Robinson Plc
Annual Report 2021

Plain-text annual report

From Purpose to Action Annual report 2021 Welcome to the Robinson Group Annual report 2021 2021 was a very challenging year for many businesses, including Robinson. As the global economy began to reopen post Covid-19, demand for raw materials increased rapidly which pushed up prices sharply. In the latter part of the year, we saw substantial inflation in energy prices and labour availability issues. As a business, we are proud that despite the supply chain difficulties we faced during the year, we were able to secure sufficient levels of raw materials and labour to continue serving our customers. For many reasons, demand from our customers has been extremely volatile and sales volumes were lower than 2020 as a result. During the year we have expanded our footprint, capabilities, and geographical reach with the acquisition of Schela Plast A/S (Schela Plast), which will better position us to serve customers in Northern Europe, as well as in Central Europe and the UK. Sustainability is an integral part of the Robinson strategy and 12 months on from the publication of our sustainability pledge, we are happy to update on progress against the 15 ambitious goals in this report. Contents Strategic report 3 Our year in review 4 Chairman’s statement 6 CEO’s report 8 Robinson at a glance 10 Our business strategy 12 Guiding our sustainability journey 16 How we create value 18 Risks and opportunities 20 Engaging with stakeholders 24 Performance overview Corporate governance 28 Corporate governance report 33 Directors’ remuneration report 36 Directors’ report Financial statements 40 Group income statement and statement of comprehensive income 41 Statement of financial position 42 Statement of changes in equity 43 Cash flow statement 44 Notes to the financial statements 74 Independent auditor’s report to the members of Robinson plc Additional information 80 Notice of Annual General Meeting 81 Form of proxy 82 Annual General Meeting attendance form Our year in review Sales increased to £46.0m, including the impact of the Schela Plast acquisition (2020: £37.2m) Gross margin decreased to 17% (2020: 23%) £3.9m invested in net capital expenditure** (2020: £4.6m) Adjusted EBIT* decreased to £1.2m Dividend paid in the year 5.5p (2020: £2.7m) (2020: 5.5p) Completed acquisition of Schela Plast business in Denmark in February Five year summary Revenue Gross profit % of revenue Operating costs Operating profit before exceptional items and amortisation of intangible assets Exceptional items Amortisation of intangible asset Operating profit Net finance costs Finance income in respect of pension fund Profit/(loss) before taxation Taxation Dividends Retained profit/(loss) Net assets excluding pension asset after deduction of related deferred tax Depreciation EBITDA (earnings before interest, tax, depreciation and amortisation) Capital expenditure Net debt Operating profit % of revenue Return on capital employed % Basic earnings per share 2017 £’000 29,813 5,778 19% (4,457) 1,321 65 (783) 603 (103) 130 630 (317) (901) (588) 2018 £’000 32,802 5,884 18% (4,370) 1,514 110 (783) 841 (156) - 685 10 (890) (195) 2019 £’000 35,085 7,492 21% (4,971) 2,521 - (810) 1,711 (205) - 1,506 (296) (890) 320 2020 £’000 37,203 8,566 23% (5,878) 2,688 - (809) 1,879 (127) - 1,752 (343) (890) 519 2021 £’000 45,954 7,750 17% (6,525) 1,225 (43) (957) 225 (373) - (148) 176 (898) (870) 23,056 22,928 22,923 23,404 21,670 1,492 2,878 3,194 6,510 2% 4% 1.9p 1,795 3,419 4,355 8,845 3% 5% 4.2p 1,960 4,481 1,726 6,946 5% 7% 7.3p 2,164 4,852 4,956 6,865 5% 8% 8.5p 2,963 4,145 3,991 13,127 0% 4% 0.2p * Operating profit before amortisation of intangible assets and exceptional costs ** Net capital expenditure excluding operating leases capitalised under IFRS 16 From purpose to action | Robinson Annual report 2021 | 3 Strategic report | Corporate governance | Financial statements | Additional informationChairman’s statement The Robinson business experienced very challenging conditions throughout 2021 across input price inflation, customer demand and the ongoing uncertainty resulting from the Covid-19 pandemic. Alan Raleigh | Chairman The first half of the year was dominated by constraints on resin availability and a consequential sharp increase in prices. In the first six months, the market price of resins used in the Group increased on average by 60% and remained high for the full year. The second half saw significant input price inflation across secondary packaging, energy, and transport. In the UK specifically, limited labour availability increased costs and impacted production volumes and supply to customers. Throughout the year, customer demand has been extremely volatile due to a varying pace of recovery from the pandemic and the consequential uncertainty in Fast Moving Consumer Goods (FMCG) markets. The ramp up in demand, normally evident from the beginning of the third quarter, did not begin until mid-September and remained volatile, with an overall reduction in volume for the year as a result. Finally, market conditions have led many of our customers to delay planned new business projects, instead focusing on reducing costs and preserving cash. Financial and operating performance Revenues were 24% higher than 2020, including 21% growth from the acquisition of Schela Plast which completed during the year. After adjusting for the acquisition, price changes and foreign exchange, sales volumes in the underlying business are 5% lower than 2020, which included some additional demand due to the Covid-19 pandemic. Gross margins of 17% (2020: 23%) were severely impacted by structural input cost inflation, across resin, energy, transport and labour costs, exacerbated by high demand volatility and market uncertainty. Operating costs were 12% higher than 2020, due to the effect of the Schela Plast acquisition in the year. In the underlying business, we were able to offset the impact of investments made in 2020 by reducing other discretionary expenditure. In response to the lower gross margins across the business, we implemented an initial manufacturing site restructuring programme in November, which resulted in £0.2m of exceptional costs and will deliver £0.3m of cost savings annually. Operating profit before amortisation of intangible assets and exceptional costs has reduced to £1.2m (2020: £2.7m), with a loss before tax of £0.1m (2020: profit of £1.8m). Cash generated by operations was £5.4m (2020: £6.6m), suffering from lower profitability and the effect of higher resin prices on working capital, partially offset by improved payment terms with customers. Acquisition of Schela Plast On 10 February 2021, we completed the acquisition of Schela Plast, a specialist in the design and manufacture of blow moulded containers, based in Denmark. The business experienced a difficult period under its first six months of Robinson ownership due to Covid-19 pandemic induced lockdowns in Scandinavia, material availability issues and significant inflation in input costs. Following the planned implementation of a major new contract with a leading FMCG brand owner, the final quarter of the year showed improvement. Overall, the business made an operating loss of £0.2m in the period to 31 December 2021. With the annual effect of the new contract, we have planned for a substantial increase in revenue and associated profitability in 2022, subject to the current uncertainty driven by the Russian invasion of Ukraine and subsequent sharp increase in energy and polymer prices. Capital investment, financing, and pension We are committed to developing and maintaining a competitive manufacturing infrastructure. During the year, we invested a net £3.9m in plant and equipment, of which £1.7m was invested as anticipated as part of the post-acquisition plan of Schela Plast, to replace outdated presses and add additional capacity. This investment was funded by increased borrowings resulting in net debt at 31 December 2021 of £13.1m (2020: £6.9m). In addition, From purpose to action | Robinson Annual report 2021 | 4 Strategic report | Corporate governance | Financial statements | Additional informationdeferred consideration of £2.3m is payable to the former owners of Schela Plast in 2022, and this is provided for in Trade and Other Payables. To fund the Schela Plast acquisition, new facilities totalling £12m were agreed with HSBC Bank UK in February 2021. With total credit facilities of £22m (2020: £18m), including those acquired with Schela Plast, the necessary headroom is available for the Group to operate effectively. The IAS 19 valuation of our pension plan at 31 December 2021 reported a surplus of £13.2m (2020: £9.3m). This surplus is deemed to be irrecoverable and so is not included in the Group’s assets. Property As notified in the 9 December 2021 Trading Statement, we expected to dispose of two plots of land in 2021. We are now pleased to report the sale of the first plot to Norpap Property 2019 Limited (“Norpap”), with exchange of contracts on 23 March 2022 with formal completion expected in the coming weeks. The Property was formerly used by the Group for manufacturing but has been mainly let to an associated company of Norpap for several years. The consideration payable at completion is £975,000 in cash and these monies will be used by the Company to reduce current bank debt. The Property currently attracts annual rental income of £60,000 and the book value was £238,000 at 31 December 2021. Planning approval is required for the second plot, which will result in potential completion at the end of 2022 or in the first half 2023. The gross proceeds are expected to be marginally in excess of £2.4m for the second site which has a book value of less than £0.8m. In addition, the Company has very recently accepted a non-binding offer to sell an operational property in Sutton- in-Ashfield, with a gross value of £2.5m. The total book value of the property was £1.0m at 31 December 2021. In the event that the sale does proceed, production will be relocated to a recently refurbished building on existing Robinson premises in Kirkby-in-Ashfield. The relocation will require investment of approximately £0.6m and will provide future opportunities to further improve operational efficiency in the UK plastics business. Subject to the necessary planning approvals, we would expect further sales of surplus property, in Chesterfield, to be achieved in the next 18 months. The intention of the Group remains, over time, to realise the maximum value from the disposal of surplus properties and to reinvest the proceeds in developing our packaging business. Board At the June 2021 AGM, Anthony Glossop stood down after 26 years’ service as a Non-executive Director. Guy Robinson stepped down as Finance Director on 1 January 2021 to become the Property Director and subsequently became a Non-executive Director in June following Anthony’s retirement. Mike Cusick was appointed Finance Director on 1 January. Dividend The Board proposes a final dividend of 3.0p per share to be paid on 15 July 2022 to shareholders on the register at the close of business on 1 July 2022. The ordinary shares become ex-dividend on 30 June 2022. This brings the total dividend declared for 2021 to 5.5p (2020: 8.5p including the deferred final dividend for 2019). Our people On behalf of the Board, I would like to thank all colleagues across the Group for their efforts during a year that saw major challenges and huge uncertainty. I am proud of the many inspiring examples of resilience and commitment demonstrated in the past 12 months and I look forward to working with our high performance, expert, and diverse team in 2022 to deliver sustainable value to our customers and other stakeholders. Outlook The substantial uncertainty and volatility experienced in 2021 is likely to continue through 2022, with further inflation in input costs anticipated. As a result of the inflation already experienced in 2021, we are seeking substantial price increases from all customers, which will support the improvement of margins in 2022. Given the ongoing pressure on input prices the Board will continue to prioritise the management of fixed costs in 2022. Despite the ongoing uncertainty, profits in the 2022 financial year are expected to be ahead of 2021 and we remain committed in the medium-term to delivering above- market profitable growth and our target of 6-8% adjusted operating margin*. Russian invasion of Ukraine The Russian invasion of Ukraine in recent weeks has created substantial additional market uncertainty. We have a very small sales exposure to Russia and Belarus which we have chosen to stop supplying. This will not have a material effect on the business. We have seen sharp increases in global oil and energy costs which will flow through to polymer resin and other raw material prices and impact our costs. To the extent that this cannot be passed on to customers through sales price increases, we may see a reduction in profitability. This inflation in input costs may change consumer confidence and impact customer demand, but our current assessment is that we would expect the largely essential nature of our market sectors to make them relatively robust. It is likely that the consequences of the Russian invasion of Ukraine will remain for some time. Whilst we cannot foresee or fully quantify the impact, we are closely monitoring the situation, we will drive profitability, conserve cash and respond as necessary across our geographical locations. Alan Raleigh Chairman 23 March 2022 *Operating profit margin before amortisation of intangible assets and exceptional costs. From purpose to action | Robinson Annual report 2021 | 5 Strategic report | Corporate governance | Financial statements | Additional informationCEO’s report Despite a challenging year on many levels, we expanded our business in Europe, sourced scarce material and labour to continue serving our customers and advanced our health and safety programme. Dr Helene Roberts | CEO Our markets, as in every sector, were volatile and uncertain. We continued to put our customer first: responding with agility; elevating our customer engagement and service; and putting in extra operational efficiency measures. However, like many businesses in our sector, we have been affected by significant external factors. External influences Following a net benefit in 2020, the Covid-19 pandemic started to have a negative impact across the Robinson business from early 2021. As economies started to fully reopen, demand for polymer increased significantly, leading to supply shortages, and pushing prices up rapidly. We have seen fluctuating demand from our customers including: the effects of raw material shortages in their businesses; the unwinding of pandemic and Brexit related stock builds; and a shortage of labour on some filling lines. Reduced Business unit performance customer new product development throughout the pandemic also had a negative impact on sales in 2021 due to our mainly bespoke packaging business model. Finally, during the latter part of the year, labour availability in the UK and sharp increases in other input costs such as energy, transport and secondary packaging started to impact profitability. Business unit performance All our plastics businesses saw a reduction in sales volumes in 2021, which was largely offset by price increases passed on to customers following the sharp polymer increases in the first half year. Although polymer increases were passed on where contracts allow, profitability was severely impacted by a typical three-month lag effect. However, a number of our close partnership customers supported the business by allowing more regular price increases. In the UK plastics business, sales were heavily impacted by the slower than normal ramp up in demand in the third quarter. Labour availability impacted our ability to serve customers and we saw a significant reduction in volumes 2021 2020 UK £'000 Poland £'000 Denmark £'000 Head office £'000 Group £'000 UK £'000 Poland £'000 Denmark £'000 Revenue 21,869 16,266 7,819 - 45,954 20,658 16,545 277 1,474 (202) (367) 1,182 1,354 2,126 Head office £'000 Group £'000 - 37,203 (792) 2,688 - - Operating profit before amortisation Operating profit margin before amortisation Amortisation of intangible assets Operating profit Operating profit margin Capital expenditure 1.3% 9.1% -2.6% n/a 2.6% 6.6% 12.8% n/a n/a 7.2% 1,376 954 1,651 10 (957) 225 0.5% 3,991 3,384 1,007 - 565 (809) 1,879 5.1% 4,956 From purpose to action | Robinson Annual report 2021 | 6 Strategic report | Corporate governance | Financial statements | Additional informationfrom core customers compared to 2020. As a result, we pulled forwards our plans to restructure the business in Q4 and laid the foundations for further changes in 2022. In the UK Paperbox business, sales growth accelerated as customers continue to seek UK based suppliers for their packaging. Long lead times, high shipping costs and the environmental impact of sourcing from Asia remains a key driver for growth. The business is currently a relatively small part of the Group, and whilst gross margins improved in 2021 it made a small operating loss. We have plans for equipment investment in 2022 that will substantially increase capacity and efficiencies, with additional scale we expect this business to contribute to Group profits in the current year. In Poland, lower sales volumes were primarily driven by the reduction in demand for liquid hand soap and sanitiser bottles, compared with the previous year. Currency movements also reduced Poland sales in the Group results by 6% (£1.0m) against the prior year. We were able to reduce the impact of market polymer price increases in Poland more effectively than elsewhere due to the dynamics of the local market. We were also awarded some new business projects, which will start to benefit sales in 2022. In Denmark, underlying core volumes were depressed by several Covid-19 lockdowns in Scandinavia in the first half of the year and didn’t start to recover until the final quarter. Demand was particularly low in the foodservice and hospitality sectors which are affected more by Covid-19 than other sectors in which we operate. Availability of raw materials and substantial input price inflation also impacted costs. We are disappointed that the combination of the above factors caused the business to make an operating loss in 2021. However, new business gains in 2021 with a major FMCG brand owner will have a significant positive full year effect in 2022 and we expect core volumes to continue to stabilise. Welcoming Schela Plast, Denmark The acquisition of Schela Plast in February 2021 makes us more relevant to our major customers, allowing us to mirror their production hubs across Northern Europe. The acquisition also provides other cross-group opportunities. The post-acquisition integration was challenging during the Covid-19 pandemic, with limits on travel and consequently our ability to meet face to face. Despite these and the other market challenges, the acquisition process went to plan, and the local management team have managed the business remarkably well. I’d like to thank them personally for their continued dedication. Sustainability and our business strategy During 2021, we refreshed our business strategy with three strategic priorities: putting customers first; helping our people thrive; and achieving sustainable growth. This strategy has been individually communicated to every employee. Sustainability is a key part of this strategy and performance towards our goals in this area is monitored through focused financial and non-financial metrics. We launched our sustainability pledge in February 2021 and continue to progress our work towards a plastic circular economy, using increased recycled content and making packaging which is recyclable. We are continuing to decarbonise our business by focusing on energy reduction opportunities in our operations. During the year in Denmark, we delivered a project which will reduce our energy consumption by 20% through more efficient machinery. Our sustainability goals are an integral part of our day-to- day operations and we are focusing on those areas most important to our business and customers. Operating with excellence We have continued to implement a standard way of working across the Robinson business, initially focusing heavily on health and safety. After eight lost time accidents in 2020, there were four in 2021, but we have now exceeded 12 months without a lost time accident. We are pleased with progress made to date, which has been achieved by implementing formalised, behaviour-based safety programmes, encouraging our people to report near- misses, and carrying out on-the-job checks through risk assessments. Our customers told us through an independent survey that they were delighted with our sales and account management and their overall relationship with Robinson. Some areas for enhancement were highlighted and we are progressing through an improvement plan to address the feedback and will continue to communicate on progress with our customers. Our focus ahead Given the challenges faced in 2021, and the continuing market uncertainty, we have a very clear plan to improve profitability. We will need to make fundamental changes and adapt to new ways of thinking and operating to make the business more resilient. The strategy we have in place supports this: we will focus on the customer; drive sales; reduce our cost base; and improve the capabilities of our people through training, recruitment, and increased diversity. We will face the challenges head on by continuing our selective investment programmes and driving out inefficiency in our operations. This requires changes in our core operations and organisational structures. We plan to invest in our Paperbox business to exceed market growth and continue to develop more sustainable growth with our key customers across the Group. Dr Helene Roberts CEO 23 March 2022 From purpose to action | Robinson Annual report 2021 | 7 Strategic report | Corporate governance | Financial statements | Additional informationRobinson at a glance Our purpose is to go above and beyond to create a sustainable future for our people and our planet. 1839 End-to-end solution provider, from concept to manufacturing reality More than 180 years of industry expertise Our business Robinson specialises in custom packaging with technical solutions for hygiene, safety, protection, and convenience. We manufacture injection and blow moulded plastic packaging and rigid paperboard luxury packaging. 4 1 Employing 401 people Geographical reach into Northern and Eastern Europe and the UK Markets we serve Food and drink Homecare Personal care and beauty Luxury gifts Our customers include McBride, Procter & Gamble, Reckitt Benckiser, SC Johnson and Unilever How we work Our core values and behaviours Honest Agile Empowered Engaged We are refreshingly real, straightforward and trusted by our customers We are nimble and work responsively to keep on track, quickly bringing concepts to manufacturing reality We are confident, working with authority and competence to deliver our collective goals We want our people to thrive, supporting them to realise their full potential Geographical reach The location of our sites maximises our logistical reach to deliver cost-effective solutions Sustainable focus Bringing customers sustainable solutions that align with Robinson values From purpose to action | Robinson Annual report 2021 | 8 Visit our website for more information Strategic report | Corporate governance | Financial statements | Additional information Our locations 1 2 3 4 5 Kirkby-in-Ashfield Stanton Hill Łódź Mińsk Mazowiecki Brørup (Schela Plast acquired 10 February 2021) 6 Chesterfield Robinson Plastic Packaging Robinson Paperbox Packaging Denmark 5 UK 2 6 1 Poland 4 3 Sustainability: Doing what we do, with the future of people and the planet in mind Materials Our suppliers extract and supply raw materials for our packaging, as well as provide us with energy, tools, equipment, and machinery Products We offer custom solutions and technical capabilities that deliver social and environmental benefits while protecting our customers’ products and the consumers who use them Team We invest in our people, helping shape their careers and support their safety, health, and wellbeing Operations We use innovative processes at all of our manufacturing plants and offices to reduce our impact on the planet Customers We partner with our customers, along with technical specialists, experts, and researchers, to design packaging with sustainability features and benefits built into the entire lifecycle Transportation We partner with our logistics providers to minimise transport through intelligent packaging design and taking advantage of our close locations to our key customers in the UK and Europe From purpose to action | Robinson Annual report 2021 | 9 Strategic report | Corporate governance | Financial statements | Additional informationOur business strategy Our strategic priorities Customer first Our sustainability pledge Our strategy is to grow ahead of the market, by providing excellent customer service as a long-term strategic partner, while creating a people-centric business aligned with our purpose. As we transition to a circular economy, sustainability is at the core of our work. Our strategic priorities Customer first OUR PURPOSE Going above and beyond to create a sustainable future for our people and planet Thriving people Sustainable growth We continue to partner with our customers to help provide long-term value by protecting and showcasing their brands through our sustainable, fully functional custom packaging solutions. We take their concepts and turn them into commercial reality with speed and agility. We do this by: • providing excellent customer service and enabling our customers to efficiently and effectively serve their customers and the value chain; • engaging our customers and becoming more relevant as a long-term strategic partner; and • creating mutual value for ourselves and our customers to drive sustainable growth. Intelligence We enable our customers to contribute to building a circular economy through Robinson’s sustainable products and services. Transformation We will drive shared commercial value and income streams beyond current business models, collaborating with our customers. Sustainable growth Our sustainability pledge We deliver on our promise to grow our revenue ahead of the market and achieve profitable growth, thereby generating long-term shareholder value. We do this by: • doing the right things right through professional manufacturing operations, developing a superior performance-focused mindset of improvement and extracting capacity for regenerative growth; • divesting surplus property and reinvesting into the business; and • improving financial performance and resilience, allowing us to invest in the business and helping our people thrive. Regeneration We extract maximum value from the resources we use in our operations, recovering and restoring materials at the end of their life. Transformation We will drive shared commercial value and income streams to regenerate business models for a circular economy. Underpinned by operating responsibly and sustainably Thriving people Our sustainability pledge Accountable and inclusive governance We recognise the importance of our corporate social responsibility and effective governance to support the future for our shareholders and other stakeholders. Our sustainability pledge Long-term success for Robinson and our stakeholders relies on us being part of self-sustaining local economies, delivering social, environmental and economic value. Read more on pages 12 to 15. We continue to create a people-centric business, aligned to our purpose. We do this by: • building a culture that puts people at the core, focusing on being socially inclusive and driving diversity in thinking and supporting safety, health and wellbeing; • investing in our people, enabling them to reach their full potential through our continuous training programmes, helping them shape their careers; and • engaging people in all aspects of our business and operations and assisting them to put our customers first. Talent We want our people to thrive, enabling our team to reach their potential in a culture that prioritises health and wellbeing. Community We deliver real social and environmental benefits to our people and the local communities in which we operate. From purpose to action | Robinson Annual report 2021 | 11 Strategic report | Corporate governance | Financial statements | Additional informationGuiding our sustainability journey Our sustainability pledge helps bring our purpose to life - going above and beyond to create a sustainable future for our people and our planet. This underpins our business strategy and is focused on five pillars and 15 ambitious commitments which are woven into the fabric of our business. We continue to drive towards a circular economy system with resilience, delivering social and environmental value for all as we transition into the green industrial revolution. Find out more about our pledge at robinsonpackaging.com/sustainability C o m Growing togeth er a n R e g e n e r a t T r a n s a i n g c i r c u b u l a s r i n f o r e e c s m o s n m a o t o m d i y e o l s n f o r g e a c h o t h e r y n i t e l p i n d h u m Building a hap P e y a p o n ple d h e a l t h y c u l t u r e l a u s u n s a o s s i e t n a si r u e d b n n e o y g e e R O perating b Going above and beyond for people and planet Creating sustainable produc t s a n d s e r Intellige n c e s e v i c Transformation Intelligence We will drive shared commercial value and income streams beyond current business models, collaborating with our customers and partners to regenerate local economies. We will enable our customers to contribute to building a circular economy by applying purposeful design, using recycled content, and making our products recyclable. To develop a circular economy for our products, we will focus on using materials in our packaging that are recyclable, and produced using the maximum amount of recycled material, without adversely affecting the functionality of the packaging. We are developing the end market for recycled content with a mission to be part of self-sustaining local circular economies, delivering social, environmental, and economic value. Our goal is to re-use resources such as plastics and energy for as long as possible, with minimal waste. An exciting development in this area includes the participation of Schela Plast in a consortium of four organisations working to create a national circular economy for plastics, which recently resulted in the launch of plastic packaging made from 100% Danish household-sorted plastic waste; a local loop where plastic waste is being used as raw material for new packaging. We expect from 2022, 50% of our packaging in Denmark will be made from post- consumer recycled plastic. 10% virgin plastic reduction by the end of 2025 This goal will be achieved by both “light-weighting” products, that reduces overall plastic consumed, or by switching from virgin to recycled plastic. A successful project in 2021 for a leading personal care brand involved re-designing a bottle to increase post-consumer recycled content from 25% to 50% and a reduction in overall weight of 8%. Maximum recycled content by the end of 2022: Minimum 30% in plastic / Maintain 100% in paperboard Achievement of the 30% goal in plastics will require a transition from virgin to post-consumer recycled material. We are planning to reduce our range of processed plastics to those where recycled sources are widely available, these are Polyethylene Terephthalate (PET), High Density Polyethylene (HDPE) and Polypropylene (PP). An example project which works towards this goal, is recent production of detergent bottles made with 97% post-consumer recycled HDPE. Our targets for recycling and increasing recycled content in packaging will only be met if we are producing food packaging that includes sustainably sourced recycled PP derived from mechanically recycled food packaging. To close the loop on food-grade recycled PP, we have joined forces with NEXTLOOPP and other consortium members aiming to deliver, for the first time, a supply chain for this material. At present, our sales of PP to the food sector make up approximately a quarter of total plastic packaging sales. Mechanically recycled PP does not currently meet food-grade requirements and commercial volumes of chemically recycled food-grade PP are limited. With those constraints the target of 30% recycled content in packaging is not yet achievable. Excluding our sales of PP to the food sector we are at 14% recycled content, and we expect to get close to 30% by the end of 2022. All products fully recyclable by the end of 2022 We are targeting two main areas to deliver this goal: • focusing on three polymers which are recyclable: PET, HDPE, PP, this involves phasing out for example production using polystyrene (PS) which is deemed commercially unrecyclable; • only using coloured masterbatch in our products that can be detected in recycling systems for onward recycling. Work continues in Poland and the UK for the remaining few products to substitute PS with recyclable polymers and we expect to deliver on this goal in 2022. In Denmark, we do not use carbon black and all our packaging produced is recyclable. All our paperboard packaging is widely recyclable. SUPPORTING THE UN SUSTAINABLE DEVELOPMENT GOALS SUPPORTING THE UN SUSTAINABLE DEVELOPMENT GOALS From purpose to action | Robinson Annual report 2021 | 13 Strategic report | Corporate governance | Financial statements | Additional information Regeneration People Community We will extract maximum value from the resources we use in our operations, recovering and restoring materials at the end of their life. We want our people to thrive, enabling our teams to reach their potential in a culture that prioritises health and wellbeing. We will deliver tangible social and environmental benefits to our communities, educating the next generation of change-makers and bringing more sustainable initiatives to the areas where we operate. Zero waste to landfill by the end of 2021 We have made significant progress towards this goal, reducing from 20% of waste to landfill to 4% in 2021 by improving our own segregation of waste and partnerships with waste management companies. There is a small amount left to do in Poland, but we will fully achieve our target by the end of the first quarter of 2022. All Robinson sites are now signatories to Operation Clean Sweep; an international initiative to reduce plastic pellet loss from manufacturing operations. Net carbon positive by the end of 2030 We are committed to the decarbonisation of our operations and are currently developing our roadmap to become net carbon positive by 2030. An energy management team has been formed with representatives from all sites and our leadership team. We have identified 30 potential carbon reduction projects and we are focusing on implementation of 6 high priority projects such as installation of new energy-efficient moulding machines and production cells within our sites, aligning our investments for sustainable growth. We are focusing on measuring and reducing carbon emissions from our operations (see SECR report on page 26 for further details), and in parallel, we have started to measure our indirect, upstream, and downstream (scope 3) emissions with a view to developing initiatives to reduce collective emissions with our upstream and downstream partners. Improving building sustainability We recognise that our buildings have not been built to modern sustainable standards, but we are developing a formalised sustainable building protocol for all sites and will implement improvement actions where possible and appropriate. Energy and carbon reduction measures for our buildings are integrated into our carbon management and equipment replacement programmes. Further work is needed to identify opportunities related to water consumption and improving the workplace environment to support employee welfare and wellbeing. People development plan fully implemented by the end of 2023 This is a structured approach to support and develop our employees and teams, creating a great culture for our workforce. The plan focuses on several key areas including: • Employee engagement – we ran an organisational culture survey that compared our current position against other businesses. The results identified some strengths, and we are implementing specific actions to address highlighted weaknesses. • Enhanced employee communication – we have implemented a Group-wide employee intranet and we rolled out our ‘Big Picture’ workshops which were run by employee volunteers with a focus on the history of Robinson, our business strategy, and future plans. We received valuable and positive feedback and are now implementing actions to make tangible improvements. • Diversity plan – to ensure we bring in experience from a variety of perspectives, skills, and backgrounds. • Investing in people – development and training while creating career pathways to enable continued professional development and upskilling of our teams. • Rewards and recognition and the enhancement of employee benefits – which include access to a GP within 2 hours and free counselling. Champion employee health and wellbeing We have implemented measures to ensure the safety of our teams and continue to put our people first. We are proud to say that we have not had an outbreak of Covid-19 in any of our factories and we are continually reviewing our safety procedures to maintain this. Due to the pandemic, we have also introduced hybrid working reducing the number of team members on site. Zero accidents every year We want all our employees to go home safely and that is our top priority, applying a safety-first culture across all workplaces by implementing formalised, behaviour-based safety programmes, reporting near-misses and carrying out regular risk assessments. We have not had a lost time incident since March 2021. Offer career-enhancing work experience and opportunities We believe in investing in our future workforce and offer internships, apprenticeships and take part in local career fairs in partnership with colleges and universities in the three countries where we operate. Engage schools on the benefits of packaging and recycling We hope to educate children in the benefits of sustainable plastic packaging and the recycling imperative. We are Science, Technology, Engineering, Maths (STEM) Ambassadors and are volunteering at schools and colleges. We have partnered with the IOM3 Starpack Students competition, where we supported the packaging technologists of the future. Giving back to communities every year We continue to set up local community projects led by our production sites. Whether individual, team or centrally led, Robinson is committed to support causes ranging from charitable donations, fundraising, and sponsorship, to contributing our specialist knowledge and skills to those in need. Some examples include: • our team in Poland have been collecting cans for the ‘Balls for Cans’ project. For every 15kg of cans collected, the project donates a football to support a local team, Tęcza Soccer Club in Stanisławów. All cans collected are recycled; • throughout the year our UK teams have been raising money for charities including the Great Ormond Street Hospital through a daily tuck shop and cake sales; • our continued partnership in Poland with the local volunteer fire brigade means our employees receive regular fire safety training and in turn our donations are allocated to fire service equipment for the local fire stations; • our team in Denmark continues to support the local orphanage through donations as well as participating in local fundraising events. The team also employs local people who have fallen out of employment due to physical or mental constraints, supporting and mentoring them in their careers. SUPPORTING THE UN SUSTAINABLE DEVELOPMENT GOALS SUPPORTING THE UN SUSTAINABLE DEVELOPMENT GOALS SUPPORTING THE UN SUSTAINABLE DEVELOPMENT GOALS From purpose to action | Robinson Annual report 2021 | 15 Strategic report | Corporate governance | Financial statements | Additional information How we create value External drivers What we depend on Our business model Environmental sustainability Plastics use and waste, pollution, food waste, energy, and carbon emissions. Relationships Thriving people The engagement, skill, and efforts of our talented people. Social and demographic changes Changing role of packaging and attitudes to waste. Supply partnerships Materials and equipment procured from a limited number of partners. Uncertain economic outlook Medium and long-term impacts of Covid-19 and Brexit. Regulation and legislation UK and European plastics legislation from 2022. Supply chain disruption Reliance on timely, high- quality raw materials. Digitalisation and automation Rapidly advancing manufacturing techniques and technology. Expert groups and organisations Insights to policy, legislation, and market trends, and driving positive change. Customers Integrated and mutually beneficial relationships with key customers. Resources Natural resources Renewable and non- renewable materials. Financial resources Cash, equity, and debt to invest for the long-term. Tangible assets Physical assets such as manufacturing and office facilities as well as stock. Our people and expertise We protect and develop our people to help them thrive and continue to deliver value to our business and our customers. 1 Supply chain We partner with our suppliers and expert organisations to help us develop efficient processes and sustainable products. 2 Design and manufacturing We use technical expertise to bring customer concepts to commercial reality with agility, while minimising environmental impact. 3 4 Customers Consumers We develop partnerships with and invest in our customers to ensure they can meet their own customers’ needs. We provide packaging across our market sectors that is sustainable, protective, and functional. 5 Post-consumer recycled content We aim to design closed-loop packaging – eliminating waste and pollution, keeping resources in the circular economy, and regenerating natural systems. The value we create now Our long-term impact Customers Protection and differentiation of customer brands through sustainable, custom packaging solutions at speed and at a competitive price. People Motivated people achieving their full potential and taking action to improve their health and wellbeing. Communities Increased local employment and community engagement in plastics, packaging, and circular economies. Environment Reduction in food and product waste and climate mitigation. Investors and shareholders Profitable, sustainable growth, generating long-term shareholder value. Consumers Protective packaging for hygiene, safety, and convenience. Creating inclusive and equitable employment A diverse workforce with a culture that prioritises health and wellbeing, people development and employee growth with fair reward. Protecting our planet Sustainable consumption with clear goals of zero waste to landfill and becoming net carbon positive. Reducing plastic pollution Packaging with the lowest possible plastic content, maximising recycled material and driving for improved recycling systems. Partnership and collaboration Collaboration on the regeneration of local economies, and education on the benefits of plastics and importance of recycling. From purpose to action | Robinson Annual report 2021 | 17 Strategic report | Corporate governance | Financial statements | Additional informationRisks and opportunities Our approach to risk management Our principal risks The Board maintains a process and procedures for identifying significant risks faced by the Group as follows: The Board meets annually to identify risks and review strategy. Risks are assessed during the annual planning and budget process. The Senior Leadership Team records each risk, describing mitigation measures and any proposed future actions. The status of the most significant risks is reviewed regularly at Senior Leadership Team meetings. y t i l i b a b o r P h g H i d e M w o L Risks are assessed across five categories: Strategic; Business continuity; Environment, social & governance; Operational; and Financial. From those categories, the Directors have identified those risks and opportunities that are deemed fundamental to the business due to their potential impact on the delivery of the Group’s long-term strategic goals. Static risk Increased risk D EC H B G F I J Low Med Impact High The Group’s Audit and Risk Committee assist the Board in monitoring risk management across the Group. A Acquisition performance D IT and digital security H Foreign currency B Customer relationships E Environment I Market competitiveness C Raw material supply and input prices F Debt leverage J People G Operational gearing Customer first Sustainable growth Thriving people Pages 10 and 11: Our business strategy Principal risk and impact Mitigation Key developments and opportunities Strategic A Acquisition performance The acquisition of Schela Plast creates potential risks in business stabilisation and continuity, culture, technology and change management. Failure to perform to expectations could reduce business earnings and value. B Customer relationships The Group has a small number of key customers. The loss of a customer or worsening of terms could adversely affect results. Limited power to drive price increases and inability to respond to end-consumer demand can reduce volumes and profitability. The existing Schela Plast Managing Director will remain with the business. Knowledge-sharing opportunities with UK and Poland operations. Strong partnerships and targeted strategies. Multi-level customer contact points. Building relationships with other brands. Independent customer survey highlighting key improvement areas with specific action plans. Some success with price increases outside of normal contracts. A Financial Principal risk and impact Mitigation Key developments and opportunities Business continuity C Raw material supply and input prices Failure to receive timely, high-quality raw materials (including EU imports) could impact our ability to meet customer demand. Market prices of electricity, plastic resin and other raw materials can fluctuate significantly leading to higher costs and lower profitability. Secondary supply sources in place for some key materials. Additional material stocks held to reduce the impact of Brexit and supplier force majeures. Where possible, contracts are structured to allow input cost recovery. D IT and digital security A breach of IT systems could result in the inability to operate systems effectively or the release of sensitive information. Physical security of servers, anti-malware, internet monitoring, safe-use policies and regular employee training. Shortage of corrugate and resin from European suppliers restricted output in 2021. Secondary suppliers implemented where possible, but lack of scale and inability to change specifications quickly restricts use. Substantial increase in energy and resin costs. Sales price increases implemented with most customers. Energy and oil prices have increased significantly since the beginning of the Ukraine conflict. Independent cyber maturity assessment performed and action plan for improvements implemented. Ukraine conflict is expected to result in an increase in IT security threats in the short and medium term. Environment, social & governance E Environment Business impacts related to plastics and waste pollution, food waste, energy and carbon emissions resulting in climate change. New plastics legislation may increase costs and fees and could impact customer demand for plastic packaging. F Debt leverage Higher leverage increases liquidity risk and may lead to higher finance costs. G Operational gearing As manufacturers, the Group’s businesses are operationally geared with a high proportion of fixed costs. When sales volumes are reduced the impact on profit can be substantial. H Foreign currency Currency fluctuations could impact revenues and profits and the value of overseas investments. Operational I Market competitiveness Failure to supply or an uncompetitive cost position could result in loss of market share. Being competitive will require additional capital expenditure. J People Our success depends on the efforts and abilities of our people. Low unemployment and high demand for skilled people may restrict our growth. Sustainability pledge in place. Select sustainable materials and designs to prevent product damage and waste. Ensure sustainable operations and production. Active membership of trade bodies lobbying for the benefit of plastics. Driving financial incentives in policy and legislation to increase the availability and use of recycled materials. Designing for recyclability without creating unintended environmental impacts. Monitor developments and keep close contact with customers. Sustainability pledge targets a reduction of environmental impact. Reduced material content through innovation, design and technology. Continued to phase out non- recyclable products. Working as part of a consortium to develop more recycled material opportunities. Detailed business plans identifying cash requirements in place. Sales of surplus property planned to reduce leverage. Strong relationships with Group bankers. Profit reduction reduced headroom against financial covenants. Sales price increases and restructuring plans in place to recover. Fixed costs are monitored closely to balance investment for growth whilst retaining flexibility in the event of lower volumes. Restructuring plans implemented to reduce fixed costs at the end of 2021. Sales activity should generate additional opportunities to recover volumes with existing or new projects. Currency exposures not typically hedged but exchange rates are closely monitored at Board level. Polish Zloty weakened by 7% and Danish Krone by 6% against Sterling during 2021. Investment in new technology to improve costs. Continuous improvement initiatives in place to reduce costs, including controls over capital expenditure to ensure maximum returns. Significant investment in Denmark to support a key Group customer in the year. Frequent salary benchmarking and adjustment. Fair employment practices. Increased number of permanent rather than temporary employees. Comprehensive People development plan. Continued focus on improving employee engagement. Improved induction and onboarding. Recruitment of senior HR resource. From purpose to action | Robinson Annual report 2021 | 19 Strategic report | Corporate governance | Financial statements | Additional informationEngaging with stakeholders We communicate frequently with the people who most affect and are affected by our business. As required by Section 172(1) of the Companies Act 2006, we detail those engagements here. Who and why? How we engaged Outcomes and actions Investors and banks Access to capital is vital to our long- term success. We must get buy-in to our strategic priorities from investors. We seek an investor base that is interested in long-term shareholding. • AGM. • Investor presentations and one-to-one meetings. • Reports and results announcements. • Regular meetings with banks and funding providers. • New partially committed bank funding package agreed for three-year term to support the Schela Plast acquisition. • Site tours for shareholders and bankers demonstrating the benefits of new equipment investment in the UK factories. Employees Suppliers Customers Expert organisations We engage with employees to help build a healthy culture, empowering and enabling them to achieve their potential. In return, we expect low absenteeism and turnover rates, allowing us to maintain high efficiency and productivity. • Quarterly briefings with senior site management and employee consultative committees. • Strategy communication sessions with all employees. • Annual long-service dinner with the CEO. • Independent employee surveys. • Employee intranet. • New health and safety and risk assessment measures introduced to drive a safety-first culture. • Continued to operate safely during the Covid-19 pandemic by maintaining social distance and hygiene controls throughout. • All employees participated in a bespoke purpose, values and strategy learning session during the year. • Employee champions appointed at all levels throughout the business to facilitate communication and further future engagement. Only a limited number of resin producers and machinery suppliers can supply the raw materials and equipment that we need. We rely on a small number of customers for a majority of our revenue. Strong partnerships are critical to understanding our customers’ markets and plans to ensure we can provide the best packaging solutions and services. We are members of several trade and industry organisations to stay updated on related policy, legislation and trends within our core market sectors. We partner with organisations and consortiums to drive transformational innovation and societal changes. • Regular meetings with suppliers to • Strategic review meetings twice • Company memberships of industry build partnerships and trust. • Supplier site audits. • Request for quotes and contract negotiations. per year with our customers’ senior management. bodies. • Senior management as Board members • Meetings with strategic partners at and Trustees. least once per year. • Packaging exhibitions and trade shows. • Site audits. • Independent feedback interviews and surveys. • Networking at industry events. • Active participation in select workstreams ranging from lobbying to finding technical, sustainable solutions in packaging and our manufacturing operations. • Successfully mitigated substantial • Schela Plast acquisition to support • Direct and, through the British Plastics supply risk of raw materials in the year. • New local source of post-consumer recycled raw material agreed in Denmark through participation in an industry consortium. strategic long-term partnership with our largest customer. • Continued to serve customers despite challenges to demand caused by the Covid-19 pandemic and Brexit; and supply challenges caused by raw material shortages. • Agreed sales price changes for raw material increases outside of normal escalator contracts with many customers. Federation, indirect lobbying and consulting governments on forthcoming requirements, including the UK Plastics Tax response and the Extended Producer Responsibility reform. • Engaged with RECOUP to test and trial carbon black detection to phase out where possible and gain access to market insight and primary recycling data. • Signatory to Operation Clean Sweep to reduce plastic pellet loss to the environment. • Participation in two-year NEXTLOOPP project to develop and trial food-grade recycled polypropylene and establish a secure supply chain. From purpose to action | Robinson Annual report 2021 | 21 Strategic report | Corporate governance | Financial statements | Additional informationPrincipal Board decisions The table below shows, for each principal decision taken during the period, how the interests of key stakeholders impacted were taken into account. Principal decision Restructuring of UK plastic packaging operations Following a reduction in sales volume and ongoing raw material challenges a restructuring programme was implemented which will result in exceptional costs of £0.2m in 2021 and annual savings of £0.3m in 2022. Paperbox packaging investment The Group will invest in new equipment for the Paperbox business to improve the capacity and efficiency of the business and facilitate growth. Schela Plast acquisition £3.8m consideration was committed to acquire the Schela Plast business, a Danish designer and manufacturer of blow moulded containers, serving market sectors that are complementary to those served by Robinson. The acquisition expands the geographic reach of the Group and creates sales opportunities with new and existing Robinson customers. The acquisition supports a strategic long-term partnership with the Group’s largest customer. A reduction in operating costs is necessary to remain competitive on price. Additional capacity will reduce lead- times and increase responsiveness. New equipment will significantly improve process control and quality to better serve customer needs. Enhanced opportunities within the group. Some roles made redundant but remaining employees will benefit from a more sustainable business. Safer and more modern equipment improves the daily working environment. Customers Employees Investors Expanding the geographic footprint and scale of the business will benefit investors in the long-term with capacity for further growth. Larger scale will result in synergies in future. The payback will be shorter than one year and will generate value for investors within 2022. New technology uses less energy and makes production cycles faster, increasing efficiency, capacity and ultimately return on capital. The business is heavily focused on increasing recycled material content and reducing energy consumption in line with the Group’s environmental goals. Environment Growth in paperboard packaging forms a part of the Group’s sustainability strategy. From purpose to action | Robinson Annual report 2021 | 22 Strategic report | Corporate governance | Financial statements | Additional informationFrom purpose to action | Robinson Annual report 2021 | 23 Performance overview Key performance indicators We align our KPIs with our strategic priorities and sustainability pledge to monitor financial and non-financial performance and value creation: Customer first Sustainable growth Thriving people Pages 10 and 11: Our business strategy Financial KPIs Revenue growth Our performance in our strategic priority of ‘Customer first’. Gross profit margin Demonstrates the Group’s profitability from its manufacturing operations. Performance in 2021 Revenue growth of 24% includes the effect of the Schela Plast acquisition (21%). After adjusting for the effect of currency and price, underlying volumes were 5% lower than 2020, which benefited from some Covid-19 related demand. Goal Above-market profitable growth. Performance in 2021 Gross margin in the year was severely impacted by input cost inflation, including the substantial (60%) resin cost increases experienced in the first half of the year. We are seeking price increases from all customers in 2022 which should begin to recover gross margin. 2018 2019 2020 2021 2018 2019 2020 2021 10% 7% 6% 24% (3% exc. acquisition) 18% 17% 21% 23% Adjusted operating margin* Demonstrates the Group’s ability to turn revenue into profits. Performance in 2021 Overall adjusted operating margins reduced to 2.7% during the year due to the combination of lower gross margins and higher operating costs. We are targeting price increases with customers to recover input cost inflation and making further operating cost improvements to increase margins in 2022. 2018 2019 2020 2021 Goal 4.6% 2.7% 7.2% 7.2% 6-8% Post-tax return on capital employed** Financial return from all of the capital invested in the business. A return higher than the Group’s weighted average cost of capital (4.1%) is satisfactory. Performance in 2021 The return on capital employed reduced significantly due to the lower profits during the year. Working capital as a % of sales*** Revenue required to fund the working capital cycle. Performance in 2021 Overall working capital levels were lower in the year despite the substantial increase in resin prices. The results benefit from the Schela Plast business carrying a lower level of working capital than the existing Robinson Group and progress on reducing the longer customer payment terms. 2018 2019 2020 2021 Goal 2018 2019 2020 2021 5.0% 4.3% 7.2% 7.8% 15% in the medium term 26% 26% 21% 18% From purpose to action | Robinson Annual report 2021 | 24 Strategic report | Corporate governance | Financial statements | Additional informationNon-financial KPIs Lost time accidents per 100 employees Provides a measure of the likelihood of an employee having an accident that results in time off work. Performance in 2021 There were four lost time accidents in the year, compared with eight in 2020. The most recent accident was in March 2021. Progress was achieved by implementing formalised, behaviour-based safety programmes, encouraging our people to report near- misses and carrying out on-the-job checks through risk assessments. We will continue to apply a safety-first culture to achieve our aim of zero workplace accidents. 2018 2019 2020 2021 Goal The Group continues to target zero lost time accidents. % average of post-consumer recycled content in packaging 0.65 1.00 2.10 2.37 Level of recycled material in our packaging products. Performance in 2021 Overall usage of post-consumer recycled (PCR) material increased during the year. As there are supply constraints for high-quality PCR, we are actively seeking secondary supply sources. In addition, mechanically recycled polypropylene (rPP) does not meet food-grade requirements. We are in our second year of membership in the NEXTLOOPP project to develop a supply chain of food-grade rPP from mechanical recycling. Commercial volumes of chemically recycled food- grade rPP are currently limited. Goal 100% recycled content in paperboard packaging and a minimum of 30% recycled content in plastic packaging by the end of 2022. All products 2018 0% 2019 1% 2020 2021 5% 11% Excluding PP food packaging 2018 0% 2019 2% 2020 2021 Goal 8% 14% 30% Recycled plastic consumed Total plastic consumed This shows our performance in plastic packaging. In paperboard, we have reached 100% recycled content. Our paper is made from sustainable sources and we are pursuing FSC certification. Waste to landfill as a % of total waste Amount of operational waste which is not recycled. Waste that is not recycled is sent to landfill. 12% 18% 20% 2018 2019 2020 2021 Goal 0% 4% Performance in 2021 We are implementing systems and processes to maximise our raw material efficiency, reuse our post-industrial waste and identify increased end markets to eliminate our waste to landfill. All of our sites are signed up to the Operation Clean Sweep initiative to prevent plastic pellets from our operations entering the environment. We are at zero waste to landfill in UK and Denmark and have made significant progress within Poland achieving a run rate of 5% at the end of 2021. We expect to achieve our goal by the end of the first quarter of 2022. Goal Zero waste to landfill by the end of 2021. *Operating profit margin before amortisation of intangible assets and exceptional costs. **Operating profit before amortisation of intangible assets and exceptional costs (£1,225k) less taxation (income £176k) divided by the average, current year (£34,797k) and prior year (£30,269k), capital employed (net assets less net debt). ***Inventory + trade receivables – trade payables. From purpose to action | Robinson Annual report 2021 | 25 Strategic report | Corporate governance | Financial statements | Additional informationStreamlined Energy and Carbon Reporting (SECR) The SECR regulations require UK companies to report on their energy use and carbon emissions. The Group has voluntarily chosen to disclose its total emissions for transparency and accountability in delivering its reduction targets. The Group reports Scope 1, 2 and 3 emissions in tonnes of carbon dioxide equivalent (tCO2e): • Scope 1 covers direct emissions: those that emanate directly from Group operations. This is principally natural gas burned for heating and fuel used in company owned vehicles. • Scope 2 covers indirect emissions: those generated by key suppliers, principally electricity. • Scope 3 covers other indirect emissions: those as a result of Group activities occurring from sources not owned or controlled by the Group in particular, such as emissions from business travel or employee-owned vehicles where the Group is responsible for the fuel purchase. Group 2020 UK 2020 Poland 2020 kWh 000s 22,773 1,462 388 tCO2e 11,406 269 92 kWh 000s 10,225 1,194 90 tCO2e 2,384 220 22 kWh 000s 12,548 268 298 tCO2e 9,022 49 71 24,623 11,767 11,509 2,626 13,114 9,142 0.97 0.32 0.45 0.13 1.45 0.55 Electricity Gas Transport TOTAL Intensity (tonnes CO2e per tonne of plastic polymer) Intensity (tonnes CO2e per £’000 revenue) Group 2021 UK 2021 Poland 2021 Denmark 2021 kWh 000s 26,116 1,893 540 tCO2e 10,676 347 127 kWh 000s 9,656 1,131 75 tCO2e 2,050 207 18 kWh 000s 11,531 762 331 tCO2e 8,049 140 77 kWh 000s 4,929 – 134 28,549 11,150 10,862 2,275 12,624 8,266 5,603 0.83 0.24 0.43 0.10 1.47 0.51 tCO2e 577 – 32 609 0.24 0.08 Electricity Gas Transport TOTAL Intensity (tonnes CO2e per tonne of plastic polymer) Intensity (tonnes CO2e per £’000 revenue) Electricity is the Group’s largest source of CO2e emissions, providing heat, light and power for premises, facilities and other plant and equipment. CO2e emission factors are fundamentally dependent on the source of electricity. Poland has a higher proportion of coal-fired power stations compared with the UK, with Denmark having the lowest due to the amount of renewable energy generated, in particular from wind power. As such, the CO2e emission factor per kWh for Poland is significantly higher than the UK and Denmark, resulting in higher CO2e emissions for this country. Tonnes of CO2e per tonne of plastic polymer consumed and per £’000 of revenue are used as measures of intensity. The Group aims to reduce its total intensity over time and has a public Greenhouse Gas (GHG) target to become net carbon positive by 2030. An energy and carbon management team of experts was formed to focus on projects to form our roadmap to 2030, following the carbon hierarchy of energy and carbon reduction via improvements in technology and processes, onsite generation, and finally green energy procurement for those remaining emissions that we cannot eliminate. Over 30 projects have been identified to date, we are focusing on implementation of six high priority projects. We developed energy maps for each site, identifying the highest sources of energy consumption; running a much more detailed and comprehensive exercise to determine exactly where and how much energy we are using and where the opportunities lie to decarbonise our business. From purpose to action | Robinson Annual report 2021 | 26 Strategic report | Corporate governance | Financial statements | Additional informationThe Group has invested in energy-saving initiatives in 2021, including: • two new hybrid injection moulding machines in the UK, two fully electric extrusion blow moulding machines in Denmark; • ongoing capacity and asset utilisation to become more energy efficient; • water-cooling systems and optimisation at our Łódź and Brørup sites to cool the site when outside temperatures make it viable; • additional process improvements including compressed air optimisation and fixing leaks, as well as optimisation of low-pressure consumption in our machines at Brørup. As energy providers continue to decarbonise, the associated emission factors will reduce thereby helping reduce our overall carbon emissions generated, in parallel with implementation of our energy and carbon projects. In addition pressure is on machine and technology providers to continue to develop the best available technology with low carbon and energy at affordable prices with attractive payback periods. This will drive more opportunities for investment in Robinson. Methodology note: the Group has implemented the UK government guidance on measuring and reporting GHG emissions, in line with DEFRA guidelines, using conversion units published in the UK Government GHG Conversion Factors for Company Reporting 2021. Emissions in Poland have been converted using rates from The National Centre for Emissions Management (KOBiZE) for 2021. Denmark emission conversion rates have been sourced from the Energinet Environment Report 2020. Electricity and gas: calculated from supplier invoices using metered kWh data. Gas data from Poland has been converted using UK rates as the KOBiZE does not report on these annually. Transport: calculated based on the volume of fuel purchased and mileage claims. The volume of fuel has been converted to kWh using the UK government conversion factors. For mileage claims details of the company vehicles were unknown; therefore, CO2e emissions were estimated based on typical car type and average fuel usage. The strategic report was approved by the Board of Directors on 23 March 2022 and is signed on its behalf by: Mike Cusick Director 23 March 2022 From purpose to action | Robinson Annual report 2021 | 27 Strategic report | Corporate governance | Financial statements | Additional information Corporate governance report Board of Directors Non-executive Directors Alan Raleigh Independent Non-executive Chairman Appointed to the Board: August 2015 After gaining a BSc (Hons) in Production Engineering and Production Management from Strathclyde University, Alan spent much of his career with Unilever plc holding a variety of senior positions in the UK, US and Japan. He was Executive Vice President, Personal Care Supply Chain until 2016. Other roles: Non-executive Director of Cloetta, a Swedish confectionery company listed on the Stockholm Stock Exchange. Alan is also a member of the Board of Trustees of the Chartered Institute of Procurement and Supply. Sara Halton Senior Independent Non-executive Director Appointed to the Board: January 2019 Sara has held key senior executive positions at well-known British brands, including CEO of Molton Brown. She brings a wealth of experience in driving strategic growth for global brands. Sara is a Chartered Accountant having gained an MSc in Economics and Econometrics, and a BSc in Economics at the University of Southampton. Committees: Nomination (Chair), Remuneration (Chair), Audit & Risk Other roles: Non-executive Director of Roys of Wroxham an independent chain of retail outlets based in Norfolk. Committees: Nomination, Audit & Risk (Chair), Remuneration Guy Robinson Non-executive Director Appointed to the Board: January 1995 Guy has an honours degree in Mechanical Engineering and qualified as a Chartered Accountant at Coopers & Lybrand, working for them until he joined Robinson in 1985. He was appointed Finance Director in 1995, a position that he held until 1 January 2021 when he was appointed Property Director and then Non-executive Director from 24 June 2021. Other roles: None. Committees: Nomination, Remuneration Executive Directors Helene Roberts CEO Appointed to the Board: November 2019 Helene has extensive knowledge of sustainable materials technology, global sales, marketing and innovation and people leadership. She has a degree in Materials Engineering and a PhD in Polymer Engineering. Helene’s career started with M&S, initially as a Materials Technologist before spending seven years as food and drink Head of Packaging. Since 2011, Helene has worked for several packaging converters. Most recently Helene was Managing Director at Klöckner Pentaplast, responsible for the UK, Ireland and Australian business. Mike Cusick Finance Director Appointed to the Board: January 2019 A qualified management accountant, Mike joined Robinson in 2015. Previously he was Group Commercial Finance Director, responsible for the post-acquisition integration of the Madrox business in Poland, and new commercial systems across the Group. Prior to joining Robinson, Mike gained international financial experience during eight years in various finance roles at SIG plc, latterly as Financial Controller, Mainland Europe. Mike was appointed Finance Director on 1 January 2021. From purpose to action | Robinson Annual report 2021 | 28 Strategic report | Corporate governance | Financial statements | Additional informationStrategic report | Corporate governance | Financial statements | Additional information Chairman’s governance statement The Group applies the Quoted Companies Alliance’s Corporate Governance Code (QCA Code). As Chairman, it is my responsibility to ensure the Company complies with the QCA Code and, where the Company deviates from it, to explain why the Directors believe this to be in the best interests of the Company. In this section, we share the Company’s good corporate governance structure and, where our approach differs from the QCA Code, we provide an appropriate explanation. More information on our approach to the 10 principles of the QCA Code can be found in the investor section on our website. Governance structure The Robinson Board recognises the importance of effective corporate governance in supporting the long- term success and sustainability of the business. Robinson plc Group Board Meets monthly Chaired by Alan Raleigh Responsible for developing the strategy and overall leadership of the Group within a robust framework of internal control and corporate governance. Monitors the culture, values and standards that are embedded throughout the business to deliver long-term sustainable growth for the benefit of our shareholders and other stakeholders. Nomination Committee Meets twice per year Chaired by Alan Raleigh Remuneration Committee Meets twice per year Chaired by Alan Raleigh Audit & Risk Committee Meets four times per year Chaired by Sara Halton See page 32 for more information See page 32 for more information See page 32 for more information Senior Executive Committee Meets monthly Chaired by Helene Roberts Responsible for strategy execution, day-to-day operation of the business and all matters that have not been reserved for the Board. Operating businesses Board of Directors The Company supports the concept of an effective Board leading the Group. The Board is responsible for approving Group policy and strategy with the aim of developing the business profitably, while assessing and managing the associated risks. 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 meets regularly on dates agreed each year for the calendar year ahead. The Board formally met 12 times in 2021 and plans to meet 12 times in 2022 - additional meetings can be called as and when deemed necessary. A formal schedule of matters requiring Board approval is maintained covering such areas as strategy, approval of budgets, financial results, Board appointments and dividend policy. The Board reviews its performance as an integral part of each Board meeting and appraises the performance of each Director. The Board has a written statement of its responsibilities and there are written terms of reference for the Nomination, Remuneration and Audit & Risk Committees. These are available for reference on the Robinson website. The Board consists of a Non-executive Chairman, two other Non-executive Directors, a CEO, and a Finance Director. The Chairman of the Board is Alan Raleigh and the Group's business is run by the CEO (Helene Roberts) and the Finance Director (Mike Cusick). The Board considers that both Alan Raleigh and Sara Halton are independent, but Guy Robinson is not due to his length of service with the Company. From purpose to action | Robinson Annual report 2021 | 29 The Board has determined that, as a whole, it has a complementary set of skills and experience as follows: Principal skills and experience Board Member Alan Raleigh Helene Roberts Guy Robinson Mike Cusick Sara Halton Packaging industry Manufacturing Multi- geography operations Sustainability Finance Marketing Property IT & cyber security ✔✔✔ ✔✔✔ ✔✔ ✔ ✔✔ ✔✔✔ ✔✔ ✔✔ ✔ ✔ ✔✔✔ ✔✔✔ ✔✔✔ ✔✔✔ ✔✔✔ ✔✔ ✔✔✔ ✔✔ ✔ ✔ ✔✔✔ ✔✔✔ ✔✔✔ ✔ ✔✔✔ ✔✔✔ ✔✔ ✔ ✔✔ ✔ Each Director keeps their skillset up to date by reading relevant publications and attending external training and personal development courses and workshops. Committees of the Board Remuneration Committee report The Remuneration Committee is chaired by Alan Raleigh and includes Sara Halton, and from 24 June 2021, Guy Robinson. Anthony Glossop was the chair of the committee until his retirement from the board on 24 June 2021, Alan Raleigh was appointed as chair on the same date. 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 meets at least twice and as often as required during the year and is responsible for: • establishing and maintaining formal and transparent procedures for developing policy on executive remuneration and for fixing the remuneration packages of individual Directors and monitoring and reporting on them; • determining the remuneration, including pension arrangements, of the Directors; and • determining the basis of Executive Director service agreements, having due regard for the interests of the shareholders. The Directors’ remuneration report includes the Directors’ remuneration and further detail on the work carried out during the year. The Company Secretary is responsible for ensuring that Board procedures are followed and for compliance with all applicable rules and regulations. Mike Cusick, who is also the Finance Director, performs the role of Company Secretary, providing an internal advisory role to the Board. The QCA’s guidelines state that the role of Company Secretary should not be held by an Executive Director, and as such, the Company does not currently comply with this requirement. It is the Board’s view that the size and complexity of the business does not necessitate a separate role of Company Secretary at present. Mike Cusick is supported and guided in this role by the Company’s legal advisors. This position will be kept under review by the Board. The Senior Independent Director (SID) acts as a sounding board and intermediary for the Chair and other Board members. The SID is responsible for leading the performance evaluation of the Chair, the search for a new chair and chairing meetings of the Non-executive Directors without the Chair being present. Sara Halton was appointed as the SID in September 2020. Board evaluation and effectiveness A formal external and independent review of the effectiveness of the Board was concluded during 2020. The purpose was to perform a comprehensive, independent and objective evaluation of the effectiveness and performance of the Board and its three committees. The results are described on pages 28 and 29 of the 2020 Annual report. All of the actions proposed in the 2020 Annual report have been completed during the year. It is the intention of the Board to reperform that assessment every three years. From purpose to action | Robinson Annual report 2021 | 30 Strategic report | Corporate governance | Financial statements | Additional informationStrategic report | Corporate governance | Financial statements | Additional information Audit & Risk Committee report Nomination Committee report The Audit & Risk Committee is chaired by Sara Halton and includes Alan Raleigh. Anthony Glossop was a member of the committee until his retirement from the Board on 24 June 2021. This Committee 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. The primary function of the Committee is to assist the Board in fulfilling its responsibilities regarding the integrity of financial reporting, audit, risk management and internal controls. This comprises: • monitoring and reviewing the Group’s accounting policies, practices and significant accounting judgements; and • reviewing the annual and interim financial statements and any public financial announcements and advising the Board on whether the annual report and accounts are fair, balanced and understandable. In relation to the external audit: • approving the appointment and recommending the reappointment of the external auditor and its terms of engagement and fees; • considering the scope of work to be undertaken by the external auditor and reviewing the results of that work; • reviewing and monitoring the independence of the external auditor and approving its provision of non- audit services; • monitoring and reviewing the effectiveness of the external auditor; • monitoring and reviewing the adequacy and effectiveness of the risk management systems and processes; and • assessing and advising the Board on the internal financial, operational and compliance controls. Committee activities during the year: During the year the Committee commissioned an independent review of the cyber security maturity of the Robinson Group, this will be developed into an action plan for improvement during 2022 which may include the pursuit of external accreditation. A high- level internal audit was performed over the Schela Plast business post-acquisition which highlighted some areas for improvement in both 2021 and 2022. The Nomination Committee is chaired by Alan Raleigh and includes Sara Halton and from 24 June 2021, Guy Robinson. Anthony Glossop was a member of the committee until his retirement from the board on 24 June 2021. This Committee will meet at least twice per year and reviews the Board’s structure, size and composition. It is also responsible for succession planning for Directors and other senior executives. The key responsibilities of the Committee are: • assessing whether the size, structure and composition of the Board (including its skills, knowledge, experience, independence and diversity) continue to meet the Group’s business and strategic needs; • examining succession planning for Directors and other senior executives and for the key roles of Chairman of the Board and CEO; and • identifying and nominating for approval by the Board, candidates to fill Board vacancies as and when they arise, together with leading the process for such appointments. Committee activities and Board changes during the year: In February, the Committee reviewed the composition and planned succession of the Board and concluded that the proposed changes to the Non-executive Team would meet the Group’s strategic needs. The Nomination Committee agreed that it was therefore not necessary at this stage to recruit an additional Non-executive Director. Additionally, the committee considered whether to constitute an Advisory Board and concluded that this was not a priority at this time. As previously agreed, the transition of the Finance Director role from Guy Robinson to Mike Cusick was enacted with effect from 1 January 2021, at which time Guy Robinson assumed the role of Property Director until transitioning to a Non-executive role on 24 June 2021. Anthony Glossop retired as a Non-executive Director on the same date. As part of an ongoing commitment to a diverse organisation, the committee noted that all Board Directors had successfully undertaken Diversity Training in 2021. Finally, the committee reviewed the results of the Board Chair and Senior Independent Director 2020 appraisal process and concluded that the feedback had been very valuable and constructive. It was agreed to follow the same process for 2021. From purpose to action | Robinson Annual report 2021 | 31 Attendance at Board and Committee meetings The Executive Directors work on a full-time basis within the business. The Chair is expected to devote on average three to four days per month and other Non-executive Directors two to three days per month to the Company. The attendance at formal scheduled meetings for the year was as follows: 2021 Board Audit Committee Remuneration Committee Nomination Committee Attendance* Number of meetings Alan Raleigh Helene Roberts Guy Robinson Mike Cusick Anthony Glossop Sara Halton 12 12 12 12 12 6 12 4 4 4 4 4 1 4 *Measured against meetings for which Directors were invited to attend. 2 2 2 2 2 1 2 3 3 3 3 3 2 3 100% 100% 100% 100% 100% 100% In addition to the scheduled meetings included above, the board met six additional times during the year for the consideration of specific decisions. Internal control The principal elements of the Group's systems of internal financial control include: • a management structure and written procedures that clearly define the expected levels of authority, responsibility and accountability; The Board recognises its responsibility for maintaining systems of internal control and reviewing their effectiveness. • well-established business planning, budgeting and monthly reporting functions with timely reviews at the appropriate levels of the organisation; 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. • a comprehensive system for investment appraisal and review; and • an Audit & Risk Committee that regularly reviews the relationship with and matters arising from the external auditors. On behalf of the Board, Alan Raleigh Chairman 23 March 2022 From purpose to action | Robinson Annual report 2021 | 32 Strategic report | Corporate governance | Financial statements | Additional informationStrategic report | Corporate governance | Financial statements | Additional information Directors’ remuneration report On behalf of the Remuneration Committee, I am pleased to present the Directors’ remuneration report for the year. This report sets out the Company’s remuneration policy for the Directors and explains how this policy was applied during the financial year to 31 December 2021. Remuneration policy Executive Directors The remuneration policy has been designed to ensure that Executive Directors receive appropriate incentive and reward given their performance, responsibility and experience. When assessing this, the Committee seeks to ensure that the policy aligns the interests of the Executive Directors with those of the shareholders and links to the future strategy of the business. The Company’s remuneration policy for Executive Directors is: • to consider the individual’s experience and the nature and complexity of their work in order to set a competitive base salary that attracts and retains individuals of the appropriate quality, while avoiding remunerating more than is necessary; • in the absence of changes in performance, responsibility or experience, to align annual adjustments in line with general adjustments to employees’ remuneration within the Group; • to link remuneration packages to the Group’s long- term performance through both bonus schemes and share plans; • to set performance measures that are simple to understand, easy to measure, unambiguous and consistent with the Group’s future strategy and performance measures throughout the Group; • to set an appropriate balance between fixed and variable pay; and • to provide post-retirement benefits through pension arrangements and/or salary supplements. Executive Directors’ remuneration packages are considered annually by the Committee in line with this policy. Base salary Base salary is normally reviewed annually in December. Within the review process, the Committee takes account of the profitability and ongoing progress of the Group and the individual’s contribution, as well as changes in responsibility and experience. Consideration is also given to the need to retain and motivate individuals with reference made to available information on salary levels in comparable organisations. To assist in this process, the Committee draws on the findings of external salary surveys and undertakes its own research. Annual performance incentive The performance of Executive Directors is evaluated by the Committee with a view to ensuring that there is a strong link between performance and reward. The Executive Directors are eligible to receive, at the discretion of the Committee, an annual bonus capped at 70% of base salary excluding any salary supplements in lieu of pension contributions. Guy Robinson in his capacity as Property Director, is eligible to receive, at the discretion of the committee, an annual bonus currently capped at 1% of the net proceeds payable on any surplus property disposals. The Committee considers the implementation of bonus awards based upon corporate financial targets and personal objective measures that align with the long-term interests of the shareholders and the Group’s three-year plan. Stretching and transparent but deliverable targets are From purpose to action | Robinson Annual report 2021 | 33 put in place with a view to clearly link the motivation of individuals with the value drivers and attitude to risk of the business. Pensions and other benefits The Company makes a pension contribution of up to 10% of base salary to Executive Directors, or where pension contributions are not appropriate, a salary supplement in lieu. Other benefits provided are a company car or car allowance, life assurance and private medical insurance. Share awards Executive Directors may, at the discretion of the Committee, be granted share option awards. The current scheme allows the granting of market-priced options, so the individual can only benefit if the shareholders have also benefited by an increase in the share price. Non-executive Directors The remuneration of the Non-executive Directors is determined by the Board as a whole based on current practice in equivalent companies. The Non-executive Directors do not receive any pension payments and with the exception of Guy Robinson in his capacity as Property Director, do not participate in any incentive or share award scheme. Wider employee considerations Although it is not the Committee’s responsibility to set the remuneration arrangements across the Group, it is kept informed of these so it can ensure that the Directors’ remuneration policy is consistent with remuneration practices in the Group. The CEO is required to obtain the approval of the Committee for her proposals for the remuneration of her direct reports. They and other members of the management team can qualify for a bonus that largely follows the same structure and applies similar performance targets as for Executive Directors. These arrangements are reviewed by the Committee to ensure that Executive Directors and management are committed to achieving the same strategic goals. Shareholder engagement The Committee seeks the views of shareholders on remuneration on an ongoing basis and they are invited to make contact with the Chairman of the Committee at any time should they wish to do so. Remuneration Committee advice In undertaking its responsibilities, the Committee takes independent external advice from a variety of sources and surveys but, in the present year, did not incur any cost in doing so. Annual remuneration statement The Directors received the following remuneration during the year to 31 December 2021. Helene Roberts Mike Cusick Guy Robinson Alan Raleigh Sara Halton Anthony Glossop 2021 2020 Base salary £’000 Other benefits £’000 Bonus £’000 Pension £’000 Total 2021 £’000 Total 2020 £’000 244 130 138 60 45 23 640 649 49 12 7 – – – 68 51 – – – – – – – 117 24 13 – – – – 37 35 317 155 145 60 45 23 745 350 158 199 60 40 45 852 Other Benefits include a company car allowance, private medical insurance and IFRS 2 charge on share-based payments. Helene Roberts receives a pension allowance equivalent to 10% of basic pay. Mike Cusick is a member of a money purchase pension plan, and the Company contributes at a rate of 10% of salary. The committee sought external comparison of Executive Directors’ and Non-executive Directors’ remuneration. Through multiple sources, the Board are satisfied that Board Remuneration is appropriate and comparable to other similar, listed organisations. From purpose to action | Robinson Annual report 2021 | 34 Strategic report | Corporate governance | Financial statements | Additional information Strategic report | Corporate governance | Financial statements | Additional information Annual performance incentive Details of the annual bonuses, based on performance in the year as a % of salary, achieved by the Executive Directors for the year ended 31 December 2021 are as follows: Helene Roberts nil% (2020: 25%), and Mike Cusick nil% (2020: 23%). Average pay The committee reviewed average salaries and average hourly pay rates across the Group by gender and geography. Overall, examination of the data confirms equality of pay for similar roles between females and males. However, there remains a historical gender imbalance in some parts of the business, including Sales & Distribution, Engineering, and some higher skilled Manufacturing roles, where there is a higher proportion of male employees. As a result, the mean pay of males across the Group is 1.2 times higher than the mean pay of females. The pay of our CEO in the year was 10.0 times greater than the average pay of all Group staff. Directors’ share options Details of outstanding share options on 0.5p ordinary shares are as follows: Original grant Unexercised options at 31 Dec 2020 Granted in the year Exercised in the year Lapsed or cancelled in the year Unexercised options at 31 Dec 2021 Exercise price Earliest date of exercise Date of expiry Helene Roberts 300,000 300,000 300,000 300,000 Guy Robinson 140,056 140,056 67,494 67,494 Mike Cusick 58,000 58,000 Directors' share options Other key managers Total share options 865,550 865,550 75,000 75,000 940,550 940,550 – – – – – – – – – – (140,056) – – (140,056) – (140,056) – – – – – – – – 300,000 118.5p 17-Jul-23 16-Jul-30 300,000 118.5p 17-Jul-25 16-Jul-30 – 69p 15-Nov-16 04-May-21 67,494 202p 08-Apr-17 07-Apr-24 58,000 130p 12-May-20 11-May-27 725,494 75,000 130p 12-May-20 11-May-27 800,494 200,494 options were exercisable at 31 December 2021. The market value of the shares at 31 December 2021 was 85p per share. Directors shareholdings The Directors together with their interests in 0.5p ordinary shares in Robinson plc, were as follows: Guy Robinson Alan Raleigh Sara Halton Mike Cusick Helene Roberts 31 December 2021 31 December 2020 1,352,657 1,212,601 36,145 12,049 5,458 3,455 36,145 12,049 5,458 3,455 No director had any interest in the shares of any other Group company. Alan Raleigh Remuneration Committee Chairman 23 March 2022 From purpose to action | Robinson Annual report 2021 | 35 Directors’ report The Directors present their report and the audited financial statements of the Group for the year ended 31 December 2021. The financial statements of the Group and the Company have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. Results and dividends A review of the Group’s performance for the year ended 31 December 2021 is included in the Chairman’s statement and in the Strategic report. The Directors recommend a final dividend of 3.0p per share to be paid on 15 July 2022 to shareholders on the register on 1 July 2022. Further details of dividend payments during the year are included in note 8 to the financial statements. Directors and their interests The Directors, who held office during the year, were Alan Raleigh, Helene Roberts, Guy Robinson, Mike Cusick, Anthony Glossop and Sara Halton. The biographical details of all current Directors are included in the Corporate governance report. Information on the Directors’ remuneration and service contracts is provided in the Directors’ remuneration report. The beneficial interests of the Directors in the share capital of the Company are shown in the Directors’ remuneration report. 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, Guy Robinson and Mike Cusick retire and offer themselves for re-election at the AGM. Further details concerning Directors are provided in the Corporate governance report. Employee communication The Directors recognise the need to ensure effective communication with employees. During the year, they were provided with financial and other information affecting the Company and its various operations by means of the employee intranet, briefings and newsletters. Consultative committees in the different areas of the Company enabled the views of employees to be heard and considered when making decisions likely to affect their interests. The Board will continue to review the effectiveness of communications to key stakeholders, including employees. Further details on engagement with key stakeholders during the period are provided in the Section 172(1) statement included in the Strategic report. 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 for training and career development. Financial risk management objectives and policies Information on the Group’s financial risk management objectives, policies and activities, and on the exposure of the Group to relevant risks in respect of financial instruments, is set out in note 26 to the financial statements and in the Strategic report. 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. As part of the acquisition of Schela Plast in February 2021, the Group arranged new credit facilities with existing bankers HSBC Bank UK. An existing £8m overdraft was replaced with a £6m commercial mortgage committed for three years and £6m of other short-term facilities that are due for renewal in February 2023. 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 facilities. 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 From purpose to action | Robinson Annual report 2021 | 36 Strategic report | Corporate governance | Financial statements | Additional informationStrategic report | Corporate governance | Financial statements | Additional information the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the annual financial statements. Further details are provided in note 35 to the accounts. See the Chairman’s report on page 4, “Principal risks and uncertainties” in the Strategic report on page 18, and the going concern disclosures on page 72 for further information. Future developments Capital structure See the Chairman’s statement for an update on future developments. Subsequent events Since the balance sheet date, Russian forces have invaded Ukraine. The Directors considered the financial impact of this event, which started on 24 February 2022, and have concluded that a financial estimate of its impact cannot be made at this time and that the matter is a non-adjusting post balance sheet event. As set out in note 24 to the financial statements, the issued share capital of the Company is 17,687,223 ordinary shares of 0.5p each of which 933,778 are held in treasury. There have been no changes to the issued share capital since the year end. There is only one class of shares 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 in the Directors’ remuneration report. Persons with a shareholding of over 3% in the Company as at 31 December 2021 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 shares 1,352,657 676,495 654,191 598,791 534,091 525,191 515,191 500,000 % 8.1% 4.0% 3.9% 3.6% 3.2% 3.1% 3.1% 3.0% Business relationships Independent auditor Details on how the Directors’ have had regard to the need to foster the Company’s business relationships with suppliers, customers and others, and the effect of that regard, including on the principal decisions taken, are provided in the Section 172(1) statement included in the Strategic report. Energy and carbon reporting On the recommendation of the Audit & Risk Committee, in accordance with Section 489 of the Act, resolutions are to be proposed at the AGM for the re-appointment of Mazars LLP as auditor of the Company and to authorise the Directors to determine their remuneration. The remuneration of the auditor for the year ended 31 December 2021 is disclosed in note 5 to the financial statements. A report on the Group’s energy usage and greenhouse gas emissions is provided in the Strategic report. Branches outside the UK Annual General Meeting The notice convening the Company’s 2022 AGM for 11:30 am on 26 May 2022 is set out in a separate document provided on page 80 and is available on the Group’s website at robinsonpackaging.com. The Annual report for the year ended 31 December 2021 is available from the Group’s website. The Company holds indirect investments in one unlisted company incorporated in Poland and one unlisted company incorporated in Denmark. Further details are provided in note 15 to the financial statements. Above & Beyond From purpose to action | Robinson Annual report 2021 | Robinson annual report and accounts 2020 | 37 | 37 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 they ought to have taken as a Director to make themselves 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’ remuneration report, Corporate governance 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 UK-adopted international accounting standards 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 UK-adopted international accounting standards 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. On behalf of the Board, Mike Cusick Director 23 March 2022 From purpose to action | Robinson Annual report 2021 | 38 Strategic report | Corporate governance | Financial statements | Additional informationFrom purpose to action | Robinson Annual report 2021 | 39 Financial statements Group income statement and statement of comprehensive income Group income statement Revenue Cost of sales Gross profit Operating costs Operating profit before amortisation of intangible assets Amortisation of intangible assets Operating profit Finance income - interest receivable Finance costs (Loss)/Profit before taxation Taxation Profit for the period Earnings per ordinary share (EPS) Basic earnings per share Diluted earnings per share All results are from continuing operations. Group statement of comprehensive income Profit for the period Items that will not be reclassified subsequently to the income statement: Remeasurement of net defined benefit liability Deferred tax relating to items not reclassified Items that may be reclassified subsequently to the income statement: Exchange differences on translation of foreign currency goodwill and intangibles Exchange differences on translation of foreign currency deferred tax balances Exchange differences on translation of foreign operations Other comprehensive (loss)/income for the period Total comprehensive (loss)/income for the period Notes 1 to 35 form an integral part of the financial statements. Note 2021 £’000 2020 £’000 1 45,954 37,203 (38,204) (28,637) 7,750 2 (6,568) 1,182 (957) 225 1 (374) (148) 176 28 p 0.2 0.2 12 4 5 7 9 9 8,566 (5,878) 2,688 (809) 1,879 1 (128) 1,752 (343) 1,409 p 8.5 8.4 Note 2021 £’000 2020 £’000 28 1,409 32 192 (36) 156 (367) 54 (846) (1,159) (1,003) (975) 180 (34) 146 (55) 7 (163) (211) (65) 1,344 From purpose to action | Robinson Annual report 2021 | 40 Strategic report | Corporate governance | Financial statements | Additional information Strategic report | Corporate governance | Financial statements | Additional information Statement of financial position as at 31 December Group 2021 £’000 Group 2020 £’000 Company 2021 £’000 Company 2020 £’000 Note 1,514 3,751 1,127 2,769 24,892 20,873 – 978 – – 9,288 16,895 724 – – 9,715 14,578 561 Non-current assets Goodwill Other intangible assets Property, plant and equipment Investments in subsidiaries Deferred tax assets Current assets Inventories Trade and other receivables Cash at bank and on hand Assets classified as held for sale Total assets Current liabilities Trade and other payables Borrowings Current tax liabilities Non-current liabilities Borrowings 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 11 12 14 15 20 16 17 18 19 21 21 20 23 24 25 – 1,188 31,345 5,067 10,033 2,775 238 18,113 49,458 10,273 1,681 109 12,063 14,221 1,376 – 128 15,725 27,788 21,670 84 828 216 (998) 4,107 17,433 21,670 25,747 26,907 24,854 3,110 9,185 1,386 – 13,681 39,428 6,489 3,260 69 9,818 4,991 1,042 – 173 6,206 16,024 23,404 83 732 216 161 4,133 18,079 23,404 – 4,791 319 335 5,445 32,352 – 1,028 839 – 1,867 26,721 6,026 6,422 – – – – 6,026 6,422 8,700 68 6,195 128 15,091 21,117 11,235 84 828 216 – 386 2,700 16 4,829 173 7,718 14,140 12,581 83 732 216 – 390 9,721 11,235 11,160 12,581 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 £747,000 (2020: Profit £1,152,000). Notes 1 to 35 form an integral part of the financial statements. The financial statements were approved by the Board of Directors on 23 March 2022 and were signed on its behalf by: Helene Roberts Director Mike Cusick Director Registered in England number 39811 From purpose to action | Robinson Annual report 2021 | 41 Statement of changes in equity Group At 1 January 2020 Profit for the year Other comprehensive income/(expense) Transfer from revaluation reserve as a result of property transactions Credit in respect of share-based payments Total comprehensive income for the year Dividends paid Transactions with owners At 31 December 2020 Profit for the year Other comprehensive income/(expense) Transfer from revaluation reserve 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 2021 Company At 1 January 2020 Profit for the year Other comprehensive income Transfer from revaluation reserve as a result of property transactions Credit in respect of share-based payments Total comprehensive income for the year Dividends paid Transactions with owners At 31 December 2020 Loss for the year Other comprehensive income Transfer from revaluation reserve 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 2021 Share capital £’000 Share premium £’000 Capital redemption reserve £’000 Translation reserve £’000 Revaluation reserve £’000 Retained earnings £’000 83 732 216 – – – – – – – 83 – – – – – 1 – 1 84 – – – – – – – – – – – – – – 732 216 – – – – – 96 – 96 828 – – – – – – – – 372 – (211) – – (211) – – 161 – (1,159) – – (1,159) – – – 83 732 216 – – – – – – – 83 – – – – – 1 – 1 84 – – – – – – – – – – – – – – 732 216 – – – – – 96 – 96 828 – – – – – – – – 216 – – – – – – – – – – – – – – – – – – Total £’000 22,923 1,409 (65) (4) 31 1,371 (890) (890) 4,134 – – (1) – (1) – – 17,386 1,409 146 (3) 31 1,583 (890) (890) 4,133 18,079 23,404 – – (26) – (26) – – – 28 156 18 50 252 – (898) (898) 28 (1,003) (8) 50 (933) 97 (898) (801) Total £’000 12,143 1,152 145 – 31 1,328 (890) (890) 391 – – (1) – (1) – – 10,721 1,152 145 1 31 1,329 (890) (890) 390 11,160 12,581 – – (4) – (4) – – – (747) 156 – 50 (541) – (898) (898) (747) 156 (4) 50 (545) 97 (898) (801) 386 9,721 11,235 216 (998) 4,107 17,433 21,670 Share capital £’000 Share premium £’000 Capital redemption reserve £’000 Translation reserve £’000 Revaluation reserve £’000 Retained earnings £’000 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 subsidiaries 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. From purpose to action | Robinson Annual report 2021 | 42 Strategic report | Corporate governance | Financial statements | Additional information Strategic report | Corporate governance | Financial statements | Additional information Cash flow statement Cash flows from operating activities Profit/(loss) for the period Adjustments for: Depreciation of property, plant and equipment Impairment of property, plant and equipment Profit on disposal of property, plant and equipment Amortisation of intangible assets (Decrease)/Increase in provisions Finance income Finance costs Taxation (credited)/charged Investment income Other non-cash items: – Pension current service cost and expenses – Charge for share options Operating cash flows before movements in working capital (Increase) in inventories Decrease/(increase) in trade and other receivables Increase/(decrease) in trade and other payables Cash generated by operations Corporation tax (paid)/received Interest paid Net cash generated by operating activities Cash flows from investing activities Interest received Acquisition of property, plant and equipment Proceeds on disposal of property, plant and equipment Cash outflow on acquisition of subsidiary Dividends received Net cash used in investing activities Cash flows from financing activities Loans repaid Loans drawndown Loans granted to subsidiaries Loans repaid by subsidiaries Net proceeds from sale and leaseback transactions Proceeds from issue of ordinary shares Capital element of lease payments Dividends paid Net cash used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents at 1 January Effect of foreign exchange rate changes Cash and cash equivalents at end of period Cash at bank and on hand Bank overdrafts Cash and cash equivalents at end of period Group 2021 £’000 Group 2020 £’000 Company 2021 £’000 Company 2020 £’000 28 1,409 (747) 1,152 2,963 2,164 – (87) 957 (45) (1) 374 (176) – 192 50 4,255 (1,237) 511 1,868 5,397 (99) (349) 4,949 98 (24) 809 4 (1) 128 343 – 180 31 5,141 (363) 296 1,512 6,586 (529) (128) 5,929 1 1 (3,991) (4,673) 128 (1,832) – 81 – – (5,694) (4,591) (468) 6,000 – – 1,721 97 (1,987) (898) 4,465 3,720 (896) (49) 2,775 2,775 – 2,775 – – – – – 6,000 (6,451) 1,366 1,061 – (710) (890) (539) 799 (1,678) (17) (896) 1,386 (2,282) (896) – 97 – (898) 114 (520) 839 – 319 319 – 319 101 – (45) – 213 (40) 161 (151) 83 – (8) – 46 (22) 84 (75) – (2,000) 192 50 (266) – 101 (408) (573) – (137) (710) 39 (11) 48 – – 76 180 31 (527) – (667) 572 (623) 98 (72) (597) 22 (565) 8 – 2,000 1,464 – – – 1,705 – – – (890) 815 1,682 (839) (4) 839 839 – 839 Notes 1 to 35 form an integral part of the financial statements. From purpose to action | Robinson Annual report 2021 | 43 Notes to the financial statements 1 Segmental and revenue 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 assets and liabilities held in the following locations: 2021 Revenue Operating profit/(loss) before amortisation of intangible assets Amortisation of intangible assets Operating profit/(loss) Other segment information Assets Liabilities Capital expenditure Depreciation Finance income - interest receivable Finance costs Taxation 2020 Revenue Operating profit/(loss) before amortisation of intangible assets Amortisation of intangible assets Operating profit/(loss) Other segment information Assets Liabilities Capital expenditure Depreciation Finance income - interest receivable Finance costs Taxation Impairment of property, plant and equipment UK £’000 Poland £’000 Denmark £’000 UK head office £’000 Total Group £’000 21,869 16,266 7,819 – 45,954 277 – 277 1,474 (761) 713 (202) (196) (398) (367) – (367) 1,182 (957) 225 13,997 (5,980) 1,376 1,258 – 63 38 17,286 (3,972) 10,629 7,546 49,458 (5,782) (12,054) (27,788) 954 941 – 36 94 1,651 682 – 114 (157) 10 82 (1) 161 (151) 3,991 2,963 (1) 374 (176) Total Group £’000 37,203 2,688 (809) 1,879 UK head office £’000 – (792) – (792) 8,380 39,428 (4,102) (16,024) 565 65 (1) 68 (75) – 4,956 2,164 (1) 128 343 98 UK £’000 Poland £’000 Denmark £’000 20,658 16,545 1,354 – 2,126 (809) 1,354 1,317 12,636 (8,078) 3,384 1,070 – 24 166 98 18,412 (3,844) 1,007 1,029 – 36 252 – – – – – – – – – – – – – The segment assets and liabilities presented above exclude intergroup balances and segment capital expenditure excludes intergroup transfers. The UK head office operating loss is after crediting external property rental and other income (see note 2). Revenue by major customer Revenues from the Group’s largest customer amounted to £5,742,000 (2020: £4,835,000); this is included in the UK, Poland and Denmark operating segments. No other customer contributed 10% or more to Group revenue. Revenue by geographic area Revenue from external customers was derived from the following geographic areas: United Kingdom Europe Others 2021 £’000 21,004 23,385 1,565 45,954 2020 £’000 19,929 16,391 883 37,203 From purpose to action | Robinson Annual report 2021 | 44 Strategic report | Corporate governance | Financial statements | Additional informationStrategic report | Corporate governance | Financial statements | Additional information Notes to the financial statements continued 2 Operating costs Selling, marketing and distribution costs Administrative costs Property lease income Acquisition costs Exceptional items (see note 3) Other income (Gain) on foreign exchange 3 Exceptional items Restructuring and rationalisation costs Retranslation of deferred consideration payable 4 Finance costs Interest on bank overdrafts Interest on bank and other loans Interest on leases 5 (Loss)/Profit before taxation The (loss)/profit before taxation has been stated after charging/(crediting): Cost of inventories (included in cost of sales) Employee costs (see note 6) Depreciation of property, plant and equipment (see note 14): – owned – held under leasing arrangements Amortisation of intangible assets (see note 12) Impairment in respect of: – inventories (see note 16) – property, plant and equipment (see note 14) – receivables (see note 17) Gain on disposal of property, plant and equipment Gain on foreign exchange movements Fees payable by the Group to the Company's independent auditor, Mazars LLP, and its associates, were as follows: Audit fees: – for the audit of the UK companies – for the audit of the overseas companies Total audit fees Non-audit fees - tax services Total auditor's remuneration Audit fees in respect of the Robinson pension plan (charged to the plan) 2021 £’000 1,413 5,447 (307) 83 43 (104) (7) 2020 £’000 1,527 4,693 (261) 84 – (105) (60) 6,568 5,878 2021 £’000 (165) 122 (43) 2020 £’000 – – – 2021 £’000 2020 £’000 89 143 142 374 2021 £’000 36,420 11,885 1,924 1,039 957 8 – 121 (87) (7) 55 10 65 – 65 4 36 33 59 128 2020 £’000 27,136 8,955 1,548 616 809 366 98 4 (24) (60) 30 9 39 11 50 4 From purpose to action | Robinson Annual report 2021 | 45 Notes to the financial statements continued 6 Employee information The average monthly number of persons (including Directors) employed by the Group and Company during the year was: Number employed: Manufacturing Sales, general and administration Total Employee costs during the year amounted to: Wages and salaries Social security costs Pension costs Share-based charges Total Group 2021 Group 2020 Company 2021 Company 2020 327 74 401 £’000 10,182 1,079 572 52 279 58 337 £’000 7,778 956 190 31 – 17 17 £’000 1,467 192 101 50 – 15 15 £’000 1,165 157 24 31 11,885 8,955 1,810 1,377 The pension costs above all relate to defined contribution plans. Directors' emoluments are included in the above and are detailed further in the Directors’ remuneration report. 7 Taxation Current corporation tax is calculated at 19% (2020: 19%) of the estimated assessable profit for the year. In addition, deferred tax of £8,000 (2020: £7,000) has been debited/credited directly to equity in the year (see note 20). 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 Increase in deferred tax assets (Decrease) in deferred tax liability Total current deferred tax credit Other tax charge Total tax (credit)/charge Profit before taxation At the effective rate of tax of 19% (2020: 19%) Items disallowable for tax Depreciation on assets ineligible for capital allowances Capital allowances for year in excess of depreciation Prior year adjustments - corporation tax Prior year adjustments - deferred tax Remeasurement of deferred tax for changes in tax rates Non-taxable items Deferred tax not recognised Other differences Tax charge for the year 2021 £’000 2020 £’000 154 (42) 112 336 (624) (288) – (176) (148) (28) 16 (16) – (42) 38 (178) (43) 78 (1) (176) 415 13 428 (41) (44) (85) – 343 1,752 333 31 14 13 13 (46) – (10) – (5) 343 The total tax recognised in other comprehensive income in the year was £54,000 (2020: £30,000). There are unrecognised capital losses carried forward of £646,000 (2020: £681,000). With this exception, the Directors are not aware of any material factors affecting the future tax charge. Deferred tax balances have been provided at 25% in these accounts. The Corporation Tax rate for the year ended 31 December 2021 was 19%. On 24 May 2021, the increase in the UK tax rate from 19% to 25% with effect from 1 April 2023 was substantially enacted. Deferred tax has been calculated for the UK based on the expected reversal dates of the temporary differences. From purpose to action | Robinson Annual report 2021 | 46 Strategic report | Corporate governance | Financial statements | Additional informationStrategic report | Corporate governance | Financial statements | Additional information Notes to the financial statements continued 8 Dividends Ordinary dividend paid: 2020 interim of 3.5p per share 2020 interim of 2.0p per share 2020 final of 3.0p per share 2021 interim of 2.5p per share 2021 £’000 – – 490 408 898 2020 £’000 566 324 – – 890 An interim dividend of 2.5p per ordinary share was paid on 8 October 2021 (2020: total interim dividends 5.5p). The Directors are proposing a final dividend of 3.0p for the year ended 31 December 2021 (2020: 3.0p). Total dividends paid during the year, including the final dividend for 2020, were £898,000 (2020: £890,000). No dividends have been paid between 31 December 2021 and the date of signing the financial statements. 9 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 £28,000 (2020: £1,409,000) divided by the weighted average number of shares in issue, net of treasury shares of 16,713,539 (2020: 16,613,389) and for diluted earnings per share of 16,749,474 (2020: 16,781,894) after the potentially dilutive effect of further shares issued through share options is applied. Weighted average number of ordinary shares in issue (thousands) Effect of dilutive share option awards (thousands) Weighted average number of ordinary shares for calculating diluted earnings per share (thousands) 2021 2020 16,714 16,613 35 169 16,749 16,782 200,494 (2020: 200,494) share options were not included in the diluted earnings per share calculation as their effect is anti-dilutive in the periods presented. 10 Property lease income Receivable: – within one year – between one and two years – between two and three years – between three and four years – between four and five years 2021 £’000 2020 £’000 208 127 94 47 10 486 206 190 183 48 – 627 From purpose to action | Robinson Annual report 2021 | 47 Notes to the financial statements continued 11 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 goodwill balance includes amounts relating to: the Madrox business in Poland, acquired in 2014, which forms a part of the Poland operating segment; and the Schela Plast business in Denmark, acquired in 2021, which forms a part of the Denmark operating segment. The goodwill arises as a result of the deferred tax liability created on the recognition of the customer relationship intangible asset. Group Cost At 1 January 2020 Exchange differences At 31 December 2020 Acquisitions Exchange differences At 31 December 2021 Accumulated impairment losses At 1 January 2020 Exchange differences At 31 December 2020 Exchange differences At 31 December 2021 Carrying amount At 31 December 2021 At 31 December 2020 £’000 1,526 (23) 1,503 486 (123) 1,866 382 (6) 376 (24) 352 1,514 1,127 The carrying value of goodwill in respect of all CGU's is set out below. These are supported by value in use calculations in the year as explained below. Denmark Poland 2021 £’000 461 1,053 1,514 2020 £’000 – 1,127 1,127 The Group tests goodwill and the associated intangible assets 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% (2020: 2%) in perpetuity. The base pre-tax rate used to discount the forecast cash flows is 4.1% (2020: 3.2%), which reflects the weighted average cost of capital for the Group. The Poland CGU uses a rate of 4.9% including a risk adjustment of 0.8% to reflect the higher risk associated with returns in Poland. The carrying value of the Group’s CGUs remains 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. From purpose to action | Robinson Annual report 2021 | 48 Strategic report | Corporate governance | Financial statements | Additional informationStrategic report | Corporate governance | Financial statements | Additional information Notes to the financial statements continued 12 Intangible assets Group Cost At 1 January 2020 Exchange differences At 31 December 2020 Additions Exchange differences At 31 December 2021 Amortisation At 1 January 2020 Charge for the year Exchange differences At 31 December 2020 Charge for the year Exchange differences At 31 December 2021 Carrying amount At 31 December 2021 At 31 December 2020 Customer relationships £’000 8,036 (122) 7,914 2,208 (628) 9,494 4,420 809 (84) 5,145 957 (359) 5,743 3,751 2,769 The amortisation period for customer relationships acquired is 10 years. 13 Acquisitions On 10 February 2021, Robinson (Overseas) Limited acquired the entire share capital of Schela Plast A/S (“Schela”) a Danish designer and manufacturer of blow moulded containers. The acquisition expands the geographic reach of the Group and creates sales growth opportunities with new and existing Robinson customers. The enterprise value was £7.3m on a debt free cash free basis. Total consideration was £3.8m, which comprised £1.4m of cash paid on completion and £2.4m of deferred consideration, with net debt acquired of £3.5m. A further contingent consideration of £0.6m would have been payable based on performance in 2020 and 2021, however, the targets were not achieved. The following table summarises the consideration paid by the group and the fair value of the identifiable assets and liabilities of Schela as at the date of acquisition: Assets Property, plant and equipment Investments Inventory Trade and other receivables Deferred tax assets Cash and cash equivalents Liabilities Bank overdrafts and bank loans Trade and other payables Obligations under finance leases Amounts owed to group undertakings Total identifiable net assets at fair value Customer relationships acquired Total consideration £’000 4,267 1 855 1,336 39 706 7,204 (1,496) (1,400) (1,595) (1,134) (5,625) 1,579 2,208 3,787 The gross amount and fair value of trade receivables amounts to £1.2m. The Group measures the acquired lease liabilities using the present value of the remaining lease payments at the date of acquisition. From the date of acquisition, Schela contributed £7.8m of revenue and a loss before tax of £0.3m to the Group results. If the combination had taken place at the beginning of the year, revenue for the Group would have been £47m and loss before tax would have been £0.1m. Acquisition costs of £83,000 (2020: £84,000) were incurred in the year and were expensed to the Group income statement through operating costs. From purpose to action | Robinson Annual report 2021 | 49 Notes to the financial statements continued 13 Acquisitions (continued) Purchase consideration Cash paid on completion Deferred consideration due within one year Total consideration Analysis of cash flow on acquisition Consideration paid (included in cash flows from investing activities) Loan repaid to former owners (included in cash flows from investing activities) Cash and equivalent balances acquired (included in cash flows from investing activities) Net cash flow on acquisition 14 Property, plant and equipment Group Cost or deemed cost At 1 January 2020 Additions at cost Disposals Reclassified Exchange movement At 31 December 2020 Additions at cost Reclassified as held for sale Disposals Added on acquisition Reclassified Exchange movement At 31 December 2021 Accumulated depreciation and impairment At 1 January 2020 Charge for year Impairment Disposals Exchange movement At 31 December 2020 Charge for year Disposals Reclassified as held for sale Exchange movement At 31 December 2021 Net book value At 31 December 2021 At 31 December 2020 £’000 1,418 2,369 3,787 £’000 (1,404) (1,134) 706 (1,832) Total £’000 42,537 4,956 (740) – (277) 46,476 3,991 (345) (1,511) 4,267 – (1,441) 51,437 24,199 2,164 98 (683) (175) 25,603 2,963 (1,161) (107) (753) 26,545 Land and buildings £’000 Surplus properties £’000 Plant and machinery £’000 Assets under construction ’000 9,252 599 – – (78) 9,773 216 – (1) 1,737 – (414) 11,311 2,755 246 – – (26) 2,975 414 – – (100) 3,289 4,046 – – – – 4,046 – (345) – – – – 3,701 397 – – – – 397 – – (107) – 290 28,714 3,297 (740) 176 (194) 31,253 2,924 – (1,203) 2,067 1,439 (945) 35,535 21,047 1,918 98 (683) (149) 22,231 2,549 (1,161) – (653) 22,966 525 1,060 – (176) (5) 1,404 851 – (307) 463 (1,439) (82) 890 – – – – – – – – – – – 8,022 6,798 3,411 3,649 12,569 9,022 890 1,404 24,892 20,873 From purpose to action | Robinson Annual report 2021 | 50 Strategic report | Corporate governance | Financial statements | Additional information Strategic report | Corporate governance | Financial statements | Additional information Notes to the financial statements continued 14 Property, plant and equipment (continued) Company Cost or revalued amount At 1 January 2020 Additions at cost Disposals At 31 December 2020 Additions at cost Reclassified as held for sale Disposals At 31 December 2021 Accumulated depreciation and impairment At 1 January 2020 Charge for year Disposals At 31 December 2020 Charge for year Reclassified as held for sale At 31 December 2021 Net book value At 31 December 2021 At 31 December 2020 Land and buildings £’000 Surplus properties £’000 Plant and machinery £’000 Assets under construction ’000 4,656 546 – 5,202 – – (1) 5,201 1,842 82 – 1,924 95 – 2,019 6,739 – – 6,739 – (442) – 6,297 322 – – 322 – (107) 215 3,182 3,278 6,082 6,417 65 19 (10) 74 10 – – 84 63 1 (10) 54 6 – 60 24 20 – – – – – – – – – – – – – – – – – Total £’000 11,460 565 (10) 12,015 10 (442) (1) 11,582 2,227 83 (10) 2,300 101 (107) 2,294 9,288 9,715 The impairment included in plant and machinery in 2020 relates to custom production equipment that was no longer compatible with the Group's portfolio of products, in the year this asset was fully impaired and as such the carrying value of this asset is now £nil. At 31 December 2021, had the land and buildings and surplus properties been carried at historical cost less accumulated depreciation and accumulated impairment losses, their carrying amount would have been approximately £5,423,000 (2020: £5,895,000); Company £2,285,000 (2020: £2,344,000). The Directors consider the fair value of the surplus properties held by the Group equates to a market value of £5,400,000 (2020: £6,400,000) following the transfer of part of the property to Assets classified as held for sale during the period. 15 Investments in subsidiaries Company Cost At 1 January 2020 Loans repaid At 31 December 2020 Exchange differences Loans granted At 31 December 2021 Amounts written off At 1 January 2020 Written off in the period At 31 December 2020 Written off in the period At 31 December 2021 Net book value At 31 December 2021 At 31 December 2020 Shares in Group undertakings £’000 Loans to Group undertakings £’000 Total £’000 22,322 (5,127) 17,195 (58) 2,588 19,725 2,575 42 2,617 213 2,830 22,321 (5,127) 17,194 (58) 2,588 19,724 2,575 42 2,617 213 2,830 1 – 1 – – 1 – – – – – 1 1 16,894 14,577 16,895 14,578 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. From purpose to action | Robinson Annual report 2021 | 51 Notes to the financial statements continued 15 Investments in subsidiaries (continued) Interests in Group undertakings The Company has the following interest in subsidiaries, all of which are included in the consolidated accounts: Name of undertaking Robinson (Overseas) Limited Robinson Paperbox Packaging Limited Robinson Plastic Packaging Limited Robinson Packaging Polska Sp. z o.o Schela Plast A/S Walton Mill (Chesterfield) Limited Walton Estates (Chesterfield) Limited Lowmoor Estates Limited Portland Works Limited Robinson Plastic Packaging (Stanton Hill) Limited Held Directly Directly Directly Indirectly Indirectly Directly Directly Directly Directly Directly Country England England England Poland Denmark England England England England England Activities Intermediate 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 In each case, the Company's equity interest is in the form of ordinary shares. 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; and Schela Plast A/S whose registered office is Erhvervsvej 2, 6650 Brørup, Denmark. The percentage shareholding for all subsidiaries is 100%. On 10 February 2021, the Group acquired 100% of the share capital of Schela Plast A/S, a manufacturer of plastic packaging domiciled in Denmark. 16 Inventories Raw materials, packaging and consumables Work in progress Finished goods and goods for resale Group 2021 £’000 3,410 31 1,626 5,067 Inventories are stated net of an allowance of £708,000 (2020: £625,000) in respect of excess, obsolete or slow-moving items. Movements in the allowance were as follows: Inventory provision movements At 1 January Acquisition of Schela Plast A/S Utilisation Unused amount reversed Increase in allowance At 31 December Group 2021 £’000 (625) (250) 175 332 (340) (708) Group 2020 £’000 1,927 42 1,141 3,110 Group 2020 £’000 (392) – 133 67 (433) (625) From purpose to action | Robinson Annual report 2021 | 52 Strategic report | Corporate governance | Financial statements | Additional informationStrategic report | Corporate governance | Financial statements | Additional information Notes to the financial statements continued 17 Trade and other receivables Trade receivables Less: provision for impairment of trade receivables Trade receivables - net Receivables from subsidiaries Other receivables Prepayments Trade and other receivables Current tax assets Total receivables Group 2021 £’000 9,779 (218) 9,561 – 244 228 Group 2020 £’000 8,992 (131) 8,861 – 170 145 Company 2021 £’000 Company 2020 £’000 209 (2) 207 4,434 20 121 400 (8) 392 571 7 49 10,033 9,176 4,782 1,019 – 9 9 9 10,033 9,185 4,791 1,028 Trade terms are a maximum of 150 days credit. The average credit period taken is 64 days (2020: 71 days). Due to their short-term nature, the fair value of trade and other receivables does not differ from book value. The net impairment of trade receivables charged to the income statement was £121,000 (2020: £4,000). There is no impairment of any receivables other than trade receivables. Trade receivables from one customer amounted to £1,047,000 at 31 December 2021 (2020: £1,001,000). Trade receivables are regularly reviewed for bad and doubtful debts. An allowance has been made for estimated credit losses from trade receivables as follows: At 31 December 2021 Expected loss rate Gross carrying amount (£’000) Credit loss allowance (£’000) At 31 December 2020 Expected loss rate Gross carrying amount (£'000) Credit loss allowance (£'000) More than 30 days past due More than 90 days past due More than 120 days past due More than 210 days past due – 343 – – (23) – 50% 100% 42 21 36 36 More than 30 days past due More than 90 days past due More than 120 days past due More than 210 days past due – 76 – – 11 – 50% 100% 51 25 21 21 Current – 9,381 – Current – 8,833 – Total 9,779 57 Total 8,992 46 In addition to the credit loss allowance, the provision for impairment of trade receivables includes additional specific provisions for estimated irrecoverable debts of £48,000 (2020: £15,000) and credit note provisions of £113,000 (2020: £70,000). Movement in the allowance for doubtful debts At 1 January Utilisation Unused amount reversed Charged to income statement At 31 December Group 2021 £’000 Group 2020 £’000 Company 2021 £’000 Company 2020 £’000 (131) 34 93 (214) (218) (189) 62 121 (125) (131) (8) 6 2 (2) (2) – – – (8) (8) The Group applies the IFRS 9 simplified approach to measuring expected credit losses (ECLs), which uses a lifetime expected loss allowance for all trade receivables. To measure the ECLs, trade receivables have been grouped based on shared credit risk characteristics and the days past due. The expected loss rates are based on the payment profiles of sales over a period of 36 months before 31 December 2021 or 31 December 2020 and the historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. Trade receivables are written off where there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, among others, the failure of a debtor to engage in a repayment plan with the Group and a failure to make contractual payments for a period greater than 365 days past due. Trade receivables are measured at amortised cost. From purpose to action | Robinson Annual report 2021 | 53 Notes to the financial statements continued 18 Assets classified as held for sale Property held for sale at 1 January Reclassified from property, plant & equipment Property held for sale at 31 December Group 2021 £’000 – 238 238 Group 2020 £’000 Company 2021 £’000 Company 2020 £’000 – – – – 335 335 – – – Assets classified as held for sale include surplus land and buildings that are being marketed for sale and for which a sale is anticipated in the next 12 months. 19 Trade and other payables Trade payables Amounts due to subsidiaries Social security and other taxes Deferred consideration Other payables Accruals Group 2021 £’000 6,161 – 777 2,261 469 605 Group 2020 £’000 4,234 – 925 – 484 846 Company 2021 £’000 Company 2020 £’000 141 5,226 157 – 95 407 256 5,114 500 – 87 465 6,422 10,273 6,489 6,026 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 38 days (2020: 45). 20 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 2020 Charge to income Charged through other comprehensive income Exchange differences At 31 December 2020 Charge to income Acquisition of Schela Plast A/S Charged through other comprehensive income Exchange differences At 31 December 2021 Company At 1 January 2020 Charge to income At 31 December 2020 Charge to income Charged through other comprehensive income At 31 December 2021 Accelerated tax depreciation £’000 Short term temporary differences £’000 Fair value gains £’000 57 148 – – 205 336 – – – 541 (1) 4 3 48 – 51 72 (233) (7) – (168) (624) 447 (54) 11 (388) (519) (43) (562) (162) – (724) 24 – – 3 27 – – – 8 35 12 1 13 – 4 17 Total £’000 153 (85) (7) 3 64 (288) 447 (54) 19 188 (508) (38) (546) (114) 4 (656) From purpose to action | Robinson Annual report 2021 | 54 Strategic report | Corporate governance | Financial statements | Additional information Strategic report | Corporate governance | Financial statements | Additional information Notes to the financial statements continued 20 Deferred taxation (continued) Deferred tax liability Deferred tax asset Group 2021 £’000 1,376 (1,188) 188 Group 2020 £’000 1,042 (978) 64 Company 2021 £’000 Company 2020 £’000 68 (724) (656) 16 (561) (545) Deferred tax has been provided at 25% in the UK, country specific rates have been used for overseas subsidiaries. Certain deferred tax liabilities have been offset. The above is the analysis of the deferred tax balances (after offset) for financial reporting purposes. The Directors consider that the Group will generate sufficient taxable profits in future years with which to recover the deferred tax asset. 21 Borrowings Group Company Borrowings may be analysed as follows: Current liabilities Non-current liabilities Total liabilities Current liabilities Non-current liabilities Total liabilities At 31 December 2021 Bank and other loans Lease liabilities Total At 31 December 2020 Bank overdrafts Bank and other loans Lease liabilities Total Bank and other loans are repayable as follows: Bank and other loans: – within one year – due after one and within two years – due after two and within five years – due after five years 66 1,615 9,585 4,636 9,651 6,251 – – 8,700 8,700 – – 1,681 14,221 15,902 – 8,700 8,700 2,282 – 978 – 2,700 2,291 2,282 2,700 3,269 – – – – 2,700 – – 2,700 – 3,260 4,991 8,251 – 2,700 2,700 Group 2021 £’000 66 513 8,380 692 Group 2020 £’000 Company 2021 £’000 Company 2020 £’000 – – 2,700 – – 465 8,235 – – – 2,700 – 9,651 2,700 8,700 2,700 Bank overdraft and other short-term credit facilities are repayable on demand and bear interest at a rate that varies with the local base interest rates. They are secured by charges over certain of the Group’s properties. The total of undrawn facilities at 31 December 2021 was £6.6m. Bank and other loans include £7m of commercial mortgage agreements, which are denominated in Sterling and Danish Krone and the £2.7m loan from the Pension Escrow Account (see note 32 for more details) denominated in Sterling. The average remaining term is 3.8 years (2020: 3.3 years). For the year ended 31 December 2021, the average effective borrowing rate was 1.8% (2020: 1.1%). The loans are secured by a charge over certain of the Group's properties. The Group leases certain plant and machinery under finance lease and hire purchase contracts, which are denominated in Sterling, Euros, Danish Krone and Polish Zloty. The average remaining lease term is 4.5 years (2020: 3.6 years). For the year ended 31 December 2021, the average effective borrowing rate was 1.95% (2020: 1.0%). Lease liabilities are secured on the assets to which they relate. The carrying amount of the Group's lease obligations approximates to their fair value. From purpose to action | Robinson Annual report 2021 | 55 Notes to the financial statements continued 22 Leasing Leased assets where the Group is a lessee Property, plant and equipment includes the following amounts relating to leased assets where the Group is a lessee: Group Right-of-use assets Plant and machinery Lease liabilities Current Non-current Group 2021 £’000 Group 2020 £’000 Company 2021 £’000 Company 2020 £’000 6,942 6,942 1,615 4,636 6,251 3,864 3,864 978 2,291 3,269 – – – – – – – – – – Additions to right-of-use assets during the year amounted to £3,201,000 (2020: £1,391,000). With an additional £1,437,000 added on acquisition of Schela Plast A/S. The Group income statement includes the following amounts relating to leased assets: Depreciation charge on right-of-use assets Plant and machinery Interest expense (see note 4) Leases are repayable as follows: Group Amounts payable under lease contracts: – within one year – after one and within five years – after five years Less: future finance charges Present value of lease obligations Group 2021 £’000 Group 2020 £’000 Company 2021 £’000 Company 2020 £’000 1,039 1,039 142 616 616 59 – – – – – – Minimum lease payments Present value of minimum lease payments 2021 £’000 1,717 4,058 780 6,555 (304) 6,251 2020 £’000 1,005 2,295 18 3,318 (49) 3,269 2021 £’000 1,615 3,881 755 6,251 2020 £’000 978 2,273 18 3,269 Sale and leaseback transactions In the normal course of business, the Group constructs plant and machinery assets over a period of time, typically six to nine months. In some cases after commissioning of the asset, it may be subject to a sale and hire purchase transaction, whereby the Group sells the asset to a finance provider and commits to paying monthly lease rentals for a period of time before re-assuming ownership. In 2021, there were three transactions of this type raising £1,475,000 (2020: £1,061,000) before deposit payments. No gain or loss was recognised on these transactions during the period. Due to the fact that the lessor is a financial institution, these arrangements do not meet the definition of a sale in IFRS 15, and as such, the amounts received from the financial institution are instead accounted for as a financial liability under IFRS 9. From purpose to action | Robinson Annual report 2021 | 56 Strategic report | Corporate governance | Financial statements | Additional informationStrategic report | Corporate governance | Financial statements | Additional information Notes to the financial statements continued 22 Leasing (continued) Leased assets where the Group is a lessor The Group leases various properties to tenants with rentals payable monthly or quarterly in advance. Lease payments for some contracts include RPI/CPI increases, but there are no other variable lease payments that depend on an index or rate. Although the Group is exposed to changes in the residual value at the end of the current leases, the group typically enters into new operating leases and, therefore, will not immediately realise any reduction in residual value at the end of these leases. Expectations about the future residual values are reflected in the fair value of the properties. The Group carrying value of properties subject to operating leases is £4,255,000 (2020: £4,278,000), only part of which is occupied by tenants. Property lease income is disclosed in note 2, and minimum receipts under property leases are disclosed in note 10. 23 Provisions for liabilities Group and Company At 1 January 2020 Movement in year At 31 December 2020 Movement in year At 31 December 2021 Post-retirement benefits £’000 169 4 173 (45) 128 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 3.5% per annum, medical cost inflation of 10% per annum and individual life expectancy assumptions. Based on those assumptions, the provision is expected to be utilised over 29 years. 24 Called up 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 (2020: 17,687,223) Held in Treasury: 933,778 shares (2020: 1,073,834) Net issued share capital: 16,753,445 shares (2020: 16,613,389) 2021 £’000 2020 £’000 350 350 88 (4) 84 88 (5) 83 The Company has one class of ordinary shares that carries no right to fixed income. 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. During 2021, options on 140,056 shares were exercised, these were satisfied from existing treasury shares. 25 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. From purpose to action | Robinson Annual report 2021 | 57 Notes to the financial statements continued 26 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 cooperation 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. Summary of financial assets and financial 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: Financial assets measured at amortised cost Trade receivables Other receivables Amounts due from subsidiaries Cash at bank and on hand Financial liabilities measured at amortised cost Trade payables Other payables Accrued expenses Amounts due to group undertakings Bank overdrafts Bank and other loans Lease liabilities Net financial assets and liabilities Non-financial assets and liabilities Total equity Group 2020 £’000 Company 2021 £’000 Company 2020 £’000 Group 2021 £’000 9,561 244 – (469) (605) – – (9,651) (6,251) 8,861 170 – 207 20 4,434 392 7 571 839 2,775 1,386 319 12,580 10,417 4,980 1,809 (6,161) (4,234) (484) (846) (141) (95) (407) (256) (87) (465) – (11,421) (9,943) (2,282) (2,700) (3,269) – – (8,700) (2,700) – – (23,137) (13,815) (20,764) (13,451) (10,557) (3,398) (15,784) (11,642) 32,227 26,802 27,019 21,670 23,404 11,235 24,223 12,581 All financial assets and financial liabilities noted in the above table are measured at amortised cost. Cash at bank and on hand, bank overdrafts and bank and other loans largely attract floating interest rates. Accordingly, management considers that their carrying amount approximates to fair value. Lease liabilities may attract floating interest rates or fixed interest rates implicit in the lease rentals and their fair value has been assessed relative to prevailing market interest rates, management considers that their carrying amount approximates to fair value. Foreign currency risk Transaction risk Foreign currency transaction risk arises on sales and purchases denominated in currencies other than the functional currency of the entity that enters into the transaction. Group transactions are primarily in Sterling, Polish Zloty, Danish Krone or Euros. The magnitude of these transactional exposures is relatively low for the group as sales and purchases are typically matched by currency; and commercial contracts include escalators for currency movements on raw materials. The Group does not typically hedge transactional currency risk with derivative instruments, but exchange rate movements are regularly monitored. Translation risk Foreign currency translation risk arises on consolidation in relation to the translation into Sterling of the results and net assets of the Group’s non-UK subsidiaries. From purpose to action | Robinson Annual report 2021 | 58 Strategic report | Corporate governance | Financial statements | Additional information Strategic report | Corporate governance | Financial statements | Additional information Notes to the financial statements continued 26 Risk management objectives and policies (continued) The currency profile of net assets was as follows: Net assets by currency Sterling Polish Zloty Danish Krone Euro Others Total Group 2021 £’000 Group 2020 £’000 Company 2021 £’000 Company 2020 £’000 3,708 13,000 5,310 (356) 8 9,079 14,183 – 208 (66) 10,673 12,026 (41) 1,104 (502) – (20) – 637 (62) 21,670 23,404 11,234 12,581 The following table details the Group’s sensitivity to a 10% 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% against the Euro, Polish Zloty and Danish Krone. Currency impact Profit or loss for the year Equity Euro Polish Zloty Danish Krone +10% -10% +10% -10% +10% -10% 32 32 (40) (40) (86) (86) 105 105 271 271 (331) (331) Interest rate risk Interest rate risk is the risk that the fair value of, or future cash flows associated with, a financial instrument will fluctuate because of changes in market interest rates. The Group is exposed to interest rate risk on its floating rate borrowings. The interest rate profile of the Group’s interest-bearing financial assets and financial liabilities was as follows: Floating rate Bank overdrafts Bank and other loans: – pension escrow loan – commercial mortgages Lease liabilities Cash at bank and on hand Fixed rate Bank and other loans: – commercial mortgages Lease liabilities Total Group 2021 £’000 Group 2020 £’000 Company 2021 £’000 Company 2020 £’000 – (2,282) – – (2,700) (6,018) (4,002) 2,775 (2,700) – (1,878) 1,386 (2,700) (6,000) – 319 (2,700) – – 839 (9,945) (5,474) (8,381) (1,861) (933) (2,249) – (1,391) (3,182) (1,391) – – – – – – (13,127) (6,865) (8,381) (1,861) Interest payable on bank overdrafts and floating rate loans is based on base rates and short-term interbank rates. At 31 December 2021, the weighted average interest rate payable on bank overdrafts was 0% (2020: 1.35%). At 31 December 2021, the weighted average interest rate payable on bank and other loans was 1.79% (2020: 1.10%). At 31 December 2021, the weighted average interest rate receivable on cash at bank and in hand was nil% (2020: nil%). On the assumption that a change in market interest rates would be applied to the interest rate exposures that were in existence at the balance sheet date an increase/decrease of 100 basis points in market interest rates would decrease/increase the Group’s profit before tax by £127,000 (2020: £69,000), and the Company's profit before tax by £87,000 (2020: £27,000). From purpose to action | Robinson Annual report 2021 | 59 Notes to the financial statements continued 26 Risk management objectives and policies (continued) Credit risk Credit risk is the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has three types of financial assets that are subject to the ECL model: trade receivables, other receivables, and cash at bank and in hand. Disclosure regarding ECLs on trade receivables is provided in note 17. While other receivables and cash at bank and on hand are also subject to the requirements of IFRS 9, the identified impairment loss was immaterial. The Group’s cash balances are managed such that there is no significant concentration of credit risk in any one bank or other financial institution. Management monitors the credit quality of the institutions with which it holds deposits. The Group continuously monitors defaults (for debts beyond due date) 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. 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. At 31 December 2021, the maximum exposure to credit risk (excluding intercompany balances in the Company) was as follows: Trade and other receivables: – Trade receivables – Other receivables Cash at bank and on hand Total Liquidity risk analysis Group 2021 £’000 Group 2020 £’000 Company 2021 £’000 Company 2020 £’000 9,779 244 10,023 2,775 8,992 170 9,162 1,386 12,798 10,548 209 20 229 319 548 400 7 407 839 1,246 Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities. The Group’s borrowing facilities are monitored against forecast requirements and timely action is taken to put in place, renew or replace credit lines. 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: Group At 31 December 2021 Trade payables Other financial liabilities Bank overdrafts Bank and other loans: – principal – interest Minimum lease payments Group At 31 December 2020 Trade payables Other financial liabilities Bank overdrafts Bank and other loans: – principal – interest Minimum lease payments Within one year £’000 After one and within five years £’000 After five years £’000 6,161 1,074 – 531 6 – – – 8,428 22 – – – 692 33 Total £’000 6,161 1,074 – 9,651 61 1,717 4,058 780 6,555 9,489 12,508 1,505 23,502 4,234 1,330 2,282 – 15 1,005 8,866 – – – 2,700 – 2,295 4,995 – – – – – 18 18 4,234 1,330 2,282 2,700 15 3,318 13,879 From purpose to action | Robinson Annual report 2021 | 60 Strategic report | Corporate governance | Financial statements | Additional informationStrategic report | Corporate governance | Financial statements | Additional information Notes to the financial statements continued 26 Risk management objectives and policies (continued) Company At 31 December 2021 Trade payables Other financial liabilities Bank overdrafts Bank and other loans: – principal – interest Amounts owed to subsidiaries Company At 31 December 2020 Trade payables Other financial liabilities Bank overdrafts Bank and other loans: – principal – interest Amounts owed to subsidiaries Within one year £’000 After one and within five years £’000 After five years £’000 141 502 – 465 – 5,226 6,334 256 552 – – 15 5,114 5,937 – – – 8,235 – – 8,235 – – – 2,700 – – 2,700 – – – – – 6,195 6,195 – – – – – 4,829 4,829 Total £’000 141 502 – 8,700 – 11,421 20,764 256 552 – 2,700 15 9,943 13,466 27 Group capital and net debt The Group's capital comprises total equity and net debt. 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 and net debt. Robinson manages the capital structure and adjusts it in light of changes in economic conditions and the risk characteristics of the underlying assets. The Directors aim to maintain an efficient capital structure with a relatively conservative level of debt-to-equity gearing so as to ensure continued access to a broad range of financing sources that provide them sufficient flexibility in pursuing commercial opportunities as they arise. In order to maintain its capital structure, the Group may adjust the dividends paid to shareholders, issue new shares or sell assets to reduce debt. The Group's capital was as follows: Total equity Net debt Capital Gearing (average net debt / average capital) 2021 £’000 21,670 13,127 2020 £’000 23,404 6,865 2019 £’000 22,923 6,946 34,797 30,269 29,869 31% 23% 26% From purpose to action | Robinson Annual report 2021 | 61 Notes to the financial statements continued 27 Group capital and net debt (continued) Movements in Group net debt were as follows: Cash at bank and on hand Bank overdrafts Bank and other loans Lease liabilities Net debt Cash at bank and on hand Bank overdrafts Bank and other loans Lease liabilities Net debt 28 Capital commitments At 31 December 2020 £’000 1,386 (2,282) (2,700) (3,269) Exchange movements £’000 Debt acquired £’000 (85) – – 70 706 – (1,496) (1,595) Cash flows £’000 768 2,282 (5,455) (1,457) At 31 December 2021 £’000 2,775 – (9,651) (6,251) (6,865) (15) (2,385) (3,862) (13,127) At 31 December 2019 £’000 1,403 (3,081) (2,700) (2,568) (6,946) Exchange movements £’000 Debt acquired £’000 65 – – (66) (1) – – – – Cash flows £’000 (82) 799 – (635) At 31 December 2020 £’000 1,386 (2,282) (2,700) (3,269) (6,865) – 82 Group 2021 £’000 Group 2020 £’000 Company 2021 £’000 Company 2020 £’000 Contracted but not provided in these financial statements 321 1,045 – 45 29 Assets pledged as security The carrying amounts of assets pledged as security (excluding intercompany balances in the Company) for current and non-current borrowings are: Current Floating charge: – Cash and cash equivalents – Trade and other receivables First mortgage: – Assets classified as held for sale Total current assets pledged as security Non-current First mortgage: – Land and buildings – Surplus properties Lease liabilities: – Plant and equipment Floating charge: – Plant and equipment Total non-current assets pledged as security Total assets pledged as security Group 2021 £’000 Group 2020 £’000 Company 2021 £’000 Company 2020 £’000 1,485 6,441 639 5,788 238 – 319 356 335 839 457 – 8,164 6,427 1,010 1,296 3,876 3,411 7,287 7,321 7,321 6,374 6,374 20,982 29,146 3,055 3,649 6,704 3,864 3,864 3,545 3,545 14,113 20,540 3,182 6,082 9,264 3,278 6,417 9,695 – – 23 23 – – 20 20 9,287 10,297 9,715 11,011 From purpose to action | Robinson Annual report 2021 | 62 Strategic report | Corporate governance | Financial statements | Additional information Strategic report | Corporate governance | Financial statements | Additional information Notes to the financial statements continued 30 Contingent liabilities There were contingent liabilities at 31 December 2021 in relation to cross guarantees of bank overdrafts and leases given by the Company on behalf of other Group undertakings. The amount guaranteed at 31 December 2021 was £2,408,000 (2020: £4,585,000). The Directors have considered the fair value of the cross guarantee and do not consider this to be significant. 31 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 £9,228,000 of the net charges in 2021 related to UK subsidiaries (2020: £7,659,000). 2021 £’000 2020 £’000 606 974 11 543 409 21 7,935 7,152 9,526 8,125 211 154 9,907 5,205 Note 30 discloses cross-guarantees between the Company, its subsidiaries and finance providers in relation to bank overdrafts and leases. This is considered to have minimal value. Details of transactions between the Group and other related parties are disclosed below: Post-employment benefit plans Contributions amounting to £12,000 (2020: £11,000) were payable by the Company to a pension plan established for the benefit of its employees. At 31 December 2021, £1,000 (2020: £1,000) in respect of contributions due was included in other payables. An amount of £2.7m held in the Pension Escrow Account is loaned to the Company on commercial terms and secured on surplus property valued at £2.8m held by the Group (see note 32 for further details). In 2021, Robinson plc incurred and recharged expenses of £32,000 (2020: £54,000) on behalf of the pension plan and charged £23,000 (2020: £27,000) in respect of administration services provided to the plan. Compensation of key management personnel For the purposes of these disclosures, the Group and Company regards its key management personnel as the Directors, including non- executive Directors. Compensation payable to key management personnel in respect of their services to the Group was as follows: Short-term employee benefits IFRS 2 share option charge 2021 £’000 696 44 740 2020 £’000 829 24 853 From purpose to action | Robinson Annual report 2021 | 63 Notes to the financial statements continued 32 Employee benefit obligations The Group operates a defined contribution plan for UK employees, which is held in a separate Mastertrust arrangement from the Robinson & Sons Limited Pension Fund. This plan receives contributions to the members' pension pots from the Group and members. Polish employees are members of a pay-as-you-go plan based on notional defined contribution accounts, run by the Polish state-owned Social Insurance Institution. In Denmark, employees and the company contribute to independently managed defined contribution plans. The Group's obligations in respect of these plans are limited to the contributions. The expense is recognised in the current Income statement. The rest of this note relates to the Group's UK defined benefit plan (the "Plan"). The Robinson & Sons Limited Pension Fund is a defined benefit plan, which was closed to new members in 1997 and provides benefits to members in the form of a guaranteed pension for life. The level of benefits is based on each member’s salary and pensionable service prior to leaving the Plan. Benefits receive statutory revaluation in deferment. Once in payment, pension increases are applied, the majority of which are linked to inflation (subject to floors and caps). The Plan's assets are held separately from the Group in a trust fund. The fund is looked after by Trustees on behalf of the members. The assets are invested to meet the benefits promised by a combination of investment returns and future contributions. Under the normal course of events, actuarial valuations are undertaken every three years to confirm whether the assets are expected to be sufficient to provide the benefits. If there is a shortfall, a recovery plan is put in place under which the Group is required to pay additional contributions over a period of time, as agreed with the Trustees. The last triennial actuarial valuation was at 5 April 2020, which indicated the fund was in deficit. The funding position was reassessed based on rolled forward asset values and market conditions as of 30 October 2020, the date of signing the recovery plan. The scheme at that date had a funding surplus. The Trustees and the Company have therefore agreed that the Company is not required to pay contributions. The next full valuation is due as at 5 April 2023. The accounting disclosures are based on different assumptions from the plan’s funding assumptions. This is because: i) the funding and accounting valuations may be carried out at different dates and so are based on different market conditions; and ii) the funding assumptions are determined by the Trustees who must include margins for prudence. The accounting assumptions are determined by the Group Directors in accordance with accounting standards, which are different from funding regulations. The IAS 19 value placed on the pension benefit obligation has been determined by rolling forward from previous results, making adjustments to reflect benefits paid out of the Plan, and for differences between the assumptions used at this year end and the previous year end. Amounts recognised in statement of financial position Fair value of plan assets Liability value (present value of funded obligation) Surplus Unrecognised assets due to asset ceiling Net asset 2021 £’000 2020 £’000 69,051 66,903 (55,852) (57,605) 13,199 9,298 (13,199) (9,298) - - The main reasons for the improvement in the balance sheet position since last year are: • the investment return achieved on the Scheme’s assets over the period was around 7%, which was higher than the discount rate used last year, and; • the change in market conditions over the year – bond yields have increased over the period, resulting in a higher discount rate and a lower liability value. The above improvements have been partly offset by the assumptions for future inflation being higher than last year, increasing the value placed on Plan liabilities. The surplus is not recognised in the Group balance sheet, on the basis that future 'economic benefits' are not available in the form of reduced future contributions or a cash refund. The amounts recognised in the balance sheet and the movements in the defined benefit obligation over the year are as follows: Change in funded defined benefit obligation (DBO) DBO at beginning of year Service cost Interest on DBO Employee contributions Remeasurement – actuarial (gain)/loss from financial items Remeasurement – actuarial (gain)/loss from demographic items Benefits paid DBO at end of year 2021 £’000 2020 £’000 57,605 55,871 116 789 12 132 (229) 94 1,093 14 3,495 (324) (2,573) (2,638) 55,852 57,605 From purpose to action | Robinson Annual report 2021 | 64 Strategic report | Corporate governance | Financial statements | Additional information Strategic report | Corporate governance | Financial statements | Additional information Notes to the financial statements continued 32 Employee benefit obligations (continued) Change in Plan assets Fair value at beginning of year Employee contributions Interest income on Plan assets Impact of interest on asset ceiling Remeasurement - actuarial gain Employer contributions Benefits paid Expenses paid Fair value at end of year Asset return Interest income on Plan assets (expected return) Impact of interest on asset ceiling Remeasurement - actuarial gain Actual return on Plan assets The following amounts were recognised in the income statement and statement of other comprehensive income: Income statement Current service cost Expenses Net interest cost Impact of interest on the asset ceiling Total cost recognised in the income statement Statement of other comprehensive income Remeasurement DBO - actuarial loss from financial items Remeasurement DBO - actuarial (gain) from demographic items Remeasurement Plan assets - actuarial (gain) on assets Effect of asset limitation and minimum funding requirement Total (gain)/loss not recognised in other comprehensive income 2021 £’000 2020 £’000 66,903 66,392 12 918 (129) 3,996 – 14 1,301 (208) 2,128 – (2,573) (2,638) (76) (86) 69,051 66,903 2021 £’000 918 (129) 3,996 4,785 2021 £’000 116 76 (129) 129 192 132 (229) (3,996) 3,901 (192) 2020 £’000 1,301 (208) 2,128 3,221 2020 £’000 94 86 (208) 208 180 3,495 (324) (2,128) (1,223) (180) Cumulative actuarial losses recognised in other comprehensive income 11,292 11,484 Reconciliation of prepaid/(accrued) pension cost Net periodic pension cost Impact of limit on net assets Remeasurements - actuarial (gains)/losses not recognised in other comprehensive income Prepaid/(accrued) at end of year (IAS) Change in asset ceiling + additional liability IFRIC14 Asset not recognised at beginning of year Changes in unrecognised asset due to asset ceiling Asset not recognised at end of year 2021 £’000 192 3,901 (4,093) – 2020 £’000 180 (1,223) 1,043 – 9,298 3,901 13,199 10,521 (1,223) 9,298 From purpose to action | Robinson Annual report 2021 | 65 Notes to the financial statements continued 32 Employee benefit obligations (continued) Key assumptions used were: Discount rate at beginning of year Discount rate at end of year RPI inflation CPI inflation Salary inflation Expected return on assets Mortality (average) Mortality improvements The average life expectancy of a pensioner is as follows: 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 Sensitivity to assumptions The following table shows the impact of changes to the main assumptions: Reduce discount rate by 0.25% pa Increase inflation rate by 0.25% pa Add one year to life expectancies 2021 2020 2021 2020 Weighted average 1.4% 1.9% 2.0% 1.4% 1.9% 1.4% 1.9% 3.9% 2.9% 4.2% 1.9% 1.4% 2.8% 1.8% 3.1% 1.4% S3PXA S3PXA CMI2020[1%] CMI2019[1%] 2021 22.8 25.3 21.8 24.1 2020 22.8 25.3 21.8 24.1 Change to liability value (%) Addition to liability value £’000 3.1% 2.0% 4.4% 1,744 1,117 2,449 The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the DBO to significant actuarial assumptions, the same method (present value of the DBO calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period. Pension Escrow Account 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 Plan for existing members. The Group has nonetheless paid employer contributions set aside in the Group’s financial statements since the actuarial valuation in April 2002, together with money purchase contributions between 2005 and 2017, into an escrow account. The outcome of the next actuarial valuation in April 2023 will determine whether the contributions will be paid over to the Plan, returned to the Group or whether some other arrangements will be made. It is likely that the escrow account will be returned to the Plan, and therefore, it has been disclosed as an asset of the Plan. £2.7m of the escrow account is loaned to the Group on commercial terms secured on surplus property valued at £2.8m held by the Group. The total set aside in the escrow account as at 31 December 2021, including the £2.7m loan receivable, amounted to £3.1m (2020: £3.1m). Asset class allocation The major categories of Plan assets are as follows: Equity securities Debt securities Real estate Other Cash Weighted average duration of the Plan (years) Expected contributions in the following period 2021 34.6% 50.9% 5.9% 4.6% 4.0% 100% 14 – 2020 41.9% 44.2% 4.8% 4.8% 4.3% 100% 14 – As at the last actuarial valuation (5 April 2020), the present value of the DBO included £2.6m in respect of active members, £7.1m in respect of deferred members and £47.2m in respect of pensioners. From purpose to action | Robinson Annual report 2021 | 66 Strategic report | Corporate governance | Financial statements | Additional information Strategic report | Corporate governance | Financial statements | Additional information Notes to the financial statements continued 32 Employee benefit obligations (continued) Risk exposure Through its defined benefit pension plan, the Group is exposed to a number of risks, the most significant of which are detailed below: Asset volatility The Plan liabilities are calculated using a discount rate set with reference to corporate bond yields; if Plan assets underperform this yield, this will create a deficit. The Plan holds a significant proportion of equities, which are expected to outperform corporate bonds in the long-term while providing volatility and risk in the short-term. The Group believes that, due to the long-term nature of the Plan liabilities and the strength of the supporting Group, a level of continuing equity investment is an appropriate element of the Group’s long-term strategy to achieve a buyout of liabilities, when market conditions allow. Changes in bond yields A decrease in corporate bond yields will increase Plan liabilities, although this will be partially offset by an increase in the value of the Plan’s holdings. Interest and Inflation risks The Plan is exposed to interest and inflation rate risks. The Plan invests in liability-driven investments with a target level of hedging of 70% of the risk to funding associated with the impact of changes in long-term interest rates and inflation expectations on the Plan’s technical provisions. Life expectancy The Plan’s obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the Plan’s liabilities. 33 Share-based payments During the year ended 31 December 2021, the Group had five share-based payment arrangements under two schemes. There were no options granted during the year. The Enterprise Management Incentive Plan 2004 (EMI Plan 2004) is part of the remuneration package of the Executive Directors of the Company. Options under this scheme will vest in accordance with a timescale over 36 months if certain performance criteria are met. Upon vesting, each option allows the holder to purchase one ordinary share at the stated price. If the option holder leaves the employment of the Company, the option is forfeited. The Incentive Plan 2016 is part of the remuneration package of the Executive Directors and other senior managers of the Company. Options under this scheme will vest in accordance with a timescale over 36 months if certain performance criteria are met. Upon vesting, each option allows the holder to purchase one ordinary share at the stated price. If the option holder leaves the employment of the Company, the option is forfeited. Fair values for the share option schemes have been determined using the Black-Scholes model. The expected volatility is based on historical volatility over the past three years. The expected life is the average expected period to exercise. The risk-free rate of return is the yield on zero-coupon UK government bonds of a term consistent with the assumed option life. A reconciliation of option movements over the year to 31 December 2021 is shown below: Outstanding at 31 December 2019 Granted Oustanding at 31 December 2020 Exercised Outstanding at 31 December 2021 Exercisable at 31 December 2020 Exercisable at 31 December 2021 EMI Plan 2004 Weighted average price (p) Incentive Plan 2016 Weighted average price (p) 207,550 112.3 133,000 – – 600,000 207,550 (140,056) 112.3 69.0 733,000 – 67,494 202.0 733,000 207,550 67,494 112.3 133,000 202.0 133,000 130.0 118.5 120.6 – 120.6 130.0 130.0 The range of exercise prices for options outstanding at the end of the period is 118.5p to 202.0p. The weighted average contractual life of options at the end of the period is 7.5 years (2020: 7.5 years). The total charge in the year ended 31 December 2021 relating to employee share-based payment plans, in accordance with IFRS 2, was £50,000 (2020: £31,000). All of which was related to equity-settled share-based payment transactions. From purpose to action | Robinson Annual report 2021 | 67 Notes to the financial statements continued 34 Non-adjusting post balance sheet events Since the balance sheet date, Russian forces have invaded Ukraine. The Directors considered the financial impact of this event, which started on 24 February 2022, and have concluded that a financial estimate of its impact cannot be made at this time and that the matter is a non- adjusting post balance sheet event. See the Chairman’s Report on page 4, “Principal Risks and Uncertainties” in the Strategic Report on page 18, and the going concern disclosures on page 72 for further information. 35 Accounting policies Robinson plc is a company incorporated in the United Kingdom under the Companies Act 2006. The consolidated and Company financial statements have been prepared in accordance with UK-adopted international accounting standards in conformity with the requirements of the Companies Act 2006. 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. 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 IAS 27 Separate Financial Statements and IFRS 10 Consolidated Financial Statements and are recognised at cost less impairment. Revenue The Group manufactures and sells a range of plastic and paperboard packaging to its customers. Revenue is recognised when control of the products is transferred, being when the products are delivered to the customer, and there is no unfulfilled performance obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Group has objective evidence that all criteria for acceptance have been satisfied. Products are sometimes sold with retrospective volume rebates based on aggregate sales over a 12-month period. Revenue from these sales is recognised based on the price specified in the contract, net of the estimated volume rebates. Accumulated experience is used to estimate and provide for the rebates, using the expected value method, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. A rebate liability (included in trade and other payables) is recognised for expected volume rebates payable to customers in relation to sales made until the end of the reporting period. No element of financing is deemed present as the sales are made with credit terms that are considered within the range of normal industry practice. A receivable is recognised when the goods are delivered, as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due. 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 differences in relation to the operation are reclassified into the income statement. Exceptional items Exceptional items are material either individually or, if of a similar type, in aggregate and which, due to their nature, being outside the normal course of business or the infrequency of the events giving rise to them, are presented separately to assist users of the financial statements in assessing the underlying trading performance and trends of the Group’s businesses either year-on-year or with other businesses. Examples of exceptional items include, but are not limited to, the following: • restructuring and other expenses relating to the integration of an acquired business and related expenses for reconfiguration of the Group’s activities; • gains/losses on disposals of businesses; • acquisition-related costs, including adviser fees incurred for significant transactions, and adjustments to the fair values of assets and liabilities that result in non-recurring charges to the income statement; • Profit/loss on disposal of material property, plant and equipment; and • costs arising because of material and non-recurring regulatory and litigation matters. From purpose to action | Robinson Annual report 2021 | 68 Strategic report | Corporate governance | Financial statements | Additional informationStrategic report | Corporate governance | Financial statements | Additional information Notes to the financial statements continued 35 Accounting policies (continued) 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. Surplus properties are stated at cost; they are not being depreciated as they are surplus and not currently in use and the value is therefore not being consumed. Depreciation is provided on other assets at the following annual rates: Buildings Plant and machinery 4% – 20% per annum 5% – 33% per annum Residual values and estimated useful lives are re-assessed annually. Assets under construction are not depreciated until they are ready for use. 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. Trade and other receivables Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They are recognised initially at the amount of consideration that is unconditional. The Group holds the trade receivables with the objective of collecting the contractual cash flows, and therefore, measures them subsequently at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established based on the ECL. The Group applies the IFRS 9 simplified approach to measuring ECLs that uses a lifetime expected loss allowance for all trade receivables, which are grouped based on shared credit risk characteristics and the days past due. The amount of the provision is recognised in the balance sheet within trade receivables. Movements in the provision are recognised in the profit and loss account in administrative expenses. Any change in their value through impairment or reversal of impairment is recognised in the income statement. Investments Fixed asset investments in subsidiaries are shown at cost less provision for impairment. Cash and cash equivalents For the purpose of presentation in the statement of cash flows, cash and cash equivalents include cash on hand, demand deposits with banks, and other short-term, highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within current liabilities in the statement of financial position. Trade and other payables These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid. The amounts are unsecured and are usually paid within 60 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method. Borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled, or expired. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Borrowings include bank overdrafts, bank and other loans, and lease liabilities. From purpose to action | Robinson Annual report 2021 | 69 Notes to the financial statements continued 35 Accounting policies (continued) 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 Plan assets less the present value of the DBO, to the extent that this is recoverable by means of a contribution holiday, payment of money purchase contributions and expenses from the Plan calculated on the projected unit credit method. Operating costs comprise the current service cost plus expenses. Finance income comprises the expected return on Plan assets less the interest on Plan liabilities. Actuarial gains or losses comprising differences between the actual and expected return on Plan assets, changes in Plan 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. 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 CGUs expected to benefit from the synergies of the combination. CGUs 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 CGU 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 the disposal of a CGU, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. Goodwill recorded in foreign currencies is retranslated at each period end. Any movements in the carrying value of goodwill as a result of foreign exchange rate movements are recognised in the Statement of comprehensive income. 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. Intangible assets recorded in foreign currencies are retranslated at each period end. Any movements in the carrying value of intangible assets as a result of foreign exchange rate movements are recognised in the Statement of comprehensive income. From purpose to action | Robinson Annual report 2021 | 70 Strategic report | Corporate governance | Financial statements | Additional informationStrategic report | Corporate governance | Financial statements | Additional information Notes to the financial statements continued 35 Accounting policies (continued) Leased assets The Group as a lessee The Group recognises a right-of-use asset and a lease liability at the commencement date of the contract for all leases conveying the right to control the use of an identified asset for a period of time, with the exception of short-term leases and leases for which the underlying asset is of low-value. The right-of-use asset is initially measured at cost, and subsequently, at cost less any accumulated depreciation and any accumulated impairment losses and adjusted for any remeasurement of the lease liability. If the lease transfers ownership of the underlying asset to the Group by the end of the lease term or if the cost of the right-of-use asset reflects that the Group will exercise a purchase option, the Group depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset on a straight-line basis. Otherwise, the Group depreciates the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term on a straight-line basis. The lease liability is initially measured at the present value of the lease payments not paid at that date. Lease payments are discounted using the Group’s incremental borrowing rate or the rate implicit in the lease contract. The lease liability is subsequently remeasured to reflect lease payments made. Short-term and low-value leases are recognised in profit or loss on a straight-line basis over the term of the lease. The Group as a lessor Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. 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. 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 to IFRS 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 from 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. Surplus properties The Group owns several properties, which were previously used in its trading businesses, that 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 been included under the heading, surplus properties. Non-current assets held for sale Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell. An impairment loss is recognised for any initial or subsequent write-down of the asset to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset is recognised at the date of derecognition. Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised. Non-current assets classified as held for sale are presented separately from the other assets in the balance sheet. From purpose to action | Robinson Annual report 2021 | 71 Notes to the financial statements continued 35 Accounting policies (continued) Share-based payments 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 from those estimated on vesting. Further details are given in the Directors’ report. 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 holds £7m of commercial mortgages which are committed to at least February 2024 and £7m of other short-term facilities that are to be renewed annually. The Group will meet its day-to-day working capital requirements through its short-term credit facilities of £7m. The Group has renegotiated these facilities on acceptable terms. The forecasts used to assess the going concern assumption were approved by the Board. As a result of the market uncertainty due to the ongoing Covid-19 coronavirus pandemic and developments in the conflict in Ukraine, the Directors have performed a detailed stress test to confirm that the business will be able to operate for at least the following 12 months from the date of approval of these financial statements. This involves assessing the headroom against available credit facilities and financial covenants in a stressed scenario, the assumptions used for this test are as follows: • 5% reduction in revenues; • 1% reduction in gross margins; • suspension of dividend payments to shareholders; • 4% increase in fixed costs; • a moratorium on uncommitted, non-essential capital expenditure; and • continued availability of existing credit facilities from the Group’s finance providers. 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. Critical accounting judgements and key sources of estimation uncertainty The preparation of the Group’s financial statements requires management to make judgements, 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 Directors consider the following to be the critical judgements and key sources of estimation uncertainty made in preparing these financial statements that, if not borne out in practice, may affect the Group’s results during the next financial year. Critical judgements 1) Classification of surplus properties The Group owns several properties, which were previously used in its trading businesses, that are now surplus to its current business needs. Management is required to determine which properties were surplus during the year and at the reporting date; the basis of determination is whether the properties are in operational use. There were no changes in the classification of properties during the current or prior year. 2) Recognition of customer relationships on Schela Plast Acquisition During the year, the Group acquired Schela Plast A/S. Under IFRS 3 ‘Business Combinations’ management is required to accurately detect, recognise and measure at fair value the intangible and tangible assets and liabilities acquired in a business combination. From the assessment undertaken, it is management’s view that the intangible asset recognised on acquisition of Schela Plast A/S relates solely to customer relationships. From purpose to action | Robinson Annual report 2021 | 72 Strategic report | Corporate governance | Financial statements | Additional informationStrategic report | Corporate governance | Financial statements | Additional information Notes to the financial statements continued 35 Accounting policies (continued) Key sources of estimation uncertainty 1) Pensions and other post-employment benefits 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 32. 2) Impairment of goodwill, other intangible assets and property, plant and equipment The Group tests goodwill, intangible assets and property, plant and equipment 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 CGUs 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 CGU and a suitable discount rate in order to calculate present value. Further details on this process are set out in note 11. Amendments to IFRSs that are mandatorily effective for the current year The adoption of the following mentioned 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 IFRS 9 Financial Instruments, IAS 39 Financial Instruments: Recognition and Measurement, IFRS 7 Financial Instruments: Disclosures, IFRS 4 Insurance Contracts and IFRS 16 Leases (Amendments): Interest Rate Benchmark Reform – Phase 2 IFRS 4 Insurance Contracts (Amendment): Extension of the Temporary Exemption from Applying IFRS 9 1 January 2021 1 January 2021 The adoption of the following mentioned standards, amendments and interpretations in future years are not expected to have a material impact on the Group’s/Company’s financial statements. EU effective date – periods beginning on or after IFRS 16 Leases (Amendment): Covid-19-related Rent Concessions Beyond 30 June 2021 IAS 16 Property, Plant and Equipment (Amendment): Proceeds Before Intended Use IAS 37 Provisions, Contingent Liabilities and Contingent Assets: (Amendment): Onerous Contracts – Cost of Fulfilling a Contract IFRS 3 Business Combinations (Amendment): Reference to the Conceptual Framework Annual Improvements to IFRSs (2018 – 2020 cycle) IFRS 17 Insurance Contracts and Amendments to IFRS 17 1 April 2021 1 January 2022 1 January 2022 1 January 2022 1 January 2022 1 January 2023 Comment on standards effective from 1 January 2021 Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2021 reporting periods and have not been early adopted by the Group. These standards are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions. From purpose to action | Robinson Annual report 2021 | 73 Independent auditor’s report to the members of Robinson plc Opinion We have audited the financial statements of Robinson Plc (the ‘parent Company’) and its subsidiaries (the ‘Group’) for the year ended 31 December 2021 which comprise Group income statement, the Group statement of comprehensive income, the Group and Company statement of financial position, the Group and Company statement of changes in equity, the Group and Company cash flow statement 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 UK-adopted international accounting standards 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 2021 and of the Group’s profit for the year then ended; • have been properly prepared in accordance with UK-adopted international accounting standards and as regards the parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006; and, • have been prepared in accordance with the requirements of the Companies Act 2006. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the “Auditor’s responsibilities for the audit of the financial statements” section of our report. We are independent of the Group and the parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, as applied to SME listed entities and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Conclusions relating to going concern In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our audit procedures to evaluate the directors’ assessment of the Group’s and the parent Company’s ability to continue to adopt the going concern basis of accounting included but were not limited to: • Undertaking an initial assessment at the planning stage of the audit to identify events or conditions that may cast significant doubt on the Group’s and the parent Company’s ability to continue as a going concern; • Obtaining an understanding of the relevant controls relating to the directors’ going concern assessment; • Evaluating the directors’ method to assess the Group’s and the parent Company’s ability to continue as a going concern; • Reviewing the directors’ going concern assessment including related stress testing which incorporated severe but plausible scenarios; • Evaluating the key assumptions used and judgements applied by the directors in forming their conclusions on going concern; and • Reviewing the appropriateness of the directors’ disclosures in the financial statements. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group’s and the parent Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. From purpose to action | Robinson Annual report 2021 | 74 Strategic report | Corporate governance | Financial statements | Additional informationIndependent auditor’s report to the members of Robinson plc continued 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. Key Audit Matter How our scope addressed this matter Revenue recognition The Group’s accounting policy in respect of revenue recognition is set out in the accounting policy notes on page 68. Revenue is a material balance for Robinson Plc and represents the largest balance in the group income statement. An error in this balance could significantly affect users’ interpretation of the financial statements. As a result, there is a risk of fraud or error in revenue recognition due to the potential to inappropriately record revenue in the wrong period. We therefore consider revenue cut-off to be a key audit matter. Our response Our procedures over revenue recognition included, but were not limited to: • Obtaining an understanding of the processes and controls over the recognition of revenue and performing walkthrough procedures to validate that controls were appropriately designed and implemented; and • Substantive testing of a sample of revenue transactions around the year end to ensure they were accounted for in the correct period. • Performed a review of material receipts pre and post year end to provide additional comfort that revenue around the year end was appropriately recognised in the correct period. Our observations Our work performed in relation to controls over the recognition of revenue confirmed that the controls in place were designed and implemented effectively. Based on our work performed on transactions around the year end, revenue was appropriately recognised in the correct period. Our application of materiality and an overview of the scope of our audit The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and on the financial statements as a whole. Based on our professional judgement, we determined materiality for the financial statements as a whole as follows: Group materiality Overall materiality How we determined it Rationale for benchmark applied Performance materiality Reporting threshold £803,000 The overall materiality level has been determined with reference to a benchmark of Group revenue. In our view, revenue is the most relevant measure of the underlying performance of the Group and therefore, has been selected as the materiality benchmark. The percentage applied to this benchmark is 1.75%. Performance materiality is set to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements in the financial statements exceeds materiality for the financial statements as a whole. This was set at £642,000. We agreed with the directors that we would report to them misstatements identified during our audit above £24,000 as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons. From purpose to action | Robinson Annual report 2021 | 75 Strategic report | Corporate governance | Financial statements | Additional informationIndependent auditor’s report to the members of Robinson plc continued Parent materiality Overall materiality How we determined it Rationale for benchmark applied Performance materiality Reporting threshold £459,000 The overall materiality level has been determined with reference to a benchmark of its net assets. In our view, net assets are the most relevant measure of the underlying performance of the company, given the nature of the operations of the company and therefore, has been selected as the materiality benchmark. The percentage applied to this benchmark is 4.00%. Performance materiality is set to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements in the financial statements exceeds materiality for the financial statements as a whole. This was set at £367,000. We agreed with the directors that we would report to them misstatements identified during our audit above £14,000 as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons. As part of designing our audit, we assessed the risk of material misstatement in the financial statements, whether due to fraud or error, and then designed and performed audit procedures responsive to those risks. In particular, we looked at where the directors made subjective judgements, such as assumptions on significant accounting estimates. We tailored the scope of our audit to ensure that we performed sufficient work to be able to give an opinion on the financial statements as a whole. We used the outputs of our risk assessment, our understanding of the Group and the parent Company, their environment, controls, and critical business processes, to consider qualitative factors to ensure that we obtained sufficient coverage across all financial statement line items. Our group audit scope included an audit of the Group and the parent Company financial statements of Robinson Plc. Based on our risk assessment, Robinson Plastic Packaging Limited, Robinson Paperbox Packaging Limited, Robinson (Overseas) Limited, Portland Works Limited and Walton Mill (Chesterfield) Limited within the group were subject to full scope audit performed by the group audit team. Robinson Packaging Polska Sp. z o.o and Schela Plast A/S were also subject to a full scope audit undertaken by component auditors, Mazars Poland and Deloitte Denmark respectively. The Group audit team directed and reviewed the work of the component auditors to gather sufficient and appropriate evidence in order to support the opinion on the consolidated financial statements. At the parent Company level, the group audit team 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 other information comprises the information included in the annual report other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or our knowledge obtained in the course of audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 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. From purpose to action | Robinson Annual report 2021 | 76 Strategic report | Corporate governance | Financial statements | Additional informationIndependent auditor’s report to the members of Robinson plc continued 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 • the parent Company financial statements are not in agreement with the accounting records and returns; or • certain disclosures of directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit. Responsibilities of Directors As explained more fully in the directors’ responsibilities statement set out on page 38, 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 the financial statements. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. Based on our understanding of the Group and the parent Company and their industry, we considered that non-compliance with the following laws and regulations might have a material effect on the financial statements: employment regulation, health and safety regulation. To help us identify instances of non-compliance with these laws and regulations, and in identifying and assessing the risks of material misstatement in respect to non-compliance, our procedures included, but were not limited to: • inquiring of management and, where appropriate, those charged with governance, as to whether the Group and the parent Company is in compliance with laws and regulations, and discussing their policies and procedures regarding compliance with laws and regulations; • inspecting correspondence, if any, with relevant licensing or regulatory authorities; • communicating identified laws and regulations throughout our engagement team and remaining alert to any indications of non-compliance throughout our audit; and • considering the risk of acts by the Group and the parent Company which were contrary to the applicable laws and regulations, including fraud. We also considered those laws and regulations that have a direct effect on the preparation of the financial statements, such as tax legislation and pension legislation. In addition, we evaluated the directors’ and management’s incentives and opportunities for fraudulent manipulation of the financial statements, including the risk of management override of controls, and determined that the principal risks related to posting manual journal entries to manipulate financial performance, management bias through judgements and assumptions in significant accounting estimates, in particular in relation to revenue recognition (which we pinpointed to the cut-off assertion) and significant one-off or unusual transactions. From purpose to action | Robinson Annual report 2021 | 77 Strategic report | Corporate governance | Financial statements | Additional informationIndependent auditor’s report to the members of Robinson plc continued Our audit procedures in relation to fraud included but were not limited to: • making enquiries of the directors and management on whether they had knowledge of any actual, suspected or alleged fraud; • gaining an understanding of the internal controls established to mitigate risks related to fraud; • discussing amongst the engagement team the risks of fraud; and • addressing the risks of fraud through management override of controls by performing journal entry testing. There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of irregularities including fraud rests with management. As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls. The risks of material misstatement that had the greatest effect on our audit are discussed in the “Key audit matters” section of this report. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Use of 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. Alistair Wesson (Senior Statutory Auditor) for and on behalf of Mazars LLP Chartered Accountants and Statutory Auditor Park View House 58 The Ropewalk Nottingham NG1 5DW 23 March 2022 From purpose to action | Robinson Annual report 2021 | 78 Strategic report | Corporate governance | Financial statements | Additional informationFrom purpose to action | Robinson Annual report 2021 | 79 Strategic report | Corporate governance | Financial statements | Additional information Notice of Annual General Meeting Notice is hereby given that the Annual General Meeting of Robinson plc will be held at Casa Hotel, Lockoford Lane, Chesterfield S41 7JB on Thursday 26 May 2022 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 the report of the Directors and the audited financial statements for the year ended 31 December 2021 The following documents will be available for inspection during normal business hours at the Registered Office of the Company from the date of this notice until the time of the meeting. They will also be available for inspection at the place of the meeting from at least 15 minutes before the meeting until it ends: 2. to declare a final dividend for the year ended 31 December 2021 1. Copies of the service contracts of the Executive Directors. of 3.0p per ordinary share 2. Copies of the letters of appointment of the Non-executive 3. to re-elect Guy Robinson as a Director of the Company who Directors. retires by rotation 4. to re-elect Mike Cusick as a Director of the Company who retires by rotation Biographical details of all those Directors who are offering themselves for reappointment at the meeting are set out on page 28 of the annual report and accounts. 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. On behalf of the Board, Mike Cusick Director 22 April 2022 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 24 May 2022 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 24 May 2022 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. From purpose to action | Robinson Annual report 2021 | 80 Form of proxy For use at the Annual General Meeting of Robinson plc convened for 26 May 2022 and any adjournments thereof. I/We,(see note 1) (block capitals please) of 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) (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 26 May 2022 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 receive the Directors’ report and financial statements for the year ended 31 December 2021 2. To declare a final dividend of 3.0p per ordinary share 3. To re-elect Guy Robinson as a Director 4. To re-elect Mike Cusick as a Director 5. To reappoint Mazars LLP as auditor of the Company and to authorise the Directors to determine their remuneration Notes * For * Against * Withheld * For * Against * Withheld * For * Against * Withheld * For * Against * Withheld 1. 2. 3. * For * Against * Withheld 4. * Please delete whichever is not desired or leave blank to allow your proxy to choose. Signature(s): Dated: The names of all registered holders should be stated in block capitals. 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. 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. 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. From purpose to action | Robinson Annual report 2021 | 81 Strategic report | Corporate governance | Financial statements | Additional information Annual General Meeting attendance form Annual General Meeting Thursday 26 May 2022 The Board very much hopes that you will be able to attend this year’s Annual General Meeting, which will be held at Casa Hotel, Lockoford Lane, Chesterfield S41 7JB at 11:30 am. 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. Me My proxy From: Full Name in CAPITALS please I shall be attending the AGM I shall be staying for the buffet lunch Please tick the appropriate boxes. Signature Date Please return this form to: Mike Cusick Robinson plc Field House Wheatbridge Chesterfield S40 2AB UK From purpose to action | Robinson Annual report 2021 | 82 Directors and Advisers Directors Alan Raleigh Non-executive Chairman Sara Halton Senior Independent Director Guy Robinson Non-executive Director Anthony Glossop Non-executive Director (resigned 24 June 2021) Helene Roberts Chief Executive Mike Cusick Finance Director Registered Office Field House, Wheatbridge, Chesterfield, S40 2AB Nominated Adviser/Broker FinnCap, One Bartholomew Close, London, EC1A 7BL Solicitor DLA Piper UK LLP, 1 St Paul’s Place, Sheffield, S1 2JX Auditor Mazars LLP, Park View House, 58 The Ropewalk, Nottingham, NG1 5DW Tax Adviser Azets, 33 Park Place, Leeds, LS1 2RY Registrar Neville Registrars Ltd, Steelpark Rd, Halesowen, B62 8HD Banker HSBC, 1 Bond Court, Leeds, LS1 2JZ The Company is incorporated in England, registered no. 39811  @robinsonpack robinson packaging Visit us online at robinsonpackaging.com Robinson plc, Field House, Wheatbridge, Chesterfield, S40 2AB United Kingdom This publication has been printed on Nautilus Superwhite 100% Recycled an FSC® certified paper from responsible sources. This ensures that there is an audited chain of custody from the tree in the well-managed forest through to the finished document in the printing factory. 

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