CRAWSHAW GROUP PLC 23rd April 2015
Crawshaw Group PLC
Final Results
Crawshaw Group PLC ('the Company'), the fresh meat and food-to-go retailer, today reports its audited results for the year ended 31 January 2015.
Results highlights for the year to 31st January 2015.
• Total Group Sales for the year up 17% to £24.6m (2014: £21.0m)
• Full year like for like sales up 5% (2014: 11%)
• EBITDA up 15% to £1.6m (2014: £1.4m)
• Adjusted EBITDA* up 30% to £1.8m (2014: £1.4m)
• Profit before tax £1.2m (2014: £1.0m)
• Net cash £9.1m (2014: £1.0m)
• Earnings per share lower at 1.30p (2014: 1.42p) as a result of the share placing in the year
• LFL sales first 10 weeks of current year down 4% (2014: +19%) with good outlook for the year ahead
Sales and gross margin
Total Group sales for the 53 weeks ended 31 January 2015 were £24.6m (2014: £21.0m), an increase of 17%.
Excluding the impact of the additional week in the current year the growth in total Group sales compared with the same 52 weeks in 2014 was 15%. Wholesale sales rose 13% to £1.1m (2014: £0.9m) and like-for-like sales grew by 5% (2014: 11%) over the year.
Additional sales have been generated by our new shop opening in Sheffield in March and our new factory shop in Rotherham in November.
Average customer spend continues to rise and is up 3.5% to £6.22 versus last year (2014: +13%) as we maintain our focus on larger value packs and multi buy offers. Customer numbers are 3.2% higher than last year (2014: -1%) driven by our hot cooked products as we improve the range and consistency of our lunchtime and take home offer.
I am pleased to say that in November we moved from 3 separate head office and factory locations into one newly refurbished facility in Rotherham. This single location can now support up to 60 shops and also contains a new factory shop which is performing well above expectations.
Gross margin levels have further strengthened to 44.4% (2014: 43.8%) as a result of lower meat prices in the year plus continued improvements in operational efficiency.
Costs
In total, overheads were 19% higher at £9.8m (2014: £8.2m). However, this figure can be further analysed between those overheads required to support the existing operation, £9.6m and the investment in infrastructure costs to support our growth strategy in the year £0.2m. Operating overheads (excluding investment in infrastructure costs) as a proportion of sales was 39% (2014: 39%).
Profit
Reported EBITDA for the year increased 15% to £1.6m (2014: £1.4m), however, excluding infrastructure costs the adjusted EBITDA was 30% higher than last year at £1.8m. This increase in profitability can be directly attributed to the improvements in like for like sales in addition to management control of gross margin and overheads. Profit before tax rose to £1.2m (2014: £1.0m) however, due to the successful share placing in the year, where the number of shares in circulation increased by 20,999,994, earnings per share reduced to 1.30p (2014: 1.42p).
Dividend
The Board is delighted to propose the payment of a final dividend of 0.47 pence per share, which together with the interim dividend of 0.10 pence per share, paid on 31st October 2014, takes the total dividend for the year to 0.57 pence per share, an increase of 10% (2014: 0.52 pence per share). Shareholder approval will be sought at the Annual General Meeting, to be held on 23rd June 2015, to pay the final dividend on 31st July 2015 to shareholders on the register on 3rd July 2015. The ex-dividend date will be 2nd July 2015. As last year, shareholders will have the opportunity to elect to reinvest their cash dividend and purchase existing shares in the Company through a Dividend Reinvestment Plan ('DRIP').
Cash
Operating cash flow before movements in working capital was £1.6m (2014: £1.4m). After working capital movements and higher taxation payments the cash generated from operating activities was £1.5m (2014: £1.4m). Other cash outflows during the year include £1.5m on capital projects (£1.0m to cover the cost of our new operating facility, head office and factory shop, leasehold improvements of £0.3m and equipment/vehicles of £0.2m), £0.2m on acquisitions, £0.4m on the repayment of loans and £0.3m on dividends. After the cash inflow of £8.6m from the share placing, cash balances at the end of January 2015 were £7.7m higher at £9.1m (2014: £1.4m).
As we have now have no debt within the company, at the reporting year end we also held net cash of £9.1m (2014: £1.0m).
Growth Plan
I am very pleased with the progress made to date on our plans to open 200 shops. The post year end acquisition of Gabbotts Farm has provided 11 additional profitable shops and a distribution centre in the North West of England. We have also recently signed leases on new shops in Leeds and Bolton which are currently being fitted out. In addition there are a number of other locations in the process of being signed up.
CEO
I am delighted to welcome Noel into the business as our new CEO. He is developing many initiatives and plans to grow sales and profits through our existing estate, to drive the integration, performance, and synergy benefits at Gabbotts, and is putting in place a robust infrastructure to ensure we are properly and expertly resourced to handle the scale of store rollout we have planned.
Outlook
LFL sales started the year lower than last year which is in line with expectation given the exceptional growth from the comparable period last year.
Each and every one of our stores were profitable during the year under review, and this gives us much confidence in the scalability of our model.
It is a very exciting time for the business and whilst short term profits will be held in check for a while as we add infrastructure costs ahead of the curve, we very much look forward to reporting on our progress as we build scale as quickly as practically possible.
Richard Rose
Chairman
23rd April 2015.
* Adjusted EBITDA is earnings before interest, taxation, depreciation, amortization and infrastructure costs. Infrastructure costs are defined as investments in people, processes and systems in the year to provide the building blocks to support future growth.
Enquiries:
Crawshaw Group plc
Lynda Sherratt 01709 369 600
Peel Hunt LLP
Dan Webster, Richard Brown 0207 418 8869
Strategy and Business Model
Mission
To use our expertise to source, prepare and retail quality meat products at a price and a service level that delight our customers.
Principal Activities
The principal activity of the Group continues to be the operation of a chain of meat focused retail food stores. The Group operates from a head office and distribution centre in Rotherham, plus 22 retail locations across Yorkshire, Lincolnshire, Nottinghamshire and Derbyshire.
Business Model
Our management team have extensive experience in sourcing quality meat products from tried and tested local and international suppliers at the lowest possible prices. Whilst we do buy longer term to ensure that we have a core range of products, we pride ourselves on identifying key lines in the spot market that offer value to our customers.
We have our own distribution centre where we control additional processing and logistics as well as the production of our very own award winning sausages.
Our retail outlets are manned with skilled butchers who are happy to help customers with advice on choosing the right product, in the right quantities, as well as how to cook it.
Our product range is split into 2 distinct areas:
• Traditional raw meat - we have a wide range of products sold either (i) loose in a serve over counter for the traditional experience or (ii) as multi buy packs on supermarket style multi deck counters which have all been cut and packaged in store.
• Hot and cold cooked food - freshly prepared roast chickens, gammon and pork joints, hot roast sandwiches, shop cooked curries and casseroles, chicken and chips as well as other traditional deli products.
Operational Strategy
The Board is focused on growing the business through identifying new profitable store locations and investing resources in a controlled expansion programme, whilst ensuring the core business continues to deliver quality products and excellent customer service at competitive prices.
Key operational objectives:
• New store locations are regularly reviewed for suitability to grow/replace our existing retail estate.
• New products are researched, tested and trialled frequently.
• Customer feedback is sought and reviewed on an ongoing basis.
• Key price points from competitors are monitored regularly.
• Our food safety management systems are continually reviewed and updated to ensure our procedures are in line with the highest standards.
As raw meat is a traded commodity, the business operates in an environment where input prices can fluctuate based on worldwide natural and economic factors such as a growing world population, climate change, exchange rates and changing dietary habits.
The Company's purchasing and sales strategy is designed to minimise these risks by ensuring (i) we sell a broad range of products and in particular, as we split into 2 complementary retail areas, we cover 2 distinct customer types rather than relying on one product for one customer and (ii) we use a broad range of tried and tested suppliers across the globe rather than relying on any specific supplier or region.
Food Safety
We invest continually to ensure our food safety management systems are implemented, delivered and continuously audited at every site and we protect our customers and our brand by sourcing quality products with full traceability. As the largest independent retail butchers chain to have a direct Primary Authority Partnership, we continue to work with our partner, the Environmental Health Department at Wakefield Council, to ensure our food safety policies and procedures are endorsed by them. This ensures consistency in food safety as all our shops as they are all working to the same standards and interpretations of the regulations.
We have very good working relationships with all the Local Authorities who regulate us and we continue to recognise the importance of food safety. Positive consistent progress has continued this year and our food hygiene ratings have improved yet again with 68% of our shops on a food hygiene rating of 5 ('very good' the highest rating achievable) and 32% on a food hygiene rating of 4 ('good'). Furthermore we have increased our '5' ratings by 8% in the last year.
Our new factory at Hellaby opened in November 2014 and was designed to our own specifications to ensure it met our high food safety standards. Throughput at our factory has increased to match the increase in sales and we continue to invest in training across the board which not only provides legal compliance but has also equipped managers with further knowledge and confidence to maintain and improve food safety.
The maintenance and continued development of our food safety management system has been fundamental in maintaining and continuously improving food safety standards across the company. Whilst we recognise the Company will continue to face challenges, including changes in legislation, we continue to be focused on food safety and the origin and traceability of products. We recognise this as being essential to ensure we meet the requirements of our customers and continue to supply safe and legal products.
KPIs and Risk Management
The performance of the business is regularly monitored against Key Performance Indicators (KPIs). Most of the KPIs identified below are discussed in more detail in the Chairman's Statement.
KPI 2015 2014 Notes
Revenue £24.6m £21.0m After trade discounts and excluding VAT
Gross profit 44.4% 43.8% Gross profit as a percentage of revenue
EBITDA £1.6m £1.4m Earnings before interest, taxation, depreciation and amortisation
Adjusted EBITDA £1.8m £1.4m Earnings before interest, taxation, depreciation, amortisation and infrastructure costs
EPS 1.30p 1.42p Profit after tax divided by the average number of shares in issue
Turnover/average number employees £83,174 £85,446 Sales per employee
Operational overheads % 39% 39% Operational overheads as a percentage of revenue
The principal risks and uncertainties affecting the Group include the following:
• Raw material availability and prices: the Group monitors raw material sources on a global basis and negotiates spot and forward purchase contracts based in sterling where appropriate with key suppliers. However, the volatility of international currency markets and their impact on spot raw material prices in sterling is an ongoing issue.
• Customer loss and competition - There is an ongoing risk of customer loss from enhanced competition. The Groups strategy is to be aware of competitor pricing, to maintain customer loyalty through value pricing and varied promotions and to deliver superior service and product expertise at all times.
• Environmental risks: the Group places considerable emphasis upon environmental compliance in its business and not only seeks to ensure ongoing compliance with relevant legislation but also strives to ensure that environmental best practice is incorporated into its key processes.
• Major disruption/disaster: business continuity planning is reviewed regularly.
• Food Safety: compliance with legislation is continually assessed and monitored at every location.
• The effect of legislation or other regulatory activities: the Group monitors forthcoming and current legislation.
• Shrinkage: All retailers are exposed to customer and employee theft. The Group has a zero tolerance to theft and we continually review internal systems and controls. We maximise the use of CCTV surveillance in store and aim to prosecute where relevant.
Directors' Report
The directors present their report together with audited financial statements for the year ended 31 January 2015.
Crawshaw Group Plc ('the Company') is a public limited company incorporated and domiciled in the United Kingdom and under the Companies Act 2006.
The address of the Company's registered office is Crawshaw Group Plc, Unit 4, Sandbeck Way, Hellaby Industrial Estate, Rotherham S66 8QL.
The Company has its primary listing on AIM, part of the London Stock Exchange.
The Group financial statements were authorised for issue by the Board of Directors on 23rd April 2015.
Further information on the activities of the business, the Group strategy and an indication of the outlook for the business are presented in the Chairman's Statement and the Strategy and Business Model sections of the report.
Results and Dividends
Reported under IFRS the Group profit before taxation is £1,194,398 (2014: £984,789).
After a taxation charge of £299,804 (2014: £164,421) the Group profit for the year is £894,594
(2014: £820,548).
The directors propose a final dividend of 0.47 pence per share (2014: 0.43 pence) to be paid on 31st July 2015, to shareholders on the register at the close of business on 3rd July 2015. The share price will be marked ex dividend with effect from the 2nd July 2015.
Dividend Reinvestment Plan ('DRIP')
In line with last year shareholders can choose to reinvest any dividends received to purchase further shares in the Company through a DRIP. A DRIP application form is available from our registrar Capita Asset Services.
Substantial Shareholdings
At 19th March 2015, the directors had been notified of the following interests, of 3% and over, in the Company's issued ordinary share capital:
Shareholder Number of Ordinary Shares
%
Arrowgrass Capital Partners 11,055,713 14.0
Unicorn Asset Management 7,276,475 9.2
Living Bridge 7,161,015 9.1
Hargreave Hale 6,484,528 8.2
Colin Crawshaw 6,265,711 7.9
Richard Rose 5,241,547 6.7
John Kelly 4,421,762 5.6
Schroder Investment Management 3,799,317 4.8
Kevin Boyd 3,316,311 4.2
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 JANUARY 2015
Year ended Year ended
31 Jan 2015 31 Jan 2014
Note £ £
Revenue
24,619,589 21,019,596
Cost of sales (13,698,483) (11,818,044)
Gross profit 10,921,106 9,201,552
Other operating income 2
18,678
18,060
Administrative expenses (9,802,982) (8,231,788)
Operating profit 1,136,802 987,824
Analysed as:
EBITDA 3 1,573,174 1,368,459
Impairment,depreciation and amortization 4 (436,372) (380,635)
Operating profit 1,136,802 987,824
Finance income 7 48,365 2,116
Finance expenses 7 (6,233) (16,111)
Net finance income/(expense) 42,132 (13,995)
Share of profit of equity accounted investees (net of tax) 15,464 10,960
Profit before income tax 1,194,398 984,789
Income tax expense 8 (299,804) (164,241)
Total recognised income for the period 894,594 820,548
Attributable to:
Equity holders of the Company 894,594 820,548
Basic profit per ordinary share 1.301p 1.419p
Diluted profit per ordinary share 1.301p 1.419p
The Company is taking advantage of the exemption in section 408 of the Companies Act 2006
not to present its individual income statement.
Balance Sheets
At 31 January 2015
Group Group Company Company
Note 2015 2014 2015 2014
ASSETS £ £ £ £
Non Current Assets
Property, plant and equipment
10 5,363,236 4,170,059 - -
Intangible assets - goodwill and related Acquisition intangibles
11
7,629,305
7,486,684
-
-
Investment in equity accounted investees
12 106,424 90,960 - -
Investments in Subsidiaries
13 - - 11,946,500 11,700,000
Total Non Current Assets 13,098,965 11,747,703 11,946,500 11,700,000
Current Assets
Inventories 15 640,400 691,569 - -
Trade and other receivables 16 483,400 354,085 6,666,106
72,632
Cash and cash equivalents 9,090,286 1,428,216 7,945 4,445
Total Current Assets 10,214,086 2,473,870 6,674,051 77,077
Total Assets 23,313,051 14,221,573 18,620,551 11,777,077
SHAREHOLDERS' EQUITY
Share capital 19 3,940,940 2,890,940 3,940,940 2,890,940
Share premium 19 13,897,023 6,317,618 13,897,023 6,317,618
Reverse acquisition reserve
19 446,563 446,563 - -
Merger Reserve 19 - - 508,146 508,146
Retained earnings 19 1,686,501 1,119,348 268,297
394,155
Total Shareholders' Equity
19,971,027
10,774,469 18,614,406
10,110,859
LIABILITIES
Non Current Liabilities
Other payables 17 272,265 229,801 - -
Interest bearing loans and borrowings
20 - 270,000 - -
Deferred tax liabilities 14 531,980 398,855 - -
Total Non Current Liabilities 804,245 898,656 - -
Current Liabilities
Trade and other payables 17 2,537,779
2,368,448 6,145
1,666,218
Interest bearing loans and borrowings
20
-
180,000
-
-
Total Current Liabilities 2,537,779
2,548,448 6,145
1,666,218
Total Liabilities 3,342,024
3,447,104
6,145
1,666,218
Total Equity and Liabilities 23,313,051 14,221,573 18,620,551 11,777,077
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Share Capital
£ Share Premium
£ Reverse Acquisition Reserve
£ Retained Earnings
£ Total Equity
£
Balance at 1 February 2013 2,890,940 6,317,618 446,563 466,476 10,121,597
Profit for the Period - - - 820,548 820,548
Dividend on Equity Shares - - - (167,676) (167,676)
Balance at 31 January 2014 2,890,940 6,317,618 446,563 1,119,348
10,774,469
Balance at 1 February 2014 2,890,940 6,317,618 446,563 1,119,348 10,774,469
Profit for the period - - - 894,593 894,593
Dividend on Equity Shares - - - (327,440) (327,440)
Share Placing 20,999,994 Shares 1,050,000 7,579,405 - - 8,629,405
Balance at 31 January 2015 3,940,940 13,897,023 446,563 1,686,501 19,971,027
Cash Flow Statements
For the period ended 31 January 2015
Group Group Company Company
Year
Ended Year
Ended Year
ended Year
ended
31 January 2015 31 January 2014 31 January 2015 31 January 2014
Cash flows from operating activities £ £ £ £
Profit/(Loss)for the period 894,594 820,548
(125,858)
404,826
Adjustments for:
Depreciation and amortization 432,116 379,748 - -
Loss on sale of property, plant and equipment 4,256 914 - -
Net financial charges (42,131) 13,995 - -
Share of profit of equity accounted investees (net of tax) (15,464) (10,960) - -
Taxation 299,804 164,241 (78,213) (71,521)
Operating cash flow before movements in working capital 1,573,175 1,368,486 (204,071)
333,305
Movement in trade and other receivables (129,965) (37,309) (24,180) (43)
Movement in trade and other payables 260,765 304,857 (5,784) 836
Movement in inventories 66,480 (184,189) - -
Tax Paid (218,263) (81,080) 71,521 -
Net cash generated/(used in) from operating activities 1,552,192 1,370,765
(162,514)
334,098
Cash flows from investing activities
Purchase of property, plant and equipment (1,559,393) (247,338) - -
Proceeds from sale of property,plant & equipment 12,545 11,433 - -
Received from equity accounted investees - 14,350 - -
Acquisition of subsidiaries net of cash acquired (237,371) - (246,500) -
Interest received 48,365 2,116 - -
Interest paid (6,233) (16,111) - -
Dividend Received - - 327,440 -
Dividend paid (327,440) (167,676) (327,440) (167,676)
Net cash (used in) investing activities (2,069,527) (403,226) (246,500) (167,676)
Cash flows from financing activities
Repayment of loans (450,000) (390,000) - -
Share Placing 8,629,405 - 8,629,405 -
Movements in amounts owed by group companies - -
(8,216,893)
(161,977)
Net cash (used in)/ generated from financing activities 8,179,405 (390,000)
412,514 (161,977)
Net change in cash and cash equivalents 7,662,070 577,539 3,500 4,445
Cash and cash equivalents at start of period 1,428,216 850,677 4,445 -
Cash and cash equivalents at end of period 9,090,286 1,428,216 7,945 4,445
1. ACCOUNTING POLICIES
Crawshaw Group Plc (the 'Company') is a company incorporated and domiciled in the UK.
The group financial statements consolidate those of the Company and its subsidiaries (together referred to as the 'Group') and equity account the Group's interest in jointly controlled entities. The parent company financial statements present information about the Company as a separate entity and not about its group.
Both the parent company financial statements and the group financial statements have been prepared and approved by the directors in accordance with International Financial Reporting Standards as adopted by the EU ('Adopted IFRSs'). On publishing the parent company financial statements here together with the group financial statements, the Company is taking advantage of the exemption in s408 of the Companies Act 2006 not to present its individual income statement and related notes that form a part of these approved financial statements.
The following new and revised IFRS have been adopted in these consolidated financial statements. The application of these new and revised IFRSs has not had any material impact on the amounts reported for the current and prior years but may affect the accounting for future transactions or arrangements. Other new standards and interpretations have no significant impact on the Group.
The following amendments to standards are mandatory for the first time for the financial period ended 1 February 2015, but do not have a material impact on the Group:
IFRS 10** Consolidated financial statements
IFRS 11** Joint arrangements
IFRS 12** Disclosures of interests in other entities
IAS 27** Separate financial statements (revised 2011)
IAS 28** Associates and joint ventures (revised 2011)
** Endorsed by the European Union for periods starting on or after 1 January 2014
New IFRS and amendments to IAS and interpretation
There are a number of standards and interpretations issued by the IASB that are effective for financial statements after this reporting period.
The application of these standards and interpretations, which include IFRS 9 Financial instruments and IFRS15 Revenue from contracts with customers, both of which are effective for annual periods beginning on or after 1 January 2017, is not anticipated to have a material effect on the Group's financial statements.
The Group is in the process of assessing the impact that the application of these standards and interpretation will have on the Group's financial statements.
BASIS OF CONSOLIDATION
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable. The acquisition date is the date on which control is transferred to the acquirer. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.
Joint Arrangements
A joint arrangement is an arrangement over which the Group and one or more third parties have joint control. These joint arrangement are in turn classified as:
● Joint ventures whereby the Group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities; and
● Joint operations whereby the Group has rights to the assets and obligations for the liabilities relating to the arrangement.
The accounting policies in this note have, unless otherwise stated, been applied consistently to all periods presented in these consolidated financial statements.
2. OTHER OPERATING INCOME
2015 2014
£ £
RGV management charge 12,000 12,000
Other 6,678 6,060
TOTAL 18,678 18,060
The Group charges RGV Refrigeration a management charge each period for administration services. The Group has an investment in RGV Refrigeration, which is described further in note 12.
3. EBITDA
EBITDA is operating profit before impairment, depreciation and amortization.
Adjusted EBITDA is defined as operating profit before impairment, depreciation, amortization and infrastructure costs. Infrastructure costs are defined as investments in people, processes and systems in the year to provide the building blocks to support future growth.
Current year costs cover the setting up of a new long term incentive plan and staff recruitment expenses.
2015 2014
£ £
Reported EBITDA 1,573,174 1,368,459
Infrastructure Costs 205,080 -
Adjusted EBITDA 1,778,254 1,368,459
4. EXPENSES AND AUDITOR'S REMUNERATION
Included in operating profit are the following:
2015 2014
£ £
Depreciation of property, plant and equipment(owned)(note10) 397,436 345,068
Amortisation of intangible assets (note 11) 34,680 34,680
Loss/(profit) on sale of property, plant and equipment 4,256 914
Auditor's remuneration:
2015 2014
£ £
Audit of these financial statements 15,300
15,150
Amounts receivable by the auditors and their associates in respect of:
Audit of financial statements of subsidiaries pursuant to legislation 22,500 20,000
Other services relating to taxation 7,100 8,075
Other advisory services 26,150 2,625
Total auditors' remuneration 71,050
45,850
5. STAFF NUMBERS AND COSTS
The average number of persons employed by the Company (including directors) during the period, analysed by category, was as follows:
Number of employees
2015 2014
Management 5 5
Other 291 241
296 246
The aggregate payroll costs of these persons were as follows:
2015 2014
£ £
Wages and salaries 5,038,156 4,209,650
Social security costs 417,870 349,276
Other pension costs 56,044 60,833
5,512,070 4,619,759
6. KEY MANAGEMENT COMPENSATION
2015 2014
£ £
Wages and salaries 362,531 289,991
Company contributions to money purchase pension plans 56,044 60,883
The Group considers key management personnel as defined in IAS24 'Related Party Disclosures' to be the Directors of the Group. Detailed disclosures of individual remuneration, pension entitlements and share options, for those directors who served during the year, are given in the Report of the Remuneration Committee on page 8, these numbers have been audited. The aggregate of emoluments and amounts receivable under long term incentive schemes of the highest paid director was £87,083 (2014: £78,595), and company pension contributions of £40,833 (2014: £40,833) were made to a money purchase scheme on his behalf.
Number of directors
2015 2014
Retirement benefits are accruing to the following number of directors under:
Money purchase schemes 2 2
7. FINANCE AND INCOME EXPENSE
2015 2014
£ £
Bank interest received 48,365 2,116
Financial income 48,365 2,116
Bank interest paid 6,233 16,111
Financial expenses 6,233 16,111
8. INCOME TAX EXPENSE
Recognised in the income statement
2015 2014
The income tax expense is based on the estimated effective rate of taxation on trading for the period and represents: £ £
Current tax 206,772 259,124
Adjustments for prior year (40,093) (36,521)
166,679 222,603
Deferred tax:
Origination and reversal of timing differences 84,710 (5,709)
Adjustments for prior year 48,415 -
Effect of rate change - (52,653)
Income tax expense 299,804 164,241
Reconciliation of effective tax rate 2015 2014
£ £
Profit/(Loss) for the period 894,594 820,548
Total Tax Expense 299,804 164,241
Profit/(Loss) excluding taxation 1,194,398 984,789
Tax using UK Corporation tax rate of 21.33% 254,801 228,176
Non-deductible expenses 42,326 24,383
Adjustment in respect of prior years 8,323 (36,521)
Change of deferred tax rate to 20% - (52,654)
Tax not at standard rate (5,646) 857
Total tax expense 299,804 164,241
The corporation tax rate for the period is 21.33%.
A further reduction in the main corporation tax rate to 20% (effective from 1 April 2015) was substantively enacted on 2 July 2013. Accordingly deferred tax balances are carried at 20% (2014: 20%).
9. EARNINGS PER ORDINARY SHARE
Basic earnings per ordinary share is calculated by dividing the earnings attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the year of 68,556,045 (31/1/14: 57,818,801).
Diluted EPS is calculated by dividing the profit for the year attributable to ordinary shareholders by the weighted average number of ordinary shares in issue adjusted to assume conversion of all potentially dilutive ordinary shares from the start of the year giving a figure of 68,556,045 (31/1/14: 57,818,801).
The calculation of the basic and diluted earnings per share is based on the following data:
2015 2014
£ £
Earnings attributable to shareholders 894,594 820,548
10. PROPERTY, PLANT AND EQUIPMENT
Land and Buildings
Assets under Construction Freehold Leasehold improvements Plant, equipm't and vehicles Total
Cost £ £ £ £ £
Balance at 1 February 2014 40,745 815,379 3,472,805 1,833,169 6,162,098
Additions at cost 79,500 - 1,192,635 287,258 1,559,393
Addition on acquisition 48,022 48,022
Disposals - - - (80,841) (80,841)
Transfer (40,745) - 40,745 - -
Balance at 31 January 2015 79,500 815,379 4,706,185 2,087,608 7,688,672
Depreciation and impairment
Balance at 1 February 2014 - 110,508 1,149,074 732,457 1,992,039
Depreciation charge for the year - 38,549 209,249 149,638 397,436
Disposals - - - (64,040) (64,040)
Balance at 31 January 2015 - 149,057 1,358,323 818,055 2,325,435
Net book value
At 31 January 2015 79,500 666,322 3,347,862 1,269,553 5,363,236
At 31 January 2014 40,745 704,871 2,323,731 1,100,712 4,170,059
There are no items of property, plant and equipment in the Company.
PRIOR YEAR
Land and Buildings
Asset under construction Freehold Leasehold improvements Plant,equipment and vehicles Total
Cost £ £ £ £ £
Balance at 1 February 2013 - 815,379 3,472,450 1,661,514 5,949,343
Additions at cost 40,745 - 355 206,238 247,338
Disposals - - - (34,583) (34,583)
Balance at 31 January 2014 40,745 815,379 3,472,805 1,833,169 6,162,098
Depreciation and impairment
Balance at 1 February 2013 - 90,126 958,987 620,093 1,669,206
Depreciation charge for the year - 20,382 190,087 134,599 345,068
Disposals - - - (22,235) (22,235)
Balance at 31 January 2014 - 110,508 1,149,074 732,457 1,992,039
Net book value
At 31 January 2013 - 725,323 2,513,463 1,041,421 4,280,137
At 31 January 2014 40,745 704,871 2,323,731 1,100,712 4,170,059
11. INTANGIBLE ASSETS
Other Intangibles Goodwill Brand Total
Group £ £ £ £
Cost or deemed cost
At 1 February 2014 214,247 7,028,657 693,558 7,936,462
Additions from acquisitions - 177,301 - 177,301
At 31 January 2015 214,247 7,205,958 693,558 8,113,763
Amortisation and impairment
At 1 February 2014 214,247 - 235,531 449,778
Amortisation charge for the year - - 34,680 34,680
Balance at 31 January 2015 214,247 - 270,211 484,458
Net book value
At 31 January 2015 - 7,205,958 423,347 7,629,305
At 31 January 2014 - 7,028,657 458,027 7,486,684
Goodwill was recognized in the year on the acquisition of East Yorkshire Beef Ltd (See Note 26)
PRIOR YEAR
Other Intangibles Goodwill Brand Total
Group £ £ £ £
Cost or deemed cost
At 1 February 2013 and 31 January 2014 214,247 7,028,657 693,558 7,936,462
Amortisation and impairment
At 1 February 2013 214,247 - 200,851 415,098
Amortisation charge for the year - - 34,680 34,680
Balance at 31 January 2014 214,247 - 235,531 449,778
Net book value
At 31 January 2014 - 7,028,657 458,027 7,486,684
At 31 January 2013 - 7,028,657 492,707 7,521,364
There are no intangible assets within the Company.
Goodwill is tested for impairment annually.
Acquired brand values were calculated using the royalty relief approach and are amortised over twenty years. The remaining amortisation period is 12 years and 2 months.
The amortisation and impairment charge is recognised in the following line items in the consolidated statement of comprehensive income:
2015 2014
£ £
Administrative expenses 34,680 34,680
Impairment testing
Goodwill arose on the Group's original acquisition of Crawshaw Butchers Limited and East Yorkshire Beef Ltd.
For Crawshaw Butchers Limited, the goodwill is allocated against these older more established stores as a group of cash generating units as follows:
2015 2014
£ £
Crawshaw Butchers Limited (at acquisition) 7,028,657 7,028,657
East Yorkshire Beef Ltd Acquisition 177,301 -
The recoverable amount of Crawshaw Butchers Ltd at acquisition has been calculated with reference to its value in use. The key assumptions of this calculation are shown below:
2015 2014
Growth rate applied (beyond approved forecast period) 3.0% 3.0%
Discount rate (pre tax) 15.0% 15.0%
The growth rate used in the value in use calculation reflects management's assessment of the likely growth rate achievable by the Group at the stores that were in existence at the acquisition of Crawshaw Butchers Limited.
Management have determined the discount rate by reference to other companies of similar nature within their industry and their assessment of the optimal long-term capital structure for the business.
East Yorkshire Beef Ltd has been reviewed under the same criteria and no impairment issues have been identified.
12. INVESTMENTS IN EQUITY ACCOUNTED INVESTEES
Group Group
2015 2014
£ £
Non-current
Investment in equity accounted investees 106,424 90,960
Other investments comprise a 50% share in RGV Refrigeration, a partnership jointly owned by Crawshaw Butchers Limited and Mr M Hornsby. The principal place of business for RGV Refrigeration is Unit 4,Sandbeck Way, Hellaby Industrial Estate, Rotherham S66 8QL. The last year end being 30 September 2014. The Group does not exert control over the entity.
The carrying value of investments in equity accounted investees includes £26,424 (2014: £10,960) of outstanding dividend declared by RGV Refrigeration.
13. OTHER INVESTMENTS
Company Company
2015 2014
£ £
Non-current
Investment in Crawshaw Butchers Ltd 11,700,000 11,700,000
Investment in East Yorkshire Beef Ltd 246,500 -
Total 11,946,500 11,700,000
14. DEFERRED TAX LIABILITIES
Recognised deferred tax liabilities
Deferred tax liabilities are attributable to the following:
Group Liabilities
2015
£
Plant and equipment 450,777
Intangible assets - brand 82,726
Temporary differences (1,523)
531,980
Movement in deferred tax during the year
31 January 2014 Recognised in income Current year 31 January
2015
£ £ £
Plant and equipment 307,821 142,956 450,777
Deferred tax relating to intangible assets - brand 89,662 (6,936) 82,726
Temporary differences 1,372 (2,895) (1,523)
398,855 133,125 531,980
15. INVENTORIES
Group Group
2015 2014
£ £
Finished goods 640,400 691,569
Finished goods recognised as cost of sales in the year amounted to £13,698,483 (2014: £11,818,044)
16. TRADE AND OTHER RECEIVABLES
Group Group Company Company
2015 2014 2015 2014
£ £ £ £
Trade receivables 167,517 117,315 - -
Other tax and social security 452 11,772 - -
Prepayments and accrued income 315,431 197,960 25,289 1,111
Amounts owed from group undertakings - - 6,562,604 -
Corporation tax recoverable - 27,038 78,213 71,521
483,400 354,085 6,666,106 72,632
The directors consider that the carrying amount of trade and other receivables approximates their fair value.
Aged analysis of trade receivables
31 January 2015 31 January 2014
Gross receivables Provision for doubtful debt Net trade receivables Gross receivables Provision for doubtful debt Net trade receivables
£ £ £ £ £ £
Not past due 137,282 - 137,282 66,870 - 66,870
Up to 1 month past due 24,628 (2,199) 22,429 50,040 - 50,040
Over 1 month past due 17,770 (9,964) 7,806 7,658 (7,253) 405
179,680 (12,163) 167,517
124,568 (7,253) 117,315
Provision for doubtful debt
£
Provision at 31st January 2014 (7,253)
Created during the year (4,910)
Released during the year -
Provision at 31st January 2015 (12,163)
17. TRADE AND OTHER PAYABLES
Group Group Company Company
2015 2014 2015 2014
£ £ £ £
Current:
Trade payables 1,735,848 1,652,559 - -
Other creditors and accruals 588,906 456,764 6,145 11,929
Corporation Tax 213,025 259,125 - -
Amounts owed to Group undertakings - - - 1,654,289
2,537,779 2,368,448 6,145 1,666,218
Non-current:
Accruals 272,265 229,801 - -
272,265 229,801 - -
Trade payables and other creditors comprise amounts outstanding for trade purchases and ongoing costs. The directors consider that the carrying amount of trade payables approximates to their fair value.
Non-current accruals relate to reverse lease premiums and rent free periods, which are credited to the income statement on a straight-line basis over the lease term.
18. EMPLOYEE BENEFITS
Pension plans
Defined contribution plans
The Group operates a defined contribution pension plan. The assets of the scheme are held separately from those of the Group in an independently administered fund. The amount charged to the income statement represents the contributions payable to the scheme in respect of the accounting period. Pension costs for the defined contribution scheme are as follows:
2015
£ 2014
£
Defined contribution scheme 1,595 1,595
Share Based Payments
Share Options
Share options were granted post the reverse acquisition on 14 April 2008 to key employees of the enlarged group, Crawshaw Group PLC. In line with the scheme rules, options for employees who leave the business lapse after 6 months.
The share options in issue all relate to ordinary shares of 5p and are to be settled by the physical delivery of shares are as follows:
Date granted Exercise price Number of options at
1 Feb 2014 Granted
in period Exercised
in period Lapsed
in period Number of options at 31 Jan 2015 Exercise period
14 April 2008 42.5p 823,528 - - - 823,528 14 April 2008 to 14 April 2018
During the year the Group recognised a charge of £nil (2014: £nil) in relation to equity settled share based payments in the income statement. No further charge is expected in relation to options in issue.
19. CAPITAL AND RESERVES
Reconciliation of movements in capital and reserves - Group
Share
Capital Share
Premium Rev. Acq.
Reserve Retained
Earnings Total
Equity
£ £ £ £ £
Balance at 1 February 2013 2,890,940 6,317,618 446,563 466,476 10,121,597
Profit for the year - - - 820,548 820,548
Dividends paid (167,676) (167,676)
Balance at 31 January 2014 2,890,940 6,317,618 446,563 1,119,348 10,774,469
Profit for the year - - - 894,594 894,594
Dividends paid - - - (327,440) (327,440)
Share Placing 20,999,994 Shares 1,050,000 7,579,405 - - 8,629,405
Balance at 31 January 2015 3,940,940 13,897,023 446,563 1,686,501 19,971,027
The reverse acquisition reserve was established under IFRS3 'Business Combinations' following the deemed acquisition of Crawshaw Group Plc by Crawshaw Holdings Limited on 11 April 2008.
Reconciliation of movement in capital and reserves - Company
Share capital Share premium Merger reserve Retained earnings Total equity
£ £ £ £ £
Balance at 1 February 2014 2,890,940 6,317,618 508,146 394,155 10,110,859
Total recognised income and expense - - -
201,582
201,582
Dividend Paid - - - (327,440) (327,440)
Share placing 20,999,994 shares 1,050,000 7,579,405 - - 8,629,405
Balance at 31 January 2015 3,940,940 13,897,023 508,146
268,297 18,614,406
The merger reserve was established on 11 April 2008 following a share for share exchange between the Company and Crawshaw Holdings Limited (CHL) as part of a reverse acquisition. As a result of this transaction the Company acquired CHL which in turn owned 100% of the share capital of Crawshaw Butchers Limited (CBL).
20. LOANS AND BORROWINGS - GROUP
2015 2014
£ £
Current liabilities
Bank Overdraft - -
Mortgage - 180,000
Non-current liabilities
Mortgage - 270,000
The Company repaid their bank mortgage in full in August 2014.
21. FINANCIAL INSTRUMENTS
The Group's principal financial instruments comprise cash and trade creditors. The main purpose of these financial instruments is to raise finance for the Group's operations.
The main risks arising from the Group's financial instruments are interest rate risk, liquidity risk and credit risk. The board reviews and agrees policies for managing each of these risks and they are summarised below.
Interest rate risk
The Group has not currently entered into any steps to mitigate its risk to variability in interest rates.
Credit risk
The Group's principal financial assets are cash and receivables. The Group's credit risk is primarily attributable to trade receivables. Trade receivables are included in the balance sheet net of a provision for doubtful receivables, estimated by the Group's management based on prior experience and their assessment of current economic conditions.
At the balance sheet date the Directors consider there to be no significant credit risk.
Liquidity risk
The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of cash and bank facilities. The cash generative nature of the business has led to the Company having no bank facility requirements. The Directors are confident that there will continue to be sufficient headroom to cover liquidity risk.
Effective interest rates
In respect of income-earning financial assets and interest-bearing financial liabilities, the following table indicates their effective interest rates at the balance sheet date and the periods in which they mature or, if earlier, are repriced.
Financial Instrument Effective Interest Rate
£ £ £ £
Cash 1.0% 9,090,286 - - -
Overdraft - -
22. CAPITAL MANAGEMENT
The capital structure of the Group is a mixture of (i) net cash made up of cash balances and (ii) equity comprising issued share capital and reserves as detailed in note 19.
The Group's primary objective is to safeguard its ability to continue as a going concern, through the optimisation of the debt and equity balance, and to maintain a strong credit rating and headroom. The Group manages its capital structure through detailed management forecasts and clear authorization procedures for significant capital expenditure. The Board makes appropriate decisions in light of the current economic conditions and strategic objectives of the Group.
There has been no change in the objectives, policies or processes with regards to capital management during the years ended 31 January 2015 and 31 January 2014.
23. CAPITAL COMMITMENTS
The Group had no capital commitments at the current and preceding year ends.
24. OPERATING LEASES
Non-cancellable operating lease rentals are payable as follows:
Group Group Company Company
2015 2014 2015 2014
£ £ £ £
Less than one year 802,330 727,745 - -
Between one and five years 284,098 2,637,873 - -
More than five years 2,348,439 2,425,411 - -
Total 3,434,867 5,791,029 - -
The Company leases a number of retail outlets, warehouse and factory facilities under operating leases. Land and buildings have been considered separately for lease classification. During the year £943,156 (2014: £856,199) was recognised as an expense in the income statement in respect of operating leases.
25. RELATED PARTY TRANSACTIONS
Transactions with key management personnel:
The Board and certain members of senior management are related parties within the definition of IAS 24 (Related Party Disclosures). Summary information of the transactions with key management personnel is provided in note 6. Detailed disclosure of the individual remuneration of Board members is included in The Report of the Remuneration Committee. There is no difference between transactions with key management personnel of the Company and the Group.
Transactions with subsidiaries:
The Company has entered into transactions with its subsidiary undertakings in respect of the following: provision of Group services (including senior management, IT, accounting, purchasing and legal services). Recharges are made to subsidiary undertakings for intra- group balances, based on their amount and interest rates set by Group management.
During the year these charges amounted to:
2015 2014
£
Management charges 200,000 200,000
The amount outstanding from subsidiary undertakings to the Company at 31 January 2015 totalled £nil (2014: £nil). Amounts owed to subsidiary undertakings by the Company at 31 January 2015 totalled £0 (2014: £1,654,289).
The Company has suffered no expense in respect of bad or doubtful debts of subsidiary undertakings in the year (2014: £nil).
Transactions with jointly controlled entities
Crawshaw Butchers Limited, a subsidiary of the Company, holds a 50% share in a partnership which trades under the name of RGV Refrigeration. The operations of the partnership comprise of the maintenance and repair of refrigeration machinery for a variety of customers.
During the year the transactions amounted to:
2015 2014
£
Amounts received in respect of management charges 12,000 12,000
Amounts paid in respect of repair and maintenance services 202,129
117,343
The amount outstanding from jointly controlled entities to the Group at 31 January 2015 totalled £26,424 (2014: £10,800). Amounts owed to jointly controlled entities by the Group at 31 January 2015 totalled £20,013 (2014: £20,767).
The Group has suffered no expense in respect of bad or doubtful debts of jointly controlled entities in the year (2014: £nil).
Transaction with other related parties
During the year the Group paid £10,000 (2014: £40,000) to Electro Switch Limited in respect of Consultancy services. Mr R Rose was a director of Electro Switch Limited, which is a company which provides Consultancy services, and also a Director of Crawshaw Group Plc. Mr R Rose resigned as a director of Electro Switch Limited in March 2014. Amounts owed to Electro Switch Limited by the Group at 31 January 2015 totalled £nil (2014: £nil).
The Group leases a property owned by The Colin Crawshaw Pension Scheme for factory facilities and paid a rental fee of £13,500 in 2015 (2014: £13,500). Amounts owed to The Colin Crawshaw Pension Scheme by the Group at 31 January 2015 totalled £nil (2014: £nil).
26. ACQUISITION
On 12th May the Company acquired the entire share capital of East Yorkshire Beef Ltd for a total consideration of £246,500 in cash.
The acquisition has been accounted for under the acquisition method of accounting. The provisional fair value of assets acquired is £69,199. Goodwill of £177,301 has therefore arisen.
Net Assets Acquired Book Value Fair Value Adjs Fair Value
Tangible Fixed Assets 48,021 - 48,021
Current Assets
Stock 15,311 - 15,311
Debtors 24,543 - 24,543
Cash at bank and in Hand 9,129 - 9,129
Total Assets 97,004 - 97,004
Creditors (27,805) - (27,805)
Net Assets 69,199 - 69,199
Less Consideration paid
Cash Consideration 246,500
Goodwill Arising on Acquisition (note 11) 177,301
27. POST BALANCE SHEET EVENT
On the 14th April 2015 the Company acquired 100% of the share capital of Gabbotts Farm Limited for £3.9m utilising existing cash resources on a 'debt free cash free' basis from Cribbin Family Butchers (Holdings) Ltd.
Gabbotts Farm Limited is the holding company for Gabbotts Farm (Retail) Limited which operates 11 retail butchers units, which includes a factory meat mart attached to a small distribution centre, in the North West of England. Their retail format is almost identical to that of the Company, selling quality fresh meats and food to go at value prices.
28. PRINCIPAL SUBSIDIARY UNDERTAKINGS
At 31 January 2015 Crawshaw Group PLC had the following principal subsidiary undertakings:
Crawshaw Holdings Limited - United Kingdom - Non-trading subsidiary
Crawshaw Butchers Limited - United Kingdom - Retail Butchers
East Yorkshire Beef Limited - United Kingdom - Retail Butchers
The shareholdings were 100% of the subsidiary undertakings' ordinary and preference shares. Each of the subsidiaries is included in the consolidated financial statements.
29. ULTIMATE PARENT COMPANY
The Company is the ultimate parent company of the Group.
No other group financial statements include the results of the Company.
LONG TERM INCENTIVE PLAN
A new long term incentive plan is being reviewed by the Remuneration Committee and there will be an announcement to provide the plan details in due course.
AGM AND DISPATCH OF ACCOUNTS
ANNUAL REPORT
The Annual Report will be posted to shareholders on 7th May 2015 and will also be available from the Company's website at www.crawshawgroupplc.com from today.
ANNUAL GENERAL MEETING
The Annual General Meeting will be held at Unit 4, Hellaby Industrial Estate, Sandbeck Way, Rotherham, S66 8QL on 23 June 2015 at 12 noon.
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