Crawshaw Group Regulatory News (CRAW)

26 April 2017

Crawshaw Group Plc

Crawshaws' revenues grow with continued store rollout programme

Sales recovery driven by bounce back in customer numbers

Full Year Results

Crawshaw Group Plc ("Crawshaw", the "Company" or the "Group"), the fresh meat and food-to-go retailer, announces results for the 52 weeks ended 29 January 2017.

Financial Highlights:

· 19% increase in group turnover to £44.2m (2016: £37.1m), driven by store expansion programme

· Adjusted EBITDA* £1.3m (2016: £2.6m)

· EBITDA** of £0.1m (2016: £1.0m)

· LFL sales -7.3%**** (2016: +1.8%), with momentum recovering through H2

· Underlying Operating Loss*** of £1.1m (2016: £0.3m underlying loss)

· Statutory loss before tax of £1.4m (2016: loss before tax £0.3m)

· Cash balances of £2.1m at 29 January 2017 (£4.9m at 31 January 2016) reflecting store rollout programme

· No final dividend proposed (2016: 0.47p)

Strategy Highlights:

We have continued to build on our strategic plan, which has been reinforced through the customer proposition in the last 6 months

· Store rollout progression within the year, 11 sites added taking the total to 49 trading stores at year end

· Addressing the specific needs of individual local communities continues to improve sales across the entire estate

· Like-for-like sales have improved from -13.0% in Q3 to -7.4% in Q4 further progressing to -4.5% in the first 10 weeks of the FY2018

· Improvement in sales driven by customer numbers, which have built from -13.6% in Q3 to -6.9% in Q4 further progressing to -4.5% in the first 10 weeks of the FY2018

· Successful implementation of customer driven marketing initiatives, with social media proving particularly effective amongst local communities

· Strong performance from our 5 standalone Fresh Meat factory shops, giving confidence for a further targeted rollout of this format in FY2018

Noel Collett, CEO comments;

"This was a year of strategic progress for the Group. As a management team, we acted decisively and effectively at the end of the first half of the year to address the price and range initiatives that weren't resonating with customers. By listening to customers and focusing on the demands of each store's individual local community, we have seen a sharp recovery in both sales and customer numbers throughout the second half of the year."

"The momentum in second half sales, followed the successful opening of our new stores in the first half of the year. We now have 49 sites in the portfolio, each benefitting from the innovation and expansion within our fresh meat and food-to-go categories. In 2017, we expect to open a further 5 stores, with specific focus on the fresh meat factory shop format."

"Looking ahead, the momentum built through the last six months has continued into the new financial year, and trading is recovering in line with our expectations. With the business stabilised and having returned to cash generation, we are returning our focus to the store roll out programme."

*Adjusted EBITDA is defined by Group as profit/loss before tax, exceptional items, depreciation, amortisation, profit/(loss) on disposal of assets, net finance costs, share based payment charges attributable to the LTIP Growth Share Scheme and Accelerated Opening Costs. Accelerated opening costs are defined by the Group as the overhead investment in people, processes, systems and new store pre-opening costs i.e. costs directly associated with our accelerated store opening programme. In the period these costs amounted to £1.2m (2016: £1.6m) resulting in an adjusted EBITDA of £1.3m (2016: £2.6m).

** EBITDA is defined by Group as profit/loss before tax, exceptional items, depreciation, amortisation, profit/(loss) on disposal of assets, net finance costs, share based payment charges attributable to the LTIP Growth Share Scheme

***Underlying Operating Profit/(Loss) is defined by the Group as Operating Profit before exceptional items and share based payment charges attributable to the LTIP Growth Share Scheme.

**** LFL stores are defined as stores which have been trading for 2 full years at the start of the financial year under review.

Enquiries:

Tulchan Communications LLP

Susanna Voyle, Will Smith 0207 353 4200

Crawshaw Group plc

Noel Collett, Alan Richardson 01709 369 600

Peel Hunt LLP

Dan Webster, Adrian Trimmings, George Sellar 020 7418 8900

Chairman's Statement

Trading Performance Highlights

· 19% increase in group turnover to £44.2m (2016: £37.1m)

· Adjusted EBITDA* £1.3m (2016: £2.6m)

· EBITDA** of £0.1m (2016: £1.0m)

· LFL**** sales -7.3% (2016: +1.8%)

· 49 trading stores at year end (2016: 39 trading stores)

· Underlying Operating Loss*** of £1.1m (2016: £0.1m underlying operating profit)

· Statutory loss before tax of £1.4m (2016: loss before tax £0.3m)

· Cash balances of £2.1m at 29 January 2017 (£4.9m at 31 January 2016)

· No final dividend proposed (2016: 0.47p)

*Adjusted EBITDA is defined by Group as profit/loss before tax, exceptional items, depreciation, amortisation, profit/(loss) on disposal of assets, net finance costs, share based payment charges attributable to the LTIP Growth Share Scheme and Accelerated Opening Costs. Accelerated opening costs are defined by the Group as the overhead investment in people, processes, systems and new store pre-opening costs i.e. costs directly associated with our accelerated store opening programme. In the period these costs amounted to £1.2m (2016: £1.6m) resulting in an adjusted EBITDA of £1.3m (2016: £2.6m).

** EBITDA is defined by the Group as profit/loss before tax, exceptional items, depreciation, amortisation, profit/(loss) on disposal of assets, net finance costs and shared based payment charge attributable to the LTIP Growth Share Scheme.

***Underlying Operating Loss is defined by the Group as Operating Profit before exceptional items and share based payment charges attributable to the LTIP Growth Share Scheme.

**** LFL stores are defined as stores which have been trading for 2 full years at the start of the financial year under review.

Results and Strategic Progress

Crawshaw Group has experienced a challenging year but, once the causes of the declining like-for-like sales were established, management made rapid changes that clearly resonated with customers. As a result, we have finished the year with some really encouraging sales and margin momentum. As noted in our Interim Results, during our period of rapid growth, the number of proposition changes we asked customers to embrace and a combination of the well documented external factors caused a significant drop in the trading momentum of the core business from the end of H1 and start of H2. The management team acted quickly and carefully to restore this momentum. This was achieved with a programme of broader and deeper promotions and giving back the store managers more flexibility to trade their local shop to suit their local customers. We are pleased with the recent improved trading performance and are very encouraged by the momentum that has been built up throughout H2, which was reflected in our Christmas Trading Update.

The level of sales performance in our like-for-like estate necessitated a reduction in the rate of new store openings, to both free up management time to recover sales in the legacy estate and to maintain the strength of the balance sheet. We opened 11 new stores in the year (9 in H1 and 2 in H2) and this takes the total organic growth so far to 17. In the period, one of our legacy market shops closed as part of a council town centre regeneration scheme resulting in an estate of 49 stores at 29 January 2017.

In the period under review, the Group delivered total sales of £44.2m, an increase of 19%. This converted to an Adjusted EBITDA of £1.3m (2016: £2.6m) as lower sales and subsequent margin investment temporarily reduced the EBITDA generation of the legacy business. The Group made a loss before tax of £1.4m (2016: loss of £0.3m).

Cash

The cash position of the business continues to be robust with £2.1m cash on hand at the year-end (2016: £4.9m) with the pace of new store rollout and levels of central resource all being balanced with maintaining a strong balance sheet. The reduction in cash is entirely growth plan driven with £2.9m of capital expenditure invested in new stores in the year. The cash generated from operations funded payment of the final dividend declared last year.

Outlook

I have been very impressed by the way Noel and the management team have carefully but swiftly taken the appropriate corrective actions during this challenging period. For this reason, the performance of the business has now been stabilised, having restored the level of sales and customer numbers respectively. Coupled with the expected recovery in margin and the full benefit of the cost saving actions flowing through, the business has returned to positive cash generation.

Crawshaw has demonstrated its ability to manage a major change agenda in parallel with evaluating the ongoing potential of our store rollout programme. We therefore remain encouraged and confident in the scalability of the model, and with the business returning to a cash generative position, we look to continue with a disciplined opening programme. As noted in our Interim Results, of particular interest and significance is the strength of performance of our fresh meat factory shops. Whilst we remain completely committed to the high street, shopping centre and market location stores, the factory shop concept is proving to deliver significantly better financial returns with its higher sales, lower operating costs (no hot food-to-go offer) and lower fit out costs. The two new factory shops that opened in the year have further demonstrated the success of the concept which has helped shape our thoughts for the rollout strategy for the year ahead. And so our store rollout program will focus on this concept.

Since the end of the financial year, the business has continued to improve, with Group sales up 9% and LFL sales of -4.6% in the first ten weeks. We have also signed the lease on another factory shop unit which we expect to be trading by the end of May, and have a number of opportunities in the pipeline to open across the rest of this financial year.

The Board are committed to ensuring cash is available to fund the growth strategy and maintaining a strong balance sheet. In line with this, the Board has decided that no dividend payment will be made at this time

Richard Rose

Chairman

25 April 2017

Chief Executive Officer's Review

Performance & Operational Review

Whilst we made considerable progress in the year with the store rollout programme by adding a further 11 new stores to the estate, we have been very disappointed by the like-for-like sales performance as some of the price and range initiatives didn't resonate with customers as we had expected.

In preparing the core business to be ready for accelerated expansion and creating the store rollout blue print, we made a number of changes to standardise the new store concept on range, price point, how the stores were operated and how the stores looked. These principles worked well for our new stores, but when retrospectively introduced into our established stores, we learned it was too much change for our customers and colleagues. This was reflected in the shape of our sales performance during June and July at the end of H1.

As a result, we prioritised our focus in the second half of the year to listening to colleagues and customers, and the feedback from them was relatively straightforward. Our customers wanted to see some of the previous fresh meat pack sizes, price points and offers that were previously on sale in their specific store. This feedback was positioned at the heart of our sales recovery programme and helped shape the refinements we set about achieving to provide our managers with the necessary 'freedom within a framework' plan to win back their local customers.

To ensure that all areas of our business were completely focused on delivering the sales recovery programme effectively, it was important to temporarily pause the store rollout programme and provide full support to our store colleagues. During the implementation of our 'freedom within a framework' plan, we reviewed our head office organisation structure and removed a number of roles. The changes were implemented responsibly giving us the central support structure for the year ahead.

Having successfully landed our major change agenda, we now believe we have the right operational balance between the disciplined framework required as a platform for rollout with enough freedom for store managers to react to local customer requirements. This positive progress has also been reflected in the shape and momentum build of our sales performance in the lead up to and through the key festive trading period at the end of H2.

In summary, we have seen a direct correlation between the initiatives introduced in the summer and the timing of the steady and continuous improvement in like-for-like sales. As previously communicated, this improvement in both sales and customer number momentum has required a moderate level of margin investment. With the improvement continuing through the festive trading period, we were pleased to be cash generative again by the end of the year, in line with our expectations.

Group Revenue

For the 52 weeks to 29 January 2017, Group revenue increased by 19% from £37.1m to £44.2m. This growth was supported by contributions from our 11 new stores in the year. LFL sales were -7.3% for the full year, with H1 like-for-like sales being -4.4% and H2 like-for-like sales being -10.1%. These numbers reflect the shape of the key challenging period we experienced during June and October 2016, and as outlined in this review.

Group sales in the first 10 weeks of the new financial year increased by +9% and like-for-like sales were -4.6% for the same period.

Strategic Focus

We have continued to build on our strategic plan of 'providing safe, good quality fresh meat for the value conscious consumer', which has been reinforced through the customer proposition in the last 6 months. The customer numbers and feedback confirm that we are back on track and will therefore continue with this journey and approach.

Fresh Meat

Our managers and butchers continue to be the ambassadors of putting their customers at the heart of our local strategy, and this is reinforced with their local level freedom to delight their customers through the fresh meat offer. Our stores continue to develop local products specific to their community, provide local special offers, as demonstrated with our successful Christmas Hampers and the planned new BBQ packs for the warmer months ahead. We are maintaining the number and depth of price-led promotions which also rotate at the managers' discretion. Furthermore, we have recently introduced a new store trial of a £4.99 value pack under the umbrella of "once it's gone, it's gone" concept, consisting of great value fresh meat packs with value cut-through in POS labelling. The customer's reaction to this 'treasure-trove' concept has been extremely positive.

With our production and distribution capability now set up to service up to c.100 stores, we continue to develop our award-winning quality homemade produce and broaden the range of burgers, sausages, meatballs, kebabs, grill sticks and mince in time for the spring/summer. In addition, with this new capability in mind, we are looking to leverage the spare capacity through expanding our wholesale operations. To date, we have taken on the supply of a local 3-strong chain of local steakhouse restaurants and will consider the opportunities of similar scale relationships. This allows us to pick up business which better utilises the fixed assets we've already invested in without compromising our ability to serve our stores and customers.

Food-to-go

Within the food-to-go category, the same level of local customer focus continues to be applied by our managers and trained cooks. Our teams have reintroduced a number store specific favourite dishes to the "Butcher's Kitchen" menu and continuously test new dishes/recipes with input from their customers. This provides the perfect platform to showcase the quality of our fresh meat produce, presented to the customers freshly cooked and ready-to-go. Furthermore, we have successfully introduced the principles of our popular multibuy offers from the fresh meat category to the food-to-take-home freshly cooked joints category. This provides customers with a great choice of meal occasion, such as cooked whole chickens, chicken portions, pork loins, gammon joints and ham shanks. These are all cooked fresh daily in store using our in-house rotisserie and rationale ovens, and sold at unit prices, mix-and-match multibuys or catchweights, depending on customer requirement. Encouragingly, these initiatives have already contributed to an increase in customer numbers and sales.

In addition to these exciting fresh meat and food-to-go opportunities, which continue to anchor our value credentials, we have stepped up our marketing activity to maintain our current momentum in building customer frequency and loyalty.

Customer Driven Marketing Initiatives

To build on the existing customer number momentum, we are investing in new ways to achieve customer acquisitions whilst working hard to maintain and lock-in existing customer loyalty. As a wider team, we have identified Facebook as the most successful route to get access to a new customer base and the VIP Club/Newsletter route to incentivise customers to keep coming back.

Social Media

In addition to the Corporate Facebook Page, we have now introduced and trialled store-specific Facebook Pages in 11 stores (5 factory shops and 6 high street). All pages are administered by the local management, meaning the content is much more tailored, timely and relevant to the customer (when compared to a centrally managed approach). All stores have benefitted from their Facebook launch and customer numbers have increased, although it is worth noting the high level of success seen in the factory shops as more and more customers begin to build a visit to the destination factory shop into their routine.

Crawshaws VIP

As part of the Facebook launch, we have also introduced the 'Crawshaws VIP Club' into 4 stores (2 factory shops and 2 high street). This allows our managers to build up awareness on Facebook, then incentivise the customers into the store to sign up for the VIP Club to then benefit from a host of exclusive special offers and flash sales.

Newsletter

Once customers are signed up to the VIP Club, our managers then have the capability to communicate via email with a regular newsletter containing new products to the range, new special offers or even an invitation to take part in new schemes, such as 'recommend-a-friend'.

We are very pleased with the results from the recent marketing initiatives and this acts as a very positive step-change in customer engagement and participation. The customer data capture also allows our managers to really target their local offers relevant to their local community.

People

Great quality meat products alone will not succeed in our industry without great people delivering great customer service and experience. And whilst it has been a challenging year for everyone in the business, the speed of our recovery and stability would not have been possible without their input, tremendous attitude and commitment. I continue to be very proud and impressed by their passion to deliver amazing value to our customers every day.

FY 2017 New Store Performance

We opened 11 new stores in the year of which 6 were high street, 3 were in shopping centres and 2 were factory shop locations. From a geographical perspective, 7 were in our traditional areas in the North and North West and 4 were in the Midlands, with all 11 stores opening on time and on budget. As would be expected as we have opened more stores, there is a wider spread of performance against our base case targets and expectations. We have a number of stores that have opened well and are trading in line with our expectations, equally we have a number of stores which are not trading as strongly as anticipated, and encouragingly we have a number of stores which have traded well ahead of expectations from opening day. 

FY 2018 Growth Plan

As noted in the Interims, of particular interest and significance is the performance of our standalone fresh meat factory shops. Our 5 fresh meat factory shops sell predominantly fresh meat (no hot food-to-go offer) and have higher sales, lower operating costs and lower fit out costs than our units on the high street and in shopping centres. They are also much simpler to operate and manage. Whilst our location and format strategy has always been one of operating a diverse portfolio across high streets, shopping centres and factory shop locations, having tested the predictability of the factory shop concept and fully appraised the opportunity, we believe it to be very logical and sensible that this should shape the rollout programme for 2017.

We will also maintain a disciplined approach to our growth strategy, which means it is imperative that the pace and timings of the store openings are managed correctly. Accordingly, we have signed the lease for our next factory shop which is scheduled to open in May, with a sufficient pipeline and capability to open a further 4 factory shops during FY 2018.

Outlook for FY2018

The UK grocery market will remain competitive and, with industry-wide pressures emerging in commodities and labour costs, the UK consumer outlook looks set to continue to be more challenging than we have seen in recent years. Whilst we would ordinarily expect these to have a modest impact on margin in the short term we believe that, with our cost management measures and margin additive initiatives, together with the expected cost reduction in our business rates, we are well placed to navigate through this challenging environment. Indeed, it has been very encouraging to see that we have already proven we are capable and well placed to meet multiple challenges simultaneously, whether they are internally or externally driven.

This year has started in line with our expectations as we continue to build on the momentum and improvements from the last 6 months. The recent journey has also provided everyone with significant experience and learnings that will be extremely important in the months and years ahead. Our clear value proposition, underpinned by our unique vertically integrated concept, remains highly differentiated and competitive which we believe will further strengthen our retail offering. Furthermore, with the performance of our standalone factory shops being a real highlight of the year, we are very excited at opening more of this format.

Noel Collett

Chief Executive Officer

25 April 2017

Chief Financial Officer's Review

Revenue and gross profit

Total revenue for the Group increased by 19% to £44.2m (2016: £37.1m) with the growth from 11 additional trading stores in the year being partially offset by the 7.3% decrease in sales experienced in our LFL stores.

Gross profit margins reduced to 43.5% (2016: 45.1%) reflecting a less favourable meat pricing environment and an increase in the number and depth of our promotional offers to win back customers. Both of these impacts moderated through H2 with the margins being achieved in Q4 being ahead of those achieved in Q3.

Presentation of results

To present a clear view of performance of the Group in total and the costs directly driven by the growth strategy, we present an Underlying Operating (Loss)/Profit number and an Adjusted EBITDA number. The Underlying Operating (Loss)/Profit number adds back share based payment charges and exceptional costs to give a clear view of underlying Group performance. The Adjusted EBITDA number further excludes depreciation, amortisation and accelerated opening costs to give a clear view on the underlying trading performance of the Group - Adjusted EBITDA is our primary internal measure when assessing Group performance.

We define accelerated opening costs as the investments in people, processes and systems in the year to provide direct support for our accelerated opening programme. In the year, these costs amounted to £1.2m (2016: £1.6m) and are analysed by component of spend in the table below.

Underlying Operating Loss and Adjusted EBITDA

Accelerated opening costs

Loss Before Tax "PBT" and Earnings Per Share "EPS"

The Group delivered a loss before tax of £1.4m (2016: £0.3m loss) as a result of the deterioration in trading performance, immature new stores and the additional costs incurred to deliver the growth plan. The Loss Before Tax number includes an IFRS 2 shared based payment charge of £0.2m (2016: £0.4m). This translated to a negative EPS as expected at (1.535) pence per share (2016: negative 0.342 pence per share).

Operational overheads

Operational overheads are defined as the administrative expenses of the Group less accelerated opening costs, exceptional costs, impairment, depreciation and amortisation and share based payments as this gives a clearer reflection on the underlying operational costs performance of the Group. On this basis, the ratio of overhead costs as a % of sales has increased to 41% (2016: 38%). This reflects a dilution from new stores where initial cost ratios are higher as the stores trade through their sales maturity profile and the impact of lower LFL sales.

Cash flow

We have closed the year with £2.1m of cash on the balance sheet (2016: £4.9m) having invested £2.9m of CAPEX in opening 11 new stores. Maintaining the strength of the balance sheet continues to be a key focus for the Group with the appropriate decisions being taken on pace of rollout and investment in central resource.

Summary

It has been a year of considerable change and challenge as we have navigated through some unexpected external impacts in addition to experiencing some growing pains from significantly scaling up a small entrepreneurial business. We have now achieved a level of stability in the business which allows us to appraise and plan for the numerous growth opportunities available to the Group.

Alan Richardson

Chief Financial Officer

25 April 2017

Strategy and Business Model

Our Mission

To use our expertise to source, prepare, produce and retail quality fresh meat products at a price and a service level that continues to 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 49 retail locations across Yorkshire, Lincolnshire, Nottinghamshire, Derbyshire, the North West and the Midlands.

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 centres where we control additional processing and logistics as well as the production of our own award winning sausages, beef burgers, beef mince and grill sticks.

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 focussed 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.

· 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, 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 protect our customers and our brand by sourcing quality products with full traceability. Further to this we invest continually to ensure our food safety management systems are implemented, delivered and audited at every location.

As the only independent retail butchers chain in England to have Primary Authority, we continue to work with the Environmental Health department at Wakefield Council. This gives each of our locations, our staff and our customers a level of consistency in food safety matters as we are all working to the same standards and interpretations of the regulations.

Crawshaws continue to recognise the importance of food safety and positive consistent progress has continued and our Hygiene Ratings. 71% of the business are on 5 stars (Very good) and 20% on 4 (Good). Our factories have also consistently maintained standards whilst increasing throughput to match the increases in sales.

There continues to be ongoing investment in training which has not only provided legal compliance but has equipped Managers with further knowledge and confidence to maintain food safety. Customer feedback also indicates consistent quality control and that they are happy that their needs are being met. 

The maintenance and continued development of the company Food Safety Management System has been fundamental in maintaining standards across the company. Whilst the Company will continue to face challenges, including changes in legislation, we are focused on maintaining food safety on a consistent basis.

The focus on origin and traceability of products will continue to be managed as we recognise this as being essential if we are to 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.

* Adjusted EBITDA is defined by the Group as profit/loss before tax, exceptional items, depreciation, amortisation, profit/(loss) on disposal of assets, net finance costs, "accelerated opening costs" and share based payment charges attributable to the LTIP Growth Share Scheme. Accelerated opening costs are defined by the Group as the investments in people, processes and systems in the year to provide the building blocks for future growth.

**EBITDA is defined by the Group as earnings before interest, tax, depreciation and amortisation.

***Underlying operating(loss)/profit is defined by the Group as Operating Profit before exceptional items and share based payment charges attributable to the LTIP Growth Share Scheme. **** Operational overheads are defined as the administrative expenses of the Group less accelerated opening costs, exceptional costs, impairment, depreciation and amortisation, share based payments and exceptional costs which give a clearer reflection on the underlying operational costs performance of the Group

The principal risks and uncertainties affecting the Group include the following:

· EU trade deals and exchange rates post BREXIT: the Group sources approximately half of the meat volumes sold through the business from the EU. Any changes to the tariff free trade across current members of the EU will require us to review our sourcing model. All purchases of goods are made in sterling. Both short term volatility and long term re-basing of international currency markets will have an impact on raw material prices. The flexibility to source globally provides a level of mitigation to this risk.

· Raw material availability and prices: the Group monitors raw material sources on a global basis and either contracts to buy a set volume of goods for a set price for delivering on a specific date or contracts to buy a set volume of goods at a set price over a short time period, typically from 2 to 4 weeks. 

· Customer loss and Competition - There is an ongoing risk of customer loss from enhanced competition. The Groups strategy is to maintain customer loyalty through: 1) offering consistently high quality products at consistently low prices, 2) offering customers even greater value through a rolling cycle of deeply discounted promotional offers and; 3) delivering superior service and product expertise at all times. Competitor price points are reviewed regularly to make sure customers can rely on us to be significantly cheaper than our competitors.

· Food Safety: compliance with legislation is continually assessed with a rolling monthly internal Food Safety compliance audit in each store augmenting the annual Environmental Health Office inspections. Any performance exceptions are discussed as a matter of course at the Monthly PLC Board meeting.

· 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.

· 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.

Our 2017 Strategic Report from pages 3 to 14 has been reviewed and approved by the Board of Directors on 25 April, 2017.

Alan Richardson

Chief Financial Officer

GOVERNANCE

Board Of Directors

Richard Rose, Chairman (Age: 61)

Richard Rose was appointed Chairman of Crawshaw Holdings Limited (Crawshaw Holdings) in April 2007. He became non-executive Chairman of the Company (Crawshaw Group PLC) on 1 September 2006 (at such time being called Felix Group PLC). In April 2008, Crawshaw Holdings was acquired by the Company through a reverse takeover as a result of which the Company was renamed Crawshaw Group PLC.

Noel Collett, Chief Executive Officer (Age: 42)

Noel Collett joined Crawshaws as CEO in March 2015 having spent over 16 years with Lidl, the German Discounter. Noel has held a number of key senior leadership roles in the UK and Germany, and for the 12 years before joining Crawshaws served as Lidl's Chief Operating Officer for the UK business. He has been widely credited as an instrumental figure in transforming Lidl from a low-cost brand to a high-quality retailer during a decade of rapid sales growth.

Alan Richardson, Chief Financial Officer (Age: 40)

Alan joined Crawshaws as the Chief Financial Officer in September 2015 having spent 5 years at Morrisons, most recently as Finance Director Retail & Logistics. Previous to that, Alan spent 8 years at Asda in various senior finance roles following his qualification as a Chartered Accountant at KPMG.

Mark Naughton-Rumbo, Non-Executive Director (Age: 56)

Mark qualified as a Chartered Accountant with Ernst & Whinney in 1984 and since that time has held a number of key directorships in public and private SME companies in the retail sector. He has achievements in strategic development and implementation, experience of managing businesses in extremely challenging economic circumstances, delivering business turnaround and profitable growth. He is currently Group CFO of Anthony Nicholas Group, an Irish based fine jewellery and watch business operating in the UK and Ireland retail sectors.

Ken McMeikan, Non-Executive Director (Age: 51)

Ken is currently Group CEO of the Brakes Group, a leading pan-European foodservice company, a position he has held since 2013. Prior to this, Ken was Group CEO of Greggs Plc, the UK's leading bakery food-on-the-go retailer, a position he held from 2008 to 2013. Additionally, Ken has a combined 18 years of senior retail experience with both Tesco and Sainsbury's.

Directors' Report

The Directors present their Annual Report on the affairs of the Group together with audited financial statements for the 52 weeks ended 29 January (2016: 52 week period).

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 26 April, 2017.

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, The CEO's Statement and the Strategy and Business Model sections of the report.

Results and Dividends

Reported under IFRS the Group loss before taxation is (£1.4m) (2016: £0.3m loss). After a taxation credit of £0.2m (2016 credit: £0.1m) the Group loss for the year is £1.2m (2016: £0.3m loss).

The directors do not propose payment of a final dividend.

Substantial Shareholdings

At 1st March 2017, the directors had been notified of the following interests, of 3% and over, in the Company's issued ordinary share capital:

Directors and their interests

The following Directors held office during the Year ended 31 January 2017 and subsequently:

Kevin P Boyd (resigned 6 January 2017)

Noel J Collett

Mark Naughton-Rumbo

Alan Richardson

Richard S Rose

Kennedy McMeikan (appointed 8 July 2016)

The interests of the directors in the ordinary shares of the Company are shown below:

The interests of the Directors in options to acquire shares are shown below:

Financial Instruments

The Company's financial risk management objectives can be found in notes 19 and 20 to the financial statements

Creditor payment policy

The Group agrees payment with its trade creditors and other suppliers on an individual contract basis at the time the goods and services are ordered rather than following a standard code. The policy is to abide by the agreed terms once satisfied that the goods or services have been provided in accordance with the contract terms and conditions. The Group's average creditor payment period at 31 January 2017 was 58 days (2016: 59 days).

Employee involvement

The Board recognises that the Group's performance and success is directly related to our ability to attract, train and motivate high calibre employees. We place considerable value on the involvement of its employees and has continued to keep them informed on matters affecting them as employees and on the various financial and economic factors affecting the performance of the Group.

Going concern

The principal risks and uncertainties facing the Group are set out on page 13 and 14. For the purposes of their assessment of the preparation of the Group's accounts on a going concern basis, the Directors have considered the current cash position and forecasts of future trading including working capital and investment requirements.

During the year the Group met its day-to-day general corporate and working capital requirements through existing cash resources. At 29 January 2017 the Group had cash on hand of £2.1m (2016: £4.9m).

Overall, the Directors believe the Group is well placed to manage its business risks and successful execute the growth strategy. The Group's forecasts and projections, taking account of reasonable possible changes in trading performance, show that the Group should have sufficient cash resources to meet its requirements for at least the next 12 months. Accordingly, the adoption of the going concern basis in preparing the financial statements remains appropriate.

Disclosure of information to auditors

The directors who held office at the date of approval of this Directors' report confirm that, so far as they are each aware, there is no relevant audit information of which the Group's auditor is unaware; and each Director has taken all the steps that he/she ought to have taken as a director to make himself/herself aware of any relevant audit information and to establish that the Group's auditor is aware of that information.

Auditor

A resolution to re-appoint KPMG LLP as auditors and to authorise the Directors to determine their remuneration will be put to the members at the forthcoming Annual General Meeting.

By order of the board

Report of the Remuneration Committee

Compliance

This report by the Remuneration Committee, on behalf of the Board, contains full details of the remuneration of each Director during the period under review.

Directors' remuneration policy

The Committee aims to ensure that the remuneration packages offered are competitive and are designed to attract, retain and motivate executives of the right calibre. 

Emoluments of the directors

For the 52 weeks to 29th January 2017

Emoluments of the directors

For the 52 weeks to 31st January 2016

Pensions

Defined contribution pension payments are made to individual pension plans to provide benefits for certain Executive Directors. The Non-Executive Directors' emoluments are not pensionable.

Directors' service contracts

All Director service contracts are terminable on six months notice.

Directors' share options

As at 29 January 2017, the Directors hold no shares under option.

Long Term Incentive Plan (LTIP)

Shares were granted under the Crawshaw Group plc Long-Term Incentive Plan on 24 April 2015. The shares are 'growth shares' in a subsidiary, Crawshaw Butchers Ltd, but have value linked to the market capitalisation of Crawshaw Group plc. Shareholders are entitled to a maximum pool of 10% of the growth in value of the market capitalisation of Crawshaw Group over the hurdle rate, where the hurdle rate is set as a premium of 15% to market capitalisation immediately prior to the award of the shares.

The Directors participating in the scheme at the date of this report and their respective entitlement to the growth in value of market capitalisation of Crawshaw Group plc above the hurdle rate are as follows;

· Noel Collett, 5.00%

· Alan Richardson, 0.49%

There are specific trigger points governing when the participants can exercise their options and how the fair value of the awards have been calculated which are set out in Note 17 of the accounts.

This report was approved by the Board on 25 April 2017 and signed on its behalf by

K McMeikanChairman of the Remuneration Committee

Statement of Directors' responsibilities in respect of the Annual Report.

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare group and parent company financial statements for each financial year. As required by the AIM Rules of the London Stock Exchange they are required to prepare the group financial statements in accordance with IFRSs as adopted by the EU and applicable law and have elected to prepare the parent company financial statements on the same basis.

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 group and parent company and of their profit or loss for that period. In preparing each of the group and parent company financial statements, the directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgements and estimates that are reasonable and prudent;

· state whether they have been prepared in accordance with IFRSs as adopted by the EU; and

· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the parent company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company's transactions and disclose with reasonable accuracy at any time the financial position of the parent company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the group and to prevent and detect fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Consolidated Statement of Comprehensive Income

For the 52 weeks ended 29 January 2017

* EBITDA is defined by the Group as the profit/(loss) before tax, exceptional items, depreciation, amortisation and share based payment charges.

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 29 January 2017

These financial statements were approved by the Board of Directors on 25 April 2017 and were signed on its behalf by:

Alan Richardson

Director and Company Secretary

Company registered number: 04755803

Consolidated Statements of Changes in Shareholders' Equity

The reverse acquisition reserve was established under IFRS 3 'Business Combinations' following the deemed acquisition of Crawshaw Group Plc by Crawshaw Holdings Limited on 11 April 2008.

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).

In 2012 CHL transferred its investment in CBL to the Company at book value.

Cash Flow Statements

For the 52 week period ended 29 January 2017

Notes to the financial statements

(forming part of the financial statements)

52 Weeks ended 29 January 2017

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 associates and joint ventures. 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 current financial period is a 52 week period to 29 January 2017. The prior year was also a 52 week period.

New IFRS and amendments to IAS and interpretations

There have been no significant changes to accounting under IFRS which have affected the Group's results. The Group has considered the following amendments to published standards that are effective for the first time for the 52 weeks ended 29 January 2017 and concluded that they are either not relevant to the Group or they do not have a significant impact on the Group's financial statements. These amendments are:

· Amendments to IAS 1 'Presentation of Financial Statements';

· Amendments to IFRS 11 'joint arrangements' on accounting for acquisitions of interests in joint operations;

· Amendments to IAS 16 'Plant, property and equipment' and IAS 38 'Intangible assets' on acceptable methods of depreciation and amortisation;

· Amendments to IAS 27 'Consolidation and separate financial statements' which allows entities to equity account for joint ventures and associates in their separate financial statements; and

· Annual improvements 2012-2014.

There are a number of standards and interpretations issued by the IASB that are effective for financial statements after this reporting period.

These are:

· IFRS 9 'Financial Instruments' was published in July 2014 and will be effective for the Group from the period beginning 1st February 2018. The standard is applicable to financial assets and financial liabilities, and covers the classification, measurement, impairment and de-recognition of financial assets and financial liabilities together with a new hedge accounting model. This standard is not expected to have a material impact on the consolidated financial statements.

· IFRS 15 'Revenue from Contracts with Customers' will be effective or the Group from the period beginning 1st February 2018, replacing IAS 18 'Revenue,' IAS 11 'Construction contracts' and related interpretations. The standard establishes a principles based approach for revenue recognition and is based on the concept of recognising revenue when a customer obtains control of a good or service and has the ability to direct the use and obtain the benefits from the goods or services. It applies to all contracts with customers, except those in the scope of other standards. It replaces the separate models for goods, services and construction contracts under the current accounting standards. Group believes that the adoption of IFRS 15 will not have a material impact on the consolidated financial statements

· IFRS 16 'Leases' was published in January 2016 and will be effective for the Group from the period beginning 1 February 2019, replacing IAS 17 'Leases,' subject to EU endorsement. The standard requires lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset is of low value. IFRS 16 represents a significant change in the accounting and reporting of leases and it will primarily change the balance sheet as well as impacting the income statement and lessee reporting as disclosed in note 22. The Group is in the process of quantifying the impact of the new standard. The new standard is likely to have an impact on the Group's results and a material impact on the balance sheet, as the majority of arrangements that are currently accounted for as operating leases will come onto the Group's balance sheet. However, it is not yet practicable to fully quantify the effect of IFRS 16 on these consolidated 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.

Change in subsidiary ownership and loss of control

Changes in the Group's interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

Where the Group loses control of a subsidiary, the assets and liabilities are derecognised along with any related NCI and other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.

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.

Associates

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20 and 50 percent of the voting power of another entity.

Application of the equity method to associates and joint ventures

Associates and joint ventures are accounted for using the equity method (equity accounted investees) and are initially recognised at cost. The Group's investment includes goodwill identified on acquisition, net of any accumulated impairment losses. The consolidated financial statements include the Group's share of the total comprehensive income and equity movements of equity accounted investees, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. When the Group's share of losses exceeds its interest in an equity accounted investee, the Group's carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of an investee.

Joint operations

Where the Group is a party to a joint operation, the consolidated financial statements include the Group's share of the joint operations assets and liabilities, as well as the Group's share of the entity's profit or loss and other comprehensive income, on a line-by-line basis.

The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these consolidated financial statements.

Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategy and Business Model. In addition, notes 19 and 20 set out the Group's objectives, policies and processes for managing its capital and exposures to credit and liquidity risk.

As highlighted in note 20, the Group meets its day to day working capital requirements through cash generated from operations and borrowings. Current cash headroom totals £2.1m.

In the year, the Group entered into a £4m, 5 year Revolving Credit Facility with RBS. The facility was undrawn at year end and is expected to remain undrawn through FY 2018.

The Group's forecasts and cash projections, taking account of reasonably possible changes in trading performance as a result of the uncertain economic conditions, show that the Group should be able to operate within its cash reserves with the appropriate decisions being taken on the pace of new store rollout to ensure a sufficient working capital buffer is maintained to cover day to day cash requirements of the business.

Classification of financial instruments issued by the Group

In applying policies consistent with IAS 32, financial instruments issued by the Group are treated as equity only to the extent that they meet the following two conditions:

(a) they include no contractual obligations upon the Group to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the Group; and

(b) where the instrument will or may be settled in the Group's own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the Group's own equity instruments or is a derivative that will be settled by the Group's exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.

To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes the legal form of the Group's own shares, the amounts presented in this financial information for called up share capital and share premium account exclude amounts in relation to those shares.

Preference share capital is classified as equity if it is non-redeemable, or redeemable only at the Company's option, and any dividends are discretionary. Dividends thereon are recognised as distributions within equity upon approval by the Group's shareholders.

Preference share capital is classified as a liability if it is redeemable on a specific date or at the option of the shareholders, or if dividend payments are not discretionary. Dividends thereon are recognised as interest expense in profit or loss as accrued.

Finance payments associated with financial liabilities are dealt with as part of finance expenses. Finance payments associated with financial instruments that are classified in equity are treated as distributions and are recorded directly in equity.

Non-derivative financial instruments

Non-derivative financial instruments comprise investments in equity securities, trade and other receivables, cash and cash equivalents and trade and other payables.

Trade and other receivables are recognised at stated cost less impairment losses. It is the Company's policy to review trade and other receivable balances for evidence of impairment at each reporting date. Any receivables which give significant cause for concern are written down to the best estimate of the recoverable amount.

Cash and cash equivalents comprise cash-in-hand and cash-at-bank.

Trade and other payables are recognised at stated cost.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Residual values of property, plant and equipment is assumed to be nil. Land is not depreciated. The estimated useful lives are as follows:

· Freehold property 5%-10%

· Leasehold buildings in accordance with the lease term

· Leasehold improvements in accordance with the lease term

· Plant, equipment and vehicles 3-15 Years Straight Line Basis

Intangible assets and goodwill

Goodwill represents amounts arising on acquisition of businesses. In respect of business acquisitions that have occurred since 11 December 2006, goodwill represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired. Identifiable intangibles are those which can be sold separately or which arise from legal rights regardless of whether those rights are separable.

Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not amortised but is tested annually for impairment. Any impairment is then recognised immediately in profit or loss and is not subsequently reversed.

Intangible assets that are acquired by the Group, which have finite useful lives, are measured at cost less accumulated amortisation and accumulated impairment losses.

IFRS 1 grants certain exemptions from the full requirements of Adopted IFRSs in the transition period. The Company elected not to restate business combinations in Crawshaw Butchers Limited that took place prior to 1 February 2006. In respect of acquisitions prior to 1 February 2006, goodwill is included at 1 February 2006 on the basis of its deemed cost, which represents the amount recorded under UK GAAP which was broadly comparable save that only separable intangibles were recognised and goodwill was amortised.

Amortisation

Amortisation is recognised in the statement of comprehensive income on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use. The estimated useful lives for the current and comparative periods are as follows:

· Brand 20 years

Impairment

The carrying amounts of the Group's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated.

For goodwill and intangible assets that are not yet available for use, the recoverable amount is estimated at each balance sheet date.

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the statement of comprehensive income.

Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to cash-generating units and then to reduce the carrying amount of the other assets in the unit on a pro rata basis. A cash generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets.

Calculation of recoverable amount

The recoverable amount of other assets is the greater of their fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

Reversals of impairment

An impairment loss in respect of goodwill is not reversed.

In respect of other assets, an impairment loss is reversed when there is an indication that the impairment loss may no longer exist and there has been a change in the estimates used to determine the recoverable amount.

An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Provisions

A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected, risk adjusted, future cash flows at a pre-tax risk-free rate.

Trade and other receivables

Trade and other receivables are recognised at their fair value and thereafter at amortised cost less impairment charges.

Inventories

Inventories are stated at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items. Cost comprises purchase price and an allocation of production overheads. Net realisable value is estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

Inventories are primarily goods for resale.

Cash and cash equivalents

Cash and cash equivalents comprise cash-in-hand and cash-at bank. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose only of the statement of cash flows.

Employee benefits

Defined contribution plans

The Group operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as incurred.

Short-term benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably

Revenue

Revenue is mainly derived from retail butcher activities, stated after trade discounts, VAT and any other sales taxes. Revenue from the sale of goods is recognised in the statement of comprehensive income when the significant risks and rewards of ownership have been transferred to the buyer, which is the time of retail sale to the customer. Where the Group sells to distributors, revenue from the sale of goods is recognised where there are no further obligations on the Group and when the associated economic benefits are due to the Group and the turnover can be reliably measured. 

Expenses

Operating lease payments

Payments made under operating leases are recognised in the statement of comprehensive income on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expense. Lease incentives are recognised in the income statement on a straight-line basis over the term of the associated lease.

Net financing costs

Net financing costs comprise interest payable, finance charges on shares classified as liabilities, interest receivable on funds invested and dividend income.

Interest income and interest payable is recognised in profit or loss as it accrues, using the effective interest method. Dividend income is recognised in the income statement on the date the entity's right to receive payments is established.

Borrowing costs

Borrowing costs are expensed in the consolidated statement of comprehensive income as incurred.

Taxation

Tax on the profit or loss for the period comprises current and deferred tax. Tax is recognised in the statement of comprehensive income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous periods.

Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised.

Bank loans, overdrafts and loan notes

Interest-bearing bank loans, overdrafts and loan notes are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis in profit or loss using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

Segmental reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group's other components. Operating segments' operating results are reviewed regularly by the Chief Executive Officer to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. The Directors consider each location to be a separate operating segment. The Directors have applied the provisions within IFRS 8 for aggregation of operating segments with similar risks and markets, to have one reportable segment. The Group's business operations are conducted exclusively in the UK so geographical segment reporting is not required.

Critical accounting judgements and key sources of estimation uncertainty

The preparation of the financial information in conformity with IFRS required management to make judgements, estimated and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expense. The estimates and underlying assumptions are reviewed on an ongoing basis.

The estimates associated with the assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised in the period in which the estimate is revised if the revision only affects that period, or in the period of revision and future periods if the revision affects both current and future periods.

The key sources of estimation uncertainty at the balance sheet date are:

· Share based payments (note 17)

· Deferred tax (note 13)

· Goodwill and intangible assets in business combinations (note 10)

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 11.

3. Expenses and auditor's remuneration

Included in operating loss are the following:

4. 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:

5. Key management compensation

The Group considers key management personnel as defined in IAS24 'Related Party Disclosures' to be the Directors of the Group. The aggregate of emoluments and amounts receivable under long term incentive schemes of the highest paid Director was £334k (2016: £305k). No company pension contributions were made on his behalf (2016: £nil).

6. Finance and income expense

7. Income tax expense

Recognised in the income statement

The income tax expense is based on the estimated effective rate of taxation on trading for the period and represents:

Reconciliation of effective tax rate

Reductions in the UK corporation tax rate from 20% to 19% (effective from 1 April 2017) and to 18% (effective from 1 April 2020) were substantively enacted on 26 October 2015. A further rate reduction to 17% (to be effective from 1 April 2020) was substantively enacted on 6 September 2016.

This will reduce the Company's future current tax charge accordingly and reduce the deferred tax asset at 31 January 2017 which has been calculated based on the rate of 17% in line with the above.

8. 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 79,140,309 (31 January 2016: 78,845,870).

The calculation of the basic and diluted earnings per share is based on the following data:

In both years the share options were anti-dilutive as the Group reported a loss in each period.

9. Property, plant and equipment

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

9. Property, plant and equipment continued

Prior year

10. Intangible assets

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 20 years. The remaining amortisation period is ten years and two 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 on the subsequent acquisitions of East Yorkshire Beef Limited in June 2014 and Gabbotts Farm Limited in April 2015.

Each store is treated as a separate cash generating unit grouped together into 'relevant group of CGUs' for the purposes of impairment testing.

The goodwill supported by the expected future cash flows of each relevant group of CGUs as at 31 January 2017 is as follows:

The recoverable amount of Crawshaw Butchers Ltd, East Yorkshire Beef Limited and Gabbotts Farm Limited acquisition has been calculated with reference to their value in use. The Group prepares cash flow forecasts derived from the most recent financial budgets and projections approved by management for the next five years and assuming an estimated long term annual growth rate of 2.0% for the subsequent 25 years (2015: 2.0%).

The financial budgets and projections are based on past experience and actual operating results. The growth rates for the five year period are based on current performance of the existing store and product mix. The Directors believe that the long-term growth rate does not exceed the average long-term growth rate for the UK economy, the principal geographic area in which Crawshaws operates.

The Directors estimate the discount rates using the post-tax rates that reflect the current market assessments of the time value of money and the risks specific to the cash-generating unit. In the current year the Directors estimate the applicable pre-tax rate to be 8.8% (2016: 13.3%).

The Directors modelled a range of different scenarios by applying sensitivities to both the cash flow assumptions and the discount rate. Based on the sensitivity analysis there is sufficient headroom between the value in use calculation and the carrying value of the CGU.

11. Investments in equity accounted investees

Other investments comprise a 50% share in RGV Refrigeration, a joint venture between 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 2016. The Group does not exert control over the entity.

The carrying value of investments in equity accounted investees includes £nil (2016: £19,020) of outstanding dividend declared by RGV Refrigeration.

The share of profit recognised in the statement of comprehensive income was received in cash in the year.

12. Other investments

During the year the group restructured by hiving across the trade and assets of Gabbotts Farm (Retail) Ltd into Crawshaw Butchers Ltd. The transfer was done at undervalue however the parent company has not suffered any actual loss as a result of the transfer since the same trade and net assets remain within its group. The difference between the proceeds on transfer of the trade and assets and their recoverable amount has been reallocated to the cost of investment in Crawshaw Butchers Limited.

13. Deferred tax liabilities

Recognised deferred tax liabilities

Deferred tax liabilities are attributable to the following:

Movement in deferred tax during the year

14. Inventories

Finished goods recognised as cost of sales in the year amounted to £24,983k (2016: £20,356k).

15. 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

The release of the provision in the year was credited to the administration expense line in the Income Statement.

16. 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.

17. 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

The Group issues equity settled share based payments to certain employees. Equity settled share based payments are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of the grant. The fair value determined at the grant date of such equity settled share based payments is expensed on a straight line basis over the vesting period, based on the Group's estimate of shares that will eventually vest and adjusted for the effect of non-market based vesting conditions (with a corresponding movement in equity).

Fair value is measured by use of the Black-Scholes model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.

The fair value of the shares issued under the new Long Term Incentive Plan were valued on a discounted cash flow basis in conjunction with a third party valuation specialist.

Share Options

Share options were granted post 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 six 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 (2016: £13k) in relation to equity settled share options in the income statement.

Long term incentive plan

Shares were granted under the Crawshaw Group Plc Long-Term Incentive Plan on 24 April 2015 which entitles employees to equity instruments in Crawshaw Butchers Limited. The shares are 'growth shares' in a subsidiary, Crawshaw Butchers Ltd, but have value linked to the market capitalisation of Crawshaw Group Plc. Shareholders are entitled to a maximum pool of 10% of the growth in value of the market capitalisation of Crawshaw Group Plc over the hurdle rate, where the hurdle rate is set as a premium of 15% to market capitalisation immediately prior to the award of the shares.

Shareholders have the option to "put" their Eligible Put Shares on the occurrence of the following events:

- The First and Second Put Dates: Shareholders can put 1/6th of their Shares from the first anniversary of the date of grant and a further 1/6th of their Shares from the second anniversary of the date of grant.

- The achievement of the Performance Conditions: Shareholders can put 1/3rd of their Shares once the market capitalisation of Crawshaw Butchers has increased by 50% since the date of grant. In addition, shareholders can put a further 1/3rd of their Shares once the market capitalisation of Crawshaw Butchers has increased by 100% since the date of grant.

- On a voluntary winding up or change of control of Crawshaw Group Plc.

The fair value of the awards is determined by using the Monte Carlo model and allowance has been made for the following assumptions: Expected exercise date, expected volatility of total shareholder return, expected future dividends and the risk free rate of interest. 100,000 simulations were used in the Monte Carlo model and set out below is a summary of the key data.

The expected Volatility is wholly based on the historic volatility simulated over differing time periods to the date of grant.

The share based payment charge will be adjusted each financial year to reflect expected and actual achievement of non-market based vesting conditions. The total expense recognised in the Statement of Comprehensive Income is £217,000.

18. Loans and borrowings - Group

19. 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 paid all bank facilities mitigating any risk in interest rate variability.

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

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. 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 is forecast to continue and the bank facilities have been paid in full. The Directors are confident that there will continue to be sufficient headroom to cover liquidity risk.

The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the effect of netting agreements:

Contractual Cash Flows

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.

20. 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 the Statements of Changes in Shareholders Equity.

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 authorisation 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 periods ended 29 January 2017 and 31 January 2016.

21. Capital commitments

The Group had no capital commitments at the current and preceding year ends.

22. Operating leases

Non-cancellable operating lease rentals are payable as follows:

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 £1,676k (2016: £1,342k) was recognised as an expense in the income statement in respect of operating leases.

23. 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 5 and the Remuneration Report. 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. The amount outstanding from subsidiary undertakings to the Company at 31 January 2017 totalled £nil (2016: £nil). Amounts owed to subsidiary undertakings by the Company at 31 January 2017 totalled £nil (2016: £nil).

The Company has suffered no expense in respect of bad or doubtful debts of subsidiary undertakings in the year (2016: £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 2017 totalled £5,053 (2016: £19,020). Amounts owed joint ventures by the Group at 31 January 2017 totalled £9,363 (2016: £27,959).

The Group has suffered no expense in respect of bad or doubtful debts of jointly controlled entities in the year (2016: £nil).

Transaction with other related parties

The Group leases a property owned by The Colin Crawshaw Pension Scheme for factory facilities and paid rental fee of £13,500 in 2017 (2016: £13,500). Amounts owed to The Colin Crawshaw Pension Scheme by the Group at 31 January 2017 totalled £10,125 (2016: £nil). 

24. Exceptional costs

Exceptional costs are defined as one off costs incurred in the year which are of a non-recurring nature.

Exceptional costs incurred:

25. Subsidiary undertakings

At 29 January 2017 Crawshaw Group PLC had the following 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

Gabbotts Farm (Retail) Limited - United Kingdom - Retail Butchers

Gabbotts Farm Ltd - United Kingdom - Non-trading subsidiary

MeatMart Ltd - United Kingdom - Non-trading subsidiary

All the above subsidiary undertakings have the the following registered office:

Unit 4, Sandbeck Way, Hellaby Industrial Estate, Rotherham, S66 8QL

The shareholdings were 100% of the subsidiary undertakings' ordinary and preference shares. Each of the subsidiaries is included in the consolidated financial statements.

26. Ultimate parent company

The Company is the ultimate parent company of the Group.

No other group financial statements include the results of the Company.

27. Post balance sheet event

On 25 April 2017, the Group entered into a 3 year supply agreement for Crawshaw to acquire fresh meat and other products from 2 Sisters (through a 100% owned subsidiary, Amber Foods Limited). 

On the same date, the Group entered Head of Terms under which Invest Co 1 Limited, a vehicle 100% controlled by Boparan Private Office ("BPO"), and Stephen Henderson, chief financial officer of BPO, are expected to acquire an aggregate of 33,794,490 new shares in the Group for £5.1m, representing a 29.9% stake in Crawshaw. Invest Co 1 Limited will hold 33,594,490 Ordinary Shares and Stephen Henderson will hold 200,000 Ordinary Shares. These investments reflect a price per Ordinary Share of 15.2p, being the market price of the Company as the partnership with 2 Sisters was being structured. Invest Co 1 Limited is to be granted warrants to subscribe for an additional 45,436,069 Ordinary Shares (subject to certain anti-dilution protections), also at 15.2p per Ordinary Share, to take a further 20.1% stake in the Group. The Warrants will be exercisable by Invest Co 1. This transaction is subject to shareholder and takeover panel approval. 

28. Annual Report

The Group's Annual Report and Financial Statements for the 52 weeks ended 29 January 2017 were approved

on 25 April 2017 and are expected to be posted to shareholders, along with the Group's Notice of Annual

General Meeting ("AGM") and related form of proxy, in due course. The AGM will be held at 12 noon on

Wednesday 28 June at the Company's registered offices, Unit 4, Hellaby Industrial Estate, Sandbeck Way,

Rotherham, S66 8QL.

Further copies will be available to download from the Company's website at: www.crawshawbutchers.com and

will also be available from the companies office address, as above.