Final Results

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:

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 progresshascontinued this year and our food hygiene ratings have improvedyet 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 trainingacross the board which not only provides legal compliance but has also equipped managerswith further knowledge and confidenceto maintain and improve food safety.

The maintenance and continueddevelopment of our food safetymanagement system hasbeen fundamental in maintaining and continuously improving food safety standards acrossthe company. Whilstwe 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. Werecognise this as being essential to ensure we meet the requirementsof our customers and continue to supply safeand 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.

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:

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:

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

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.

4. EXPENSES AND AUDITOR'S REMUNERATION

Included in operating profit are the following:

Auditor's remuneration:

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:

The aggregate payroll costs of these persons were as follows:

6. KEY MANAGEMENT COMPENSATION

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.

7. FINANCE AND INCOME EXPENSE

8. INCOME TAX EXPENSE

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:

10. PROPERTY, PLANT AND EQUIPMENT

There are no items of property, plant and equipment in the Company.

PRIOR YEAR

11. INTANGIBLE ASSETS

Goodwill was recognized in the year on the acquisition of East Yorkshire Beef Ltd (See Note 26)

PRIOR YEAR

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:

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:

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:

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

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

14. DEFERRED TAX LIABILITIES

Recognised deferred tax liabilities

Deferred tax liabilities are attributable to the following:

Movement in deferred tax during the year

15. INVENTORIES

Finished goods recognised as cost of sales in the year amounted to £13,698,483 (2014: £11,818,044)

16. TRADE AND OTHER RECEIVABLES

The directors consider that the carrying amount of trade and other receivables approximates their fair value.

Aged analysis of trade receivables

Provision for doubtful debt

17. TRADE AND OTHER PAYABLES

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:

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:

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.

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:

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:

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.

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.