the Company relates to the revaluation of property held in its subsidiaries and is not distributable. 22 Risk management objectives and policies The Group and the Company are exposed to market risk through their use of financial instruments and specifically to credit risk and foreign currency risks, which result from the Group’s operating activities and the Company’s investing activities. The Group’s risk is managed in close co-operation with the board of directors and focuses on actively securing the Group’s short to medium term cash flows by minimising the exposure to financial markets. Robinson does not engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Group is exposed are described below. See also below for a summary of the Group’s financial assets and liabilities by category. Foreign currency sensitivity Most of the Group’s transactions are carried out in sterling. Exposures to currency rates arise from the Group’s overseas sales and purchases, which, where they are not denominated in sterling, are primarily denominated in Euros. Total debts denominated in Euros amounted to €644,000 at 31 December 2017 (2016: €580,000). The following table details the Group’s sensitivity to a 10 per cent increase and decrease in sterling against the relevant foreign currencies. The sensitivity analysis includes only outstanding foreign currency denominated monetary items at the period end. A positive number below indicates an increase in profit and other equity where sterling weakens 10 per cent against the Euro. Euro currency impact Profit or loss for the year Equity 2017 £’000 15 15 2016 £’000 (15) (15) Further details on currency risk management are given in the Strategic Report. Interest rate sensitivity If interest rates had been 1 per cent higher, the Group’s profit for the year ended 31 December 2017 would decrease by £58,000 (2016: £57,000) due to its exposure to interest rates on its variable rate borrowings. The impact of a 1% change on cash balances would be insignificant. Credit risk analysis The Group’s exposure to credit risk is limited to the carrying amount of financial assets recognised at 31 December 2017 as detailed in note 15. The Group continuously monitors defaults of customers and incorporates this information into its credit risk controls. External credit ratings and reports on customers are obtained and used. The Group’s policy is to deal only with creditworthy customers. The Group’s management considers that all the above financial assets that are not impaired for each of the reporting dates under review are of good credit quality, including those that are past due. The bank overdraft is secured on the debts and certain properties of the Group. No other financial assets are secured by collateral or other credit enhancements. In respect of trade and other receivables, the Group is not exposed to any significant credit risk exposure to any counterparty or group of counterparties having similar characteristics. Robinson plc Financial Statements for the year ended 31 December 2017 29 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:34 Page 30 Notes to the financial statements 22 Risk management objectives and policies (continued) Liquidity risk analysis The Group manages its liquidity needs by carefully monitoring cash outflows due in day-to-day business. The Group’s liabilities have contractual maturities that are summarised below: Current within 12 months Trade payables Other financial liabilities Borrowings Non-current later than 12 months Other financial liabilities Borrowings Group 2017 £’000 3,549 1,379 6,662 11,590 - - - Group 2016 £’000 Company 2017 £’000 Company 2016 £’000 2,529 1,433 5,570 9,532 - 201 201 90 8,353 2,021 10,464 9,208 - 9,208 44 8,298 4,885 13,227 3,431 - 3,431 The Group has no non-current liabilities. The Company non-current liabilities arise from intercompany loans which are considered due in more than 5 years. Summary of financial assets and liabilities by category The carrying amounts of financial assets and liabilities as recognised at 31 December of the reporting periods under review may also be categorised as follows: Group 2017 £’000 Group 2016 £’000 Company 2017 £’000 Company 2016 £’000 Financial assets Loans and receivables: Trade and other receivables Cash Financial liabilities measured at amortised cost: Non-current: Amounts due to group undertakings Current: Borrowings Trade and other payables Net financial assets and liabilities Non-financial assets and liabilities Total equity 9,732 283 10,015 8,456 881 9,337 2,665 148 2,813 1,019 1 1,020 - - (9,208) (5,553) (6,662) (4,928) (11,590) (1,575) 24,631 23,056 (5,771) (3,962) (9,733) (396) 23,033 22,637 (2,021) (8,443) (19,672) (16,859) 30,711 13,852 (4,885) (8,342) (18,780) (17,760) 29,137 11,377 Capital management policies and procedures The Group’s capital management objectives are: > to ensure the Group’s ability to continue as a going concern and > to provide an adequate return to shareholders by pricing products commensurately with the level of risk. The Group monitors capital based on the carrying amount of equity, less cash and cash equivalents as presented on the face of the statement of financial position. Robinson manages the capital structure and adjusts it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain its capital structure the Group may adjust the amount of dividends paid to shareholders, issue new shares, or sell assets to reduce debt. 30 Robinson plc Financial Statements for the year ended 31 December 2017 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:34 Page 31 Notes to the financial statements 23 Capital commitments Group 2017 £’000 Group 2016 £’000 Company 2017 £’000 Company 2016 £’000 Contracted but not provided in these financial statements 372 53 - - 24 Contingent liabilities There were contingent liabilities at 31 December 2017 in relation to cross guarantees of bank overdrafts given by the Company on behalf of other Group undertakings. The amount guaranteed at 31 December 2017 was £6,691,000 (2016: £5,601,000). The directors have considered the fair value of the cross guarantee and do not consider this to be significant. 25 Related parties Transactions took place in the normal course of business between the Company and its subsidiaries during the year as follows: Charges by the Company to its subsidiaries: Rent Management charges Interest Other charges (including costs incurred by the Company on behalf of its subsidiaries and subsequently recharged to them) Charges by the subsidiaries to the Company (mainly costs incurred by them on behalf of the Company and recharged to it) Net balances due from subsidiaries outstanding at the year end £5,392,000 of the charges in 2017 related to UK subsidiaries (2016: £6,020,000). 2017 £’000 318 462 34 4,886 5,700 2016 £’000 318 302 30 5,744 6,394 108 155 6,497 13,875 26 Pension asset Group and Company The Group operates one principal pension scheme, the Robinson & Sons Limited Pension Fund, of which approximately 80% of UK employees are members. The scheme has a defined benefit section, which was closed to new members in 1997 and a defined contribution section introduced in 1998. In respect of the defined benefit section, contributions to the pension schemes are made and the pension cost is assessed in accordance with the advice of an independent qualified actuary. The actuary carried out a full actuarial valuation of the scheme as at 5 April 2017 which showed a surplus of 2% on an on-going basis. The fund was valued under IAS19 as at 31 December by Andrew Allsopp FIA of Quattro Pensions and the key assumptions used were: Discount rate for liabilities Price inflation Salary inflation 2017 2.4% 3.2% 3.5% 2016 2.6% 3.4% 3.7% The most significant of these assumptions is the discount rate. If this were reduced by 0.1% per annum, the liabilities would increase by approximately £650,000 (2016: £700,000). Inflation assumptions in both years are dependent on gilt yields. The mortality assumptions used are based on the S2 series tables with allowance for future improvements made by combining the 2016 improvement factors published by the Continuous Mortality Investigation with an assumed long-term annual rate of improvement in mortality at each age of 1%. Robinson plc Financial Statements for the year ended 31 December 2017 31 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:34 Page 32 Notes to the financial statements 26 Pension asset Group and Company (continued) The average life expectancy of a pensioner at ages 45 and 65 is as follows: 2017 2016 Life expectancy of 45 year old man at the age of 65 years Life expectancy of 45 year old woman at the age of 65 years Life expectancy of 65 year old man at the age of 65 years Life expectancy of 65 year old woman at the age of 65 years 23.0 25.0 21.9 23.8 23.2 25.4 21.9 23.9 If the life expectancy assumption was increased by 1 year, the liabilities would increase by approximately £2.6m (2016: £1.6m). The average duration of the benefit obligation at the year-end is 14 years. The market value of the assets less the present value of scheme liabilities, calculated based on these assumptions, is the surplus in the scheme. Under IAS19, the disclosure of a scheme’s total surplus must be limited to the amount by which the employer can gain an “economic benefit” from the existence of the surplus. This “recoverable surplus” has been estimated as the amount of the scheme’s total surplus that can be used to meet scheme expenses, employer contributions to the defined contribution section of the Scheme, and the cost of future accrual in the defined benefit section of the Scheme. The irrecoverable surplus is then the difference between the total surplus and the estimated recoverable surplus as defined above. Following the actuarial valuation carried out in April 2002 it was clear that there was no need for the employer to pay contributions into the fund for existing scheme members. The Company has nonetheless agreed to pay employer contributions set aside in the Company’s financial statements since the actuarial valuation in April 2002, together with money purchase contributions since April 2005, into an escrow account. The outcome of the next actuarial valuation in April 2020 will determine whether the contributions will be paid over to the Fund, returned to the Company or whether some other arrangements will be made. It is likely that the escrow account will be returned to the fund and therefore it has been disclosed as an asset of the pension scheme. The total set aside in the escrow account at 31 December 2017 amounted to £3.1m (2016: £2.9m). As at 31 December, the estimated financial position was as follows: Equities Gilts & bonds Real estate Cash Total market value of assets Present value of scheme liabilities Surplus in the scheme Irrecoverable surplus Pension asset 2017 £’000 26,634 28,124 6,350 4,905 66,013 (57,485) 8,528 (8,528) - 2016 £’000 23,182 31,230 5,334 4,313 64,059 (58,879) 5,180 (5,180) - 32 Robinson plc Financial Statements for the year ended 31 December 2017 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:34 Page 33 Notes to the financial statements 26 Pension asset Group and Company (continued) The following amounts were recognised in the income statement: 2017 £’000 2016 £’000 Charged to operating profit Current service cost - final salary section Expenses - final salary section Current service cost - money purchase section Total operating charge Charged to: Cost of sales Operating costs Total operating charge Amount credited to other finance income: Expected return on assets Interest on scheme liabilities Net return The following amounts were recognised in other comprehensive income: Movement in irrecoverable surplus before deduction of escrow account Other actuarial gains/(losses) Actuarial loss recognised in other comprehensive income before deferred taxation Actuarial loss not recognised in other comprehensive income before deferred taxation Movements in the defined benefit obligation were as follows: At 1 January Current service cost Interest cost Employee contributions Remeasurement DBO - actuarial loss/(gain) from financial items Remeasurement DBO - actuarial loss/(gain) from demographic items Benefits paid At 31 December Movements in the fair value of plan assets during the year were as follows: At 1 January Employee contributions Interest income on plan assets Remeasurement of plan assets - actuarial gain/(loss) Employer contributions Benefits paid from plan Expenses paid At 31 December 109 82 158 349 89 260 349 1,635 (1,505) 130 (3,348) 3,565 217 2017 £’000 58,879 109 1,489 14 402 (14) (3,394) 57,485 2017 £’000 64,059 14 1,635 3,937 (156) (3,394) (82) 66,013 90 72 160 322 85 237 322 2,027 (1,838) 189 (980) (2,794) (3,774) 2016 £’000 50,859 90 1,838 16 7,797 746 (2,467) 58,879 2016 £’000 56,107 16 2,027 8,619 (171) (2,467) (72) 64,059 The actual return on scheme assets over the year was £5,556,000 (2016: £10,646,000). The cumulative amount of actuarial gains and losses recognised in other comprehensive income since the date of transition to IFRS is a loss of £10,306,000 (2016: £10,532,000). Robinson plc Financial Statements for the year ended 31 December 2017 33 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:34 Page 34 Notes to the financial statements 26 Pension asset Group and Company (continued) The five year history of experience adjustments is as follows: Fair value of scheme assets Present value of defined benefit obligations Irrecoverable surplus Surplus in the scheme Experience adjustments on scheme assets Percentage of scheme assets Experience adjustments on scheme liabilities Percentage of scheme liabilities 2017 £m 66.0 (57.5) (8.5) - 3.9 6% - 0% 2016 £m 64.1 (58.9) (5.2) - 8.6 13% - 0% 2015 £m 56.1 (50.9) (4.2) 1.0 (1.5) -3% (0.1) 0% 2014 £m 58.4 (53.7) (3.4) 1.3 2.6 4% - 0% 2013 £m 56.1 (48.6) (5.8) 1.7 - 0% - 0% At 31 December 2017 £25,000 of money purchase contributions had not yet been transferred to the pension provider. 27 Accounting policies Robinson plc is a company incorporated in the United Kingdom under the Companies Acts. The consolidated and Company financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. All standards and interpretations that have been issued and are effective at the year end have been applied in the financial statements. The financial statements have been prepared under the historical cost convention adjusted for the revaluation of certain properties. No other accounting standards coming into effect in the year have had any effect on the financial statements. Consolidation The Group’s financial statements consolidate the financial statements of Robinson plc and all its subsidiaries. Subsidiaries are consolidated from the date on which control transfers to the Group and are included until the date on which the Group ceases to control them. Transactions and year end balances between Group companies are eliminated on consolidation. All entities have coterminous year ends. The Group obtains and exercises control through voting rights. Investments in subsidiary undertakings are accounted for in accordance with IAS27 and IFRS 10. Revenue Revenue comprises the fair value of the consideration received or receivable for the external sale of products, exclusive of value added tax, other revenue related taxes and trade discounts and is recognised when goods have been supplied. Revenue is recognised when the significant risks and rewards of ownership have transferred, which occurs on delivery. Foreign currencies Assets and liabilities of overseas subsidiaries are translated into sterling, the functional currency of the parent company, at the rate of exchange ruling at the year end. The results and cash flows of overseas subsidiaries are translated into sterling using the average rate of exchange for the year as this is considered to approximate to the actual rate. Exchange movements on the restatement of the net assets of overseas subsidiaries and the adjustment between the income statement translated at the average rate and the closing rate are taken directly to other reserves and reported in the other comprehensive income. All other exchange differences arising on monetary items are dealt with through the consolidated income statement. On disposal of a foreign subsidiary the accumulated exchange difference in relation to the operation are reclassified into the income statement. Property, plant and equipment Property, plant and equipment are stated at cost less a provision for depreciation and impairment losses. Depreciation is calculated to write off the cost less estimated residual values of the assets in equal instalments over their expected useful lives. No depreciation is provided on freehold land or Surplus Properties. Depreciation is provided on other assets at the following annual rates: Buildings Plant and equipment 4% - 20% per annum 5% - 33% per annum Residual values and estimated useful lives are re-assessed annually. 34 Robinson plc Financial Statements for the year ended 31 December 2017 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:35 Page 35 Notes to the financial statements 27 Accounting policies (continued) Inventories Inventories are valued at the lower of cost, including related overheads, and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and the overheads incurred in bringing items to their present location and condition. Inventories are valued on a first in, first out, basis. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. Financial assets Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less any required allowances for uncollectible amounts. Loans and receivables are non-derivative financial assets that are not quoted on an active market. Trade receivables are classified as loans and receivables. Any change in their value through impairment or reversal of impairment is recognised in the income statement. Provision against trade receivables is made when there is objective evidence that the Group will not be able to collect all amounts due to it in accordance with the original terms of the receivables. The amount of the write-down is determined as the difference between the asset’s carrying amount and the present value of estimated future cash flows. Financial liabilities Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Balances with Group companies arise from trading activities and are initially recognised at fair value. Loans are measured initially at fair value and then subsequently at amortised cost using the effective interest method. The effective interest method is the rate that exactly discounts estimated future cash receipts through the expected life of the debt to the net carrying amount on initial recognition. Taxation Current income tax assets and/or liabilities comprise obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, that are unpaid/due at the reporting date. Current tax is payable on taxable profits, which may differ from profit or loss in the financial statements. Calculation of current tax is based on the tax rates and tax laws that have been enacted or substantively enacted at the reporting period. Deferred taxation is provided on taxable and deductible temporary differences between the carrying amounts of assets and liabilities in the financial statements and their corresponding tax bases. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which temporary differences can be utilised or that they will reverse. Deferred tax is measured using the tax rates expected to apply when the asset is realised or the liability settled based on tax rates enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability on the reporting date differs from its tax base except for differences arising on investments in subsidiaries where the Group can control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future. Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement, except where they relate to items that are charged directly to other comprehensive income (such as the revaluation of land or relating to transactions with owners) in which case the related deferred tax is also charged or credited directly to other comprehensive income. Current tax is the tax currently payable on taxable profit for the year. Employee benefits The retirement benefit asset and/or liabilities recognised in the statement of financial position represents the fair value of defined benefit fund assets less the present value of the defined benefit obligation, to the extent that this is recoverable by means of a contribution holiday, payment of money purchase contributions and expenses from the fund calculated on the projected unit credit method. Operating costs comprise the current service cost. Finance income comprises the expected return on fund assets less the interest on fund liabilities. Actuarial gains or losses comprising differences between the actual and expected return on fund assets, changes in fund liabilities due to experience and changes in actuarial assumptions are recognised immediately in other comprehensive income. Pension costs for the money purchase section represent contributions payable during the year. Robinson plc Financial Statements for the year ended 31 December 2017 35 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:35 Page 36 Notes to the financial statements 27 Accounting policies (continued) Goodwill All business combinations are accounted for by applying the purchase method. Goodwill arising on consolidation represents the excess of the cost of the acquisition over the Group’s interest in the fair value of identifiable assets (including intangible assets) and liabilities of the business acquired. Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period. On disposal of a cash generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. Other intangible assets Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised in the profit for the year on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses. Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately. Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material). When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. Cash Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. In the statement of financial position, bank overdrafts are shown within borrowings or current liabilities. Land & Buildings Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at their deemed cost, being the fair value at the date of transition, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Any revaluation increase arising on the revaluation of such land and buildings prior to deemed cost being adopted was credited to the properties revaluation reserve, except to the extent that it reversed a revaluation decrease for the same asset previously recognised as an expense, in which case the increase was credited to the income statement to the extent of the decrease previously expensed. A decrease in carrying amount arising on the revaluation of such land and buildings was charged as an expense to the extent that it exceeds the balance, if any, held in the properties revaluation reserve relating to a previous revaluation of that asset. Depreciation on revalued buildings is charged to income. On the subsequent sale or scrappage of a previously revalued property, the attributable revaluation surplus remaining in the properties revaluation reserve is transferred directly to retained earnings. Freehold land is not depreciated. 36 Robinson plc Financial Statements for the year ended 31 December 2017 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:35 Page 37 Notes to the financial statements 27 Accounting policies (continued) Surplus properties The Group owns several properties, that were previously used in its trading businesses, which are now surplus to its current business needs. There is an active plan to sell these properties as and when market conditions allow. For the purposes of these financial statements these properties have included under the heading Surplus Properties. Operating Leases Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. The fair value at the date of grant of share options is calculated using the Black Scholes pricing model and charged to the income statement on a straight line basis over the vesting period of the award. The charge to the income statement takes account of the estimated number of share options that will vest. The corresponding credit to an equity settled share based payment is recognised in equity. If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options ultimately exercised are different to that estimated on vesting. Further details are given in the Directors report. Employee benefit trusts The Company has established trusts for the benefit of employees and certain of their dependants. Monies held in these trusts are held by independent trustees and managed at their discretion. Where monies held in a trust are determined by the Company based on employees’ past services to the business and the Company can obtain no future economic benefit from these monies, such monies, whether in trust or accrued for by the Company are charged to the income statement in the period to which they relate. Going concern The directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the financial statements. Further detail is contained in the Directors’ Report. Critical accounting judgements and key sources of estimation uncertainty The preparation of the Group’s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities at the reporting date. However, uncertainty about the assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future. The key assumptions concerning the future and other key sources of estimation uncertainty at 31 December 2017 that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year relate to pension, other post-employment benefits and the impairment of goodwill, property and intangible assets. The cost of defined benefit pension plans and other post-employment benefit is determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, expected rates of return on assets, mortality rates and future pension increases. Due to the long term nature of these plans such estimates are subject to significant uncertainty. The irrecoverable surplus is based on estimates of the recoverable surplus. These are based on expectations in line with the underlying assumptions in the valuation and current circumstances. Further details can be found in note 26. The Group tests goodwill, intangible assets and property annually for impairment, or more frequently if there are indications that an impairment may be required. Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value-in-use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. Further details on this process are set out in note 10. An assessment is made at each reporting date as to whether there is any indication that the carrying value may be impaired for intangible assets. This comprises an estimation of the fair value less cost to sell and the value in use. The key assumption used in arriving at a fair value less cost of sale is based on future expected earnings. Future earnings streams for each cash generating unit is then discounted over a finite period to calculate the fair value. Robinson plc Financial Statements for the year ended 31 December 2017 37 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:35 Page 38 Notes to the financial statements 27 Accounting policies (continued) Amendments to IFRSs that are mandatorily effective for the current year The adoption of the following standards, amendments and interpretations in the current year have not had a material impact on the Group’s/Company’s financial statements. EU effective date – periods beginning on or after IAS 7 Statement of Cash Flows: Amendment in respect of the disclosure initiative 1 January 2017 IAS 12 Income Taxes: Amendment in relation to the recognition of deferred tax assets for unrealised losses Annual Improvements to IFRSs (2014 - 2016): Clarification of the scope of IFRS 12 Disclosure of Interests in Other Entities 1 January 2017 1 January 2017 The adoption of the following standards, amendments and interpretations in future years are not expected to have a material impact on the Group’s financial statements. EU effective date – periods beginning on or after Amendments to IAS 28 Investments in Associates and Joint Ventures: Long-term interests in Associates and Joint Ventures Expected to be endorsed 2018 Amendment to IAS 40 Investment Property:Transfers of investment property Expected to be endorsed Q1 2018 Amendment to IFRS 2 Share-based Payment:Classification and measurement of share-based payment transactions Amendment to IFRS 4 Insurance Contracts:Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts IFRS 9 Financial Instruments Amendments to IFRS 9 Financial Instruments:Prepayment features with negative compensation IFRS 15 Revenue from Contracts with Customers Clarifications to IFRS 15 Revenue from Contracts with Customers IFRS 16 Leases IFRS 17 Insurance Contracts Annual Improvements to IFRSs (2014 - 2016) Annual Improvements to IFRSs (2015 - 2017) Expected to be endorsed Q1 2018 1 January 2018 1 January 2018 Expected to be endorsed 2018 1 January 2018 1 January 2018 1 January 2019 Expected endorsement date not available Expected to be endorsed Q1 2018 Expected to be endorsed 2018 IFRIC 22 Foreign Currency Transactions and Advance Consideration Expected to be endorsed Q1 2018 IFRIC 23 Uncertainty over Income Tax Treatments Expected to be endorsed 2018 38 Robinson plc Financial Statements for the year ended 31 December 2017 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:35 Page 39 Notes to the financial statements 27 Accounting policies (continued) Comment on standards effective from 1 January 2018 a. IFRS 9 ‘Financial Instruments’ IFRS 9 ‘Financial Instruments’ will essentially replace IAS 39. The classification and measurement of financial assets and liabilities will be directly linked to the nature of the instrument’s contractual cash flows and the business model employed by the holder of the instrument. As the Group does not have any complex financial instruments, this is not expected to impact on reported performance. b. IFRS 15 ‘Revenue from Contracts with Customers’ The objective of IFRS 15 is to establish the principles that an entity should apply to report useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with a customer. The assessment is that the standard will be unlikely to have a material impact on the Group’s financial statements. Comment on standards effective from 1 January 2019 c. IFRS 16 ‘Leases’ IFRS 16 specifies how to recognise, measure, present and disclose leases, and will essentially replace IAS 17. The impact of this standard on the Group’s financial statements is not likely to be material. Robinson plc Financial Statements for the year ended 31 December 2017 39 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:35 Page 40 Independent auditor’s report to the members of Robinson plc Opinion We have audited the financial statements of Robinson Plc (the ‘company’) and its subsidiaries (the ‘group’) for the year ended 31 December 2017 which comprise the Group Income Statement, the Group Statement of Comprehensive Income, the Group and Company Statements of Financial Position, the Group and Company Statements of Changes in Equity, the Group and Company Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006. 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 31 December 2017 and of the group’s profit for the year then ended; > the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; > the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and > the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. 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 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. Use of the audit 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. Conclusions relating to going concern We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where: > the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or > the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group’s or the parent company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue. 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) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 40 Robinson plc Financial Statements for the year ended 31 December 2017 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:35 Page 41 n plc Independent auditor’s report to the members of Robinson plc The risk Our response Revenue Recognition Revenue is a material balance for Robinson Plc and represents the largest balance in the consolidated statement of comprehensive income. An error in this balance could significantly affect a users’ interpretation of the financial statements. There is risk of fraud or error in the financial reporting relating to revenue recognition due to the potential to inappropriately record revenue in the wrong period. We therefore consider cut-off to be a key audit matter. Goodwill and intangible asset impairment review Robinson Plc carries significant goodwill and other intangible asset balances on its balance sheet. The carrying values at 31 December 2017 were £1.1m and £5.1m respectively. The assessment for potential impairment is considered a key audit matter as it requires management to exercise significant judgement when considering future cashflows and profitability. The size of the balances means an error has the potential to have a material impact on the financial statements. Our procedures over revenue recognition included, but were not limited to: > Review and walkthrough of the controls in place around the recognition of revenue to ensure that revenue in the statutory accounts is accurately stated. > Testing a sample of revenue transactions around the year end to ensure they were accounted for in the correct period. > Review of management assumptions and judgements that could influence revenue recognition. No material misstatements were identified as a result of the audit procedures performed. Our procedures over the impairment assessments of goodwill and intangible assets included, but were not limited to: > Review of the goodwill and intangible assets impairment policy, and assessment of the associated controls. > Review of management’s assessment of the most appropriate level at which to set the Cash Generating Unit. > Review and challenge management’s consideration of forecast performance and any potential impairment. > Review and challenge the appropriateness of the discount rate used by management in its calculations. > Corroboration of management’s calculations and to other supporting evidence. No material misstatements were identified as a result of the audit procedures performed. Our application of materiality We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements on the financial statements and our audit. Materiality is used so we can plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free from material misstatement. The level of materiality we set is based on our assessment of the magnitude of misstatements that individually or in aggregate, could reasonably be expected to have influence on the economic decisions the users of the financial statements may take based on the information included in the financial statements. Based on our professional judgement the level of overall materiality we set for the financial statements is outlined below: Financial Statement materiality: Benchmark applied: Basis for chosen benchmark: £447,000 Materiality has been determined with reference to a benchmark of revenue, of which it represents 1.5%. We used revenue to calculate our materiality as, in our view, this is the most relevant measure of the underlying financial performance of the company. On the basis of our risk assessments, together with our assessment of the group’s overall control environment, our judgement was that performance materiality was approximately 70 per cent of our financial statement materiality, namely £313,000. We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £13,400 as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also reported to the Audit Committee on disclosure matters that we identified during the course of assessing the overall presentation of the financial statements. Robinson plc Financial Statements for the year ended 31 December 2017 41 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:35 Page 42 Independent auditor’s report to the members of Robinson plc Audit work at component locations for the purpose of obtaining audit coverage over significant financial statement accounts is undertaken based on a percentage of total performance materiality. The performance materiality set for each component is based on the relative scale and risk of the component to the group as a whole and our assessment of the risk of misstatement at component level. In the current period, the performance materiality allocated to the components and/or subsidiaries of the group ranged between £10,800 and £276,000. The company financial statement materiality has been set as 4% of Net Assets, namely £394,000. Performance materiality has been set at approximately 70 per cent of our financial statement materiality, namely £276,000. An overview of the scope of our audit An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. Our audit included an assessment of: whether accounting policies are appropriate to the group and parent company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. The risks of material misstatement that had the greatest effect on our audit, including the allocation of our resources and effort, are discussed under “Key audit matters” within this report. Our group audit was scoped by obtaining an understanding of the group and its environment, including group-wide controls, and assessing the risks of material misstatement at the group level. Based on that assessment, all entities within the group were subject to full scope audit performed by the group audit team with the exception of overseas subsidiaries whose audits were performed by the component auditor. At the parent company level we also tested the consolidation process and carried out analytical procedures to confirm our conclusion that there were no significant risks of material misstatement of the aggregated financial information. Other information The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, 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 or a material misstatement of the other information. 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. Opinions on other matters prescribed by the Companies Act 2006 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. Matters on which we are required to report by exception In light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report. 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 42 Robinson plc Financial Statements for the year ended 31 December 2017 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:38 Page 43 n plc Independent auditor’s report to the members of Robinson plc > the parent company financial statements are not in agreement with the accounting records and returns; or > certain disclosures of directors’ remuneration specific 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 10, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. 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. Signed: Louis Burns (Senior Statutory Auditor) for and on behalf of Mazars LLP Chartered Accountants and Statutory Auditor 45 Church Street Birmingham B3 2RT 22 March 2018 Robinson plc Financial Statements for the year ended 31 December 2017 43 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:38 Page 44 Report on corporate governance The Company is committed to high standards of corporate governance in keeping with its size. Although not required to, the Directors have decided to provide selected disclosures regarding corporate governance that they believe are valuable for readers of the financial statements. The Board The Company supports the concept of an effective board leading and controlling the Group. The Board is responsible for approving Group policy and strategy and the Directors are free to seek any further information they consider necessary. All Directors have access to independent professional advice at the Group's expense. The Board has a written statement of its responsibilities and there are written terms of reference for the Nomination, Remuneration and Audit committees. The Chairman and Non-executive Directors, whose time commitment to the Company is commensurate with their remuneration, hold other positions as set out in the accompanying biographies. The Board meets regularly on dates agreed each year for the calendar year ahead. This is typically eight times per year although additional meetings are called as and when deemed necessary. The Board consists of a Non-executive Chairman, two other Non-executive Directors, a Chief Executive and a Finance Director. This provides a broad background of experience and a balance whereby the Board's decision making cannot be dominated by an individual. The Chairman of the Board is Richard Clothier and the Group's business is run by the Chief Executive (Adam Formela) and the Finance Director (Guy Robinson). The biographies of the Directors, who we consider to be the key managers of the business, are set out as follows: www.robinsonpackaging. com/about/corporate- governance 1 2 3 4 5 Richard Clothier (1) Non-executive Chairman Richard joined the Robinson Board in May 2004. From 1977 he was employed by the Dalgety Group and was appointed Group Chief Executive of Dalgety Plc in 1993. From 1998 to 2006 he served as Chief Executive of PGI Group Plc and as Non-executive Director of Granada Plc from 1995 to 2004. Richard is currently Chairman of AquaBounty Technologies Inc. and is a member of the Advisory Board of Boardroom Review. Adam Formela (2) Chief Executive Adam started his career with Black & Decker, rising to the rank of European Director of Sales & Marketing before moving into general management with Electrolux and then Kenwood Appliances. He then moved to GRP Ltd, a Singapore listed company as Group Chief Executive, before returning to Europe to work with Acco Brands Corporation as Vice President of Operations, Business Development and Sales & Marketing before becoming President of the Document Communication division. Adam joined the Board in February 2007. Guy Robinson (3) Finance Director Guy has an honours degree in mechanical engineering from Nottingham University and qualified as a Chartered Accountant in 1981 at Coopers & Lybrand, working for them until he joined Robinson as Management Information Systems Manager in 1985. He has held the positions of Group Finance Controller and Packaging Division Financial Director and was appointed Group Finance Director in 1995. He has been responsible for working with the Board on many business acquisitions and disposals and is responsible for the Group’s significant property portfolio. Anthony Glossop (4) Non-executive Director Anthony was appointed a Director in 1995 and is Chairman of the Remuneration Committee. After qualifying as a solicitor, he entered industry as a Company Secretary. He became Chief Executive of a West Midlands engineering group. During the engineering recession of the 1980’s he steered that group into what is now St. Modwen Properties, of which he was Chief Executive and then Chairman. Alan Raleigh (5) Non-executive Director Alan is a Chartered Engineer who joined the Board in August 2016. After gaining a BSc Hons in Production Engineering and Production Management from Strathclyde University, he spent his career with Unilever plc holding a variety of senior positions in the UK, US and Japan. He was the Executive Vice President, Personal Care Supply Chain until 2017 and brings experience in highly relevant sectors to the Board. 44 Robinson plc Financial Statements for the year ended 31 December 2017 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:38 Page 45 Report on corporate governance Shareholders The Company maintains close contact with its brokers, who keep the Board informed of the views of the investor community. The Company values the views of its shareholders and recognises their interest in the Group's strategy and performance. The Annual General Meeting is used to communicate with private investors and they are encouraged to participate. The Directors will be available at the Annual General Meeting to answer questions. Internal control The Board recognises its responsibility for maintaining systems of internal control and reviewing their effectiveness. The Board maintains procedures for identifying significant risks faced by the Group. The Board has reviewed the operation and effectiveness of the Group's system of internal financial control for the financial year up to the date of approval of the financial statements. The system of internal financial control is designed to provide reasonable, but not absolute, assurance against material misstatement or loss. The principal elements of the Group's systems of internal financial control include: > a management structure and written procedures that clearly define the levels of authority, responsibility and accountability; > well established business planning, budgeting and monthly reporting functions with timely reviews at the appropriate levels of the organisation; > a comprehensive system for investment appraisal and review; and > an Audit Committee that regularly reviews the relationship with and matters arising from the external auditors including the level of non-audit work that is performed by them. Nomination Committee The Nomination Committee is chaired by Richard Clothier and includes Anthony Glossop, Alan Raleigh and Adam Formela. This Committee meets at least once per year and reviews the Board’s structure, size and composition. It is also responsible for succession planning for Directors and other senior executives. Audit Committee The Audit Committee is chaired by Richard Clothier and includes Anthony Glossop, Alan Raleigh and Adam Formela. This Committee meets at least twice per year and reviews the interim and preliminary announcement of final results and the annual financial statements prior to their publication. It is also responsible for the appointment or dismissal of the external auditors and for agreeing their fees. It keeps under review the scope and methodology of the audit and its cost effectiveness together with the independence and objectivity of the auditors. It meets with the auditors at least twice per year to agree the audit plan and review the results of the audit. Remuneration Committee The Remuneration Committee is chaired by Anthony Glossop and includes Richard Clothier, Alan Raleigh and Adam Formela. On behalf of the Board the Committee reviews and approves the remuneration and service contracts (including benefits) of the executive Directors and other senior staff. The Committee aims to provide executive remuneration packages designed to attract, motivate and retain directors of the calibre necessary to achieve the Board’s strategic and operational objectives and to reward them for enhancing shareholder value. The remuneration packages for the executive Directors and other senior staff include a basic salary and benefits, an annual performance related pay scheme and a long term incentive plan in the form of a share option scheme. Robinson plc Financial Statements for the year ended 31 December 2017 45 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:38 Page 46 46 Robinson plc Financial Statements for the year ended 31 December 2017 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:38 Page 47 Report on corporate social responsibility Our primary objective is to deliver a sustainable profitable business which delivers consistently good value to our shareholders. In doing so, the Board takes account of its employees, customers and the environment in which the Group operates. We have a Group Welfare Officer, who inter alia looks after the foundation club (for retired employees), a visitors’ panel and the annual pensioners’ party. Products We aim to produce our products in a responsible manner, using innovative design and manufacturing to meet our customers’ requirements with minimum adverse impact on the environment. We work with our customers and suppliers to ensure recycled materials can be used where possible and that the product specification is optimised to reduce the weight or other factors that affect its impact on the environment. Places We want our manufacturing processes to have as minimal impact on the environment as possible. You will see from the Strategic report that we measure several indicators to ensure that we make continuous improvements in this area. We aim to recycle as much of our waste as possible. We are working to increase the environmental awareness of our staff in order that both the Company and the local community can benefit. People Health & safety Our primary aim is to provide a safe and healthy environment for our employees. At each of our sites we have health & safety procedures in place which are regularly reviewed and updated to provide such information, training and supervision as required. Communication The Group recognises the need to ensure effective communications with employees. During the year, they were provided with financial and other information affecting the Group and its various operations, by means of the house magazine, briefings and newsletters. Consultative committees in the different areas of the Group enabled the views of employees to be heard and considered when making decisions likely to affect their interests. Non-discrimination Our policy is to have no discrimination on grounds of age, race, colour, sex, religion, sexuality or disability. Integrity and business ethics We aim to achieve the highest standards of business integrity and ethics. We will not tolerate any forms of harassment at any level within our organisation or when dealing with people from outside. Training & education We recognise the importance of training and education for our people. We are fortunate to have an external trust fund that supports the Group to help achieve this objective. Our main businesses were early adopters of the ISO 9001 Quality Standard and Investors in People and we remain committed to helping our people achieve their maximum potential. Welfare We take the welfare of our employees both past and present very seriously, recognising that an involved caring community is a more satisfying place to work. A Group pension scheme is in place and we encourage employees to save for their retirement. We publish a Group magazine every 6 months that is distributed to all employees and pensioners. http://www.robinsonpackaging.com/about/environment Robinson plc Financial Statements for the year ended 31 December 2017 47 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:42 Page 48 48 Robinson plc Financial Statements for the year ended 31 December 2017 PERFORATION GUIDE - DO NOT PRINT robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:42 Page 49 Form of Proxy For use at the Annual General Meeting of Robinson plc convened for 10 May 2018 and any adjournments thereof. I/We,(see note 1) (block capitals please) of (name) (address) being a member of Robinson plc hereby appoint the Chairman of the Meeting* or (see note 2) or (see note 2) failing him/her (name/address) (name/address) as my/our proxy to attend and vote in my/our name(s) and on my/our behalf at the Annual General Meeting of the Company to be held on 10 May 2018 and at any adjournment thereof. This form is to be used in respect of the resolutions mentioned below as indicated. Where no instructions are given, the proxy may vote as he/she thinks fit or abstain from voting. Resolutions: 1 To adopt the Directors’ Report and Financial *FOR *AGAINST *WITHHELD Statements for the year ended 31 December 2017 2 To declare a final dividend of 3p per ordinary share 3 To re-elect Guy Robinson as a director 4 To re-elect Richard Clothier as a director 5 To reappoint Mazars LLP as auditor of the Company and to authorise the directors to determine their remuneration *FOR *FOR *FOR *FOR *AGAINST *WITHHELD *AGAINST *WITHHELD *AGAINST *WITHHELD *AGAINST *WITHHELD *Please delete whichever is not desired or leave blank to allow your proxy to choose. Signature(s) Dated Notes 1 The names of all registered holders should be stated in block capitals. 2 If it is desired to appoint a proxy other than the Chairman of the meeting, his/her name and address should be inserted, the reference to the Chairman deleted and the alteration initialled. 3 A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and, on a poll, vote in his or her stead. A proxy need not be a member of the Company. 4 In the case of joint holders, the signature of any one holder is sufficient, but the names of all joint holders must be stated. The vote of the senior who tenders a vote whether in person or by proxy will be accepted to the exclusion of the other votes of joint holders. For this purpose seniority will be in the order in which the names appear in the register of members for the joint holding. 5 Unless otherwise indicated, or upon any matter properly before the meeting but not referred to above, the proxy may vote or abstain from voting as he/she thinks fit. 6 To be valid, Forms of Proxy must be deposited at the Registered Office of the Company, Field House, Wheatbridge, Chesterfield S40 2AB, not less than 48 hours before the time appointed for the meeting. E R E H H C A T E D PERFORATION GUIDE - DO NOT PRINT Robinson plc Financial Statements for the year ended 31 December 2017 49 robinson17-pages-artwork.qxd:robinson09-pages.qxd 28/03/2018 19:42 Page 50 PERFORATION GUIDE - DO NOT PRINT AGM attendance form Annual General Meeting – Thursday 10 May 2018 The Board very much hopes that you will be able to attend this year’s Annual General Meeting, which will again be held at Chesterfield Football Club, 1866 Sheffield Road, Whittington Moor, Chesterfield, S41 8NZ at 11:30 am. In order to assist with catering and arrangements, it would be helpful if you would complete and return this Attendance Form. If you are appointing a proxy, then please ask your proxy to complete and return the form. Thank you and we look forward to seeing you. From: Full Name in CAPITALS please I shall be attending the AGM I shall be staying for the buffet lunch Me My Proxy Please tick the appropriate boxes Signature Date Please return this form to: Guy Robinson Robinson plc Field House Wheatbridge CHESTERFIELD S40 2AB UK 50 Robinson plc Financial Statements for the year ended 31 December 2017 E R E H H C A T E D PERFORATION GUIDE - DO NOT PRINT robinson17-cover-4mm-spine-artwork.qxd:robinson09-cover.qxd 29/03/2018 11:37 Page 2 Robinson plc is a custom manufacturer of plastic and paperboard packaging, predominately serving the food & drink, toiletries & cosmetics and household sectors. Our packaging solutions have been used by our customers to differentiate their brands in the UK and internationally for over 178 years. In both plastic and paperboard formats, Robinson has established a distinguished reputation for innovation and technical excellence and operates with a customer service ethos reflective of the family business from which the Group originated. Our customers include Avon, McBride, Bakkavor, British Pepper & Spice, Fiddes Payne, Hain Daniels, Kraft, Nestle, Proctor & Gamble, Quaker Oats, Mars, Dr Oetker, Reckitt Benckiser, SC Johnson, Two Sisters and Unilever. Robinson aims to ensure our products reliably meet our customers’ requirements whilst minimising their impact on the environment. All our manufacturing facilities are BRC (British Retail Consortium) accredited to food packaging standards and, in the UK, we have long held the ISO 9001 Quality Standard. Directors’ report Highlights Five year record Our market Our added value Innovative design solutions Chairman’s report Strategic report Directors’ report Financial statements 2016 Group income statement Statement of financial position Statement of changes in equity Statement of cash flows Notes to the financial statements Independent auditor’s report 03 03 04 05 06 07 08 11 16 17 18 19 20 40 Directors and advisors Corporate governance and responsibility Report on corporate governance Report on social responsibility Annual general meeting Form of proxy Annual general meeting attendance form Notice of annual general meeting 44 47 49 50 51 Robinson plc Registered Office: Field House, Wheatbridge, Chesterfield, S40 2AB Incorporated in England, registered no. 39811 www.robinsonpackaging.com Financial: www.robinsonpackaging.com/investors Directors Richard John Clothier Non-executive Chairman Adam Jonathan Formela Chief Executive Charles William Guy Robinson Finance Director Charles Compton Anthony Glossop Non-executive Director Alan McLean Raleigh Non-executive Director Nominated Adviser/Broker FinnCap 60 New Broad Street, London EC2M 1JJ Registrar Neville Registrars Ltd 18 Laurel Lane, Halesowen, B63 3DA Solicitor DLA Piper UK LLP 1 St Paul’s Place, Sheffield, S1 2JX Banker HSBC 1 Bond Court, Leeds, LS1 2JZ Auditor Mazars LLP 45 Church Street, Birmingham, B3 2RT Notice of Annual General Meeting Notice is hereby given that the Annual General Meeting of Robinson plc will be held at Chesterfield Football Club, 1866 Sheffield Road, Whittington Moor, Chesterfield, S41 8NZ on Thursday 10 May 2018 at 11:30 am for the following purposes: Resolutions To consider and, if thought fit, pass the following resolutions which will be proposed as ordinary resolutions: 1 to receive and adopt the report of the directors and the audited financial statements for the year ended 31 December 2017 2 to declare a final dividend of 3p per ordinary share 3 to re-elect Guy Robinson as a director of the Company 4 to re-elect Richard Clothier as a director of the Company 5 to re-appoint Mazars LLP as auditors of the Company and to authorise the directors to determine their remuneration To transact any other ordinary business of an annual general meeting. By order of the Board Guy Robinson Director 17 April 2018 A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and, on a poll, vote in his or her stead. A proxy need not be a member of the Company. To be valid, Forms of Proxy must be deposited at the Registered Office of the Company not less than 48 hours before the time of the meeting. Only those members in the register of members of the Company as at 11.30 am on 8 May 2018 or, if the meeting is adjourned, in the register of members 48 hours before the time of any adjourned meeting shall be entitled to attend or vote at the meeting in respect of the number of shares registered in their name at that time. Changes to entries in the register of members after 11.30 am on 8 May 2018 or, if the meeting is adjourned, after 48 hours before the time of any adjourned meeting shall be disregarded in determining the rights of any person to attend or vote at the meeting. Directions to the AGM By Road Travelling north or south on M1, exit at junction 29 and take the A617 towards Chesterfield. At the end of the dual carriageway at the edge of the town centre, turn right onto the A61 towards Sheffield. At the first roundabout turn left into Lockoford Road then right onto the B6057. The stadium is located on the right. By Train Chesterfield is serviced by the intercity network from main centres in the UK including a regular fast service from London. A taxi rank is located outside the station. SHEFFIELD A 6 1 D A O R D L E I F F E H S 7 5 0 6 B LOCKOFORD RD B 6 0 5 7 A 6 1 CHESTERFIELD FOOTBALL CLUB A619 ROTHER WAY TOWN CENTRE CHESTERFIELD A619 A632 A617 1 6 A DERBY M1 J29 2 Robinson plc Financial Statements for the year ended 31 December 2017 Robinson plc Financial Statements for the year ended 31 December 2017 51 robinson17-cover-4mm-spine-artwork.qxd:robinson09-cover.qxd 29/03/2018 11:35 Page 1 Financial Statements 2017 Robinson plc Field House, Wheatbridge, Chesterfield, S40 2AB United Kingdom www.robinsonpackaging.com Robinson plc Registered Number: 39811 Design: fizogdesign.co.uk www.robinsonpackaging.com