Crawshaw Group Regulatory News (CRAW)

Crawshaw Group PLC

Final Results

Crawshaw Group PLC ("the Company"), the meat focussed retailer, today reports its audited results for the year ended 31 January, 2012.

Results highlights for the year to 31st January 2012.

·; Sales for the year £18.9m (2011: £19.1m)

·; Operating profit (before impairment of fixed assets) £0.1m (2011: £0.6m)

·; Full year like for like sales down 4% (2011: -1%) with improved performance in Q4.

·; EBITDA £0.6m (2011: £1.0m)

·; Net debt reduced to £0.2m (2011: £0.5m)

·; Profit before tax £nil (2011: £0.6m)

·; New store opened in Derby

·; Asset impairment charge of £0.1m

Chairman's Statement

Sales and gross margin

As outlined in our interim statement issued on 3rd October 2011, the retail climate has been, and remains, particularly challenging. Sales for the year were £18.9m, slightly down from the previous year (£19.1m). Like for like sales were down 4% (2011: -1%). Other factors affecting our level of sales for the year were the sale of our Doncaster market site, the planned reduction in our lower margin wholesale business, and the opening of our new store in Derby.

Our interim statement also referred to a 10% fall in like for like sales in Q3, and outlined a number of initiatives we were implementing to reverse the decline. These included a broadening of the product range and the recruitment of a marketing manager. We also looked at our value proposition to better align it to the needs of our hard pressed customers.

I'm pleased to report some success with these measures. We did indeed manage to reverse the sales decline, with like for like sales rising 2% in Q4. In addition, average spend on fresh products rose by 17% in Q4 leading to a total of 22% (2011: 6%) over the year.

Gross margin for the year was 43.3% (2011: 43.6%)

Costs

Excluding asset impairment, total overheads increased 4.8% to £8.2m (2011: £7.7m). This increase was wholly driven by the opening of a new store in Derby in February, with like for like costs reducing by £0.1m during the year. Despite a year of increasing prices, savings have come from productivity improvements, certain renegotiated rents, and other operational and administrative areas.

Profit

Excluding asset impairment, operating profit for the year was £0.1m (2011: £0.6m). Profit before tax, including impairment, was £nil (2011: £0.6m), and excluding impairment was £0.1m (2011: £0.6m).

We generated cash during the year with EBITDA of £0.6m (2011: £1.0m). The reduction in profits can be attributed to the previously referred to fall in like for like sales, and the costs of opening our new store in Derby.

The asset impairment has arisen following a review of returns by store format and in line with my comments last year, of our new outlets, it is our larger store formats that produce the best performance. Accordingly, we have now concluded that our mobile trailer should be discontinued, and that our smallest new store in Bramley should be offered for sale. This generates an asset impairment charge of £0.1m.

No dividend is proposed.

Cash

I am pleased to report that, before tax but after working capital movements, we generated £0.5m (2011: £1.1m) of cash from operating activities. Cash has been utilised on capital projects (shops and vehicles) £0.2m, tax £0.1m, and on the repayment of loans £0.4m. We received £0.1m from the sale of our Doncaster market site. Cash balances at the end of January 2012 were £0.6m (2011: £0.7m).

As at 31st January 2012, net debt had reduced further to £0.2m, (2011: £0.5m).

Outlook

The last quarter of the year under review showed like for like sales up 2%, a reversal of the 10% decline seen the previous quarter. Since the financial year end, like for like sales have continued to increase by 3%, and we are trading ahead of our expectation.

I am encouraged by our sales improvements since Q3 of last year. The retail climate remains extremely tough, and our customers are finding it difficult to make ends meet. I believe the measures we have implemented are working and that they are producing the beginnings of profitable growth.

Unfortunately, my confidence following the restoration of profitable sales growth has been undermined by the Chancellor's decision to propose the introduction of VAT on hot food from 1st October this year.

Having worked extremely hard to offer good value to our loyal customers, and to maintain key affordable price points, I find it very unfair that small format High Street food retailers, and hard pressed families and pensioners, are being targeted in this way.

Some 38% of our sales are generated from hot food, and we are unable to predict the effect this imposition of VAT will have on our performance. We will of course do everything possible to mitigate any negative impact.

We are vigorously opposing the VAT increase, with press, and in store campaigns, as well as making representations to the Treasury.

Richard Rose

Chairman

30th April 2012.

Directors' report

Principal Activity

The principal activity of the Group is the operation of a chain of meat focused retail food stores. The Group has two distribution centres in Grimsby and Rotherham, plus 20 retail locations across Yorkshire, Lincolnshire and Nottinghamshire.

Business Review

It has been an extremely tough year for both the economy and our customers as hard pressed families and pensioners continue to struggle to make ends meet. Crawshaw Butchers Limited (CBL), the Company's sole trading subsidiary, traded profitably such that the Group reported an operating profit before one off exceptional costs of £135,676 (2011: £638,935) on turnover of £18,889,491 (2011: £19,062,928).

Total sales were down 1% versus the prior year and LFL sales were down 4% (2011 -1%) as we felt the impact of reduced footfall in the high street. Some disappointing results over the summer meant we needed to maximise the value for money element of our product promotions, pack sizes and price points. Our efforts have been received well and, after a disappointing 3rd quarter, LFL sales have been much improved towards the end of the year with the 4th quarter LFL sales up 2% versus the prior year (2011 -1%).

Sales performance in the 4th quarter was driven by our new value £5 range plus much improved LFL's from some of our newer format stores where both hot cooked takeaway food and fresh produce to cook at home appeal to our customers in equal measure. We continue to focus on "in store" customer service and have recently recruited a Marketing Manager to strengthen the impact of our promotional activity to remind customers of the quality and the value of our products.

Whilst our customers are not shopping as frequently as in previous years, preferring to make their purchases go further, they are spending more per visit. Average spend has been rising throughout the year, particularly on the raw side of the business where average spend has risen 22% (2011: 6%). Gross margin has remained relatively consistent at 43.3% (2011: 43.6%).

Overheads have increased by 5% to £8,059,743 (2011 : £7,689,323) which is more than explained by the opening of our new store in Derby. LFL overheads have actually reduced marginally in the year despite rising fuel and energy costs. Savings have been identified in staff related costs as we further improve our operational efficiency and in general operating expenses.

We have undertaken a review of our new store formats and concluded that it is the medium to large stores that generate the best returns. As a result we have decided to offer up for sale our smallest new store and to discontinue the test of the mobile unit serving local markets. This results in an exceptional impairment charge of  £130,738 (2011: £nil). Operating profit (before impairment of fixed assets) is £135,676 (2011: £638,935), and profit before tax for the year is £2,374 (2011 : £569,487). The earnings per share for the period are 0.026p (2011 : 0.720p).

LFL sales for the first 8 weeks of the current year are running 3% higher than the corresponding period last year.

Balance sheet position 

At our reporting date, the Group had a cash balance of approximately £0.6m and total assets of £13.5m.

The Group has recently agreed a reduced overdraft facility of £0.25m (2011: £0.5m) which will be reviewed annually. Total utilisation of the facility throughout the year and at the reporting date amounted to £nil.

Cash has mainly been utilised on the opening of a new retail outlet in Derby and on the repayment of debt. As a result the debt position as at 31st January, 2012 was approximately £0.8 m, solely related to a mortgage secured on the Group's distribution centre in Grimsby and a store in Hull. Taking into account cash balances the net debt position is reported as £0.2m (2011: £0.5m).

In total, £0.7m of cash has been utilised in the year for the payment of tax (£0.1m), for capital projects (£0.2m) and on the repayment of our revolving credit facility (£0.4m).These requirements have been partially met via cash generated from operating activities (£0.5m) and the sale of our Doncaster Market site (£0.1m).

Proposed dividend

The directors do not recommend the payment of a dividend.

The Company is taking advantage of the exemption in section 408 of the Companies Act 2006

not to present its individual income statement.

These financial statements were approved by the Board of Directors on 30th April 2012 and

were signed on its behalf by:

Lynda Sherratt

Finance Director

Company registered number: 04755803

Cash Flow Statements

For the period ended 31 January 2012

Notes to the financial statements

(forming part of the financial statements)

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.

• Improvements to IFRS (2010). The International Accounting Standards Board issued its annual omnibus of amendments to standards in May 2010, effective for accounting periods commencing after 1 January 2011. The adoption of these amendments does not have any impact on the reporting of the financial position or performance of the Group.

• IAS 24 Related Party Disclosures (Revised 2009) clarifies and expands the definition of a related party. There is no impact on the reporting of the Group but additional disclosures may be required in future annual reports.

• IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments provides guidance on accounting for debt for equity swaps. Equity instruments are measured initially at fair value with any gain or loss recognised immediately in the income statement.

The Group has not yet applied the following new and revised IFRSs that are not yet effective for which early adoption is permitted:

• Disclosures - Transfers of Financial Assets (Amendments to IFRS 7) was published in October 2010. Effective for annual periods beginning on or after 1 July 2011.

BASIS OF CONSOLIDATION

Subsidiaries

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. 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.

Jointly controlled entities are those entities over whose activities the Group has joint control, established by contractual agreement and requiring the venturers' unanimous consent for strategic financial and operating decisions. Jointly controlled entities 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 joint control commences until the date that 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.

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 on the business review on pages 6-7. In addition, notes 21 and 22 set out the Group's objectives, policies and processes for managing its capital and exposures to credit and liquidity risk.

As highlighted in note 22, the Group meets its day to day working capital requirements through cash generated from operations and borrowings. Current cash headroom (being cash on hand and available overdraft facility) totals £0.9m.

The Group have recently renewed the overdraft facility at the lower level of £0.25m based on forecast future cash requirements. This facility falls due for review in April 2013. The Group repaid its £0.4m revolving credit facility during the year using surplus cash reserves. The outstanding loan balance shown in note 20 relates to a mortgage against freehold property which falls due for renewal in May 2013.

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 comfortably within its secured level of available facility.

The Group have commenced discussions with the bank with regards to the mortgage and initial indications are that the facility will be renewed. The Directors currently have no reason to believe that the mortgage will not be renewed on acceptable terms.

The directors have a reasonable expectation that the company and group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.

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.

ASSOCIATES AND JOINTLY CONTROLLED ENTITIES (equity accounted investees)

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. Joint ventures are those entities over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions.

Associates and jointly controlled entities 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 income and expenses and equity movements of equity accounted investees, after adjustments to align the accounting policies with those of the Group, 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 carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

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 estimateduseful 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:

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. 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

In the current year 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 Group's Managing Director 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.

SIGNIFICANT JUDGEMENTS AND ESTIMATES

The preparation of the financial information in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. 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:

GOODWILL

Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating unit(s) to which goodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value.

The carrying amount of goodwill at the balance sheet date was £7.0 million. Details of the present value calculation are provided in note 11.

BRAND INTANGIBLES

The royalty relief approach is considered the most appropriate method to determine the value of the brand. A royalty percentage of 1% has been applied to revenue streams for the twenty years ended 31 January 2028 from the branch network carrying the Crawshaw brand. These were discounted at 15.7% to arrive at an initial carrying value of £693,558. This is amortised over the finite life of twenty years, with the amortisation charge being included within administrative expenses in the statement of comprehensive income.

2. EXCEPTIONAL ITEMS

3. OTHER OPERATING INCOME

The Group charges RGV Refrigeration a management charge each period for administration services. The Group has investment in RGV Refrigeration, which is described further in note 12.

4. EXPENSES AND AUDITORS REMUNERATION

Included in operating profit are the following:

Auditors' 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 pages to these numbers have been audited.The aggregate of emoluments and amounts receivable under long term incentive schemes of the highest paid director was £65,012 (2011: £59,846),and company pension contributions of £50,000 (2011: £54,580) were made to a money purchase scheme on his behalf. The prior year share based payment charge of £19,723 solely relates to options granted to the executive directors and key management.The comparable charge in the current year is £nil.See note 18 for further details.

7. FINANCE AND INCOME EXPENSE

8. INCOME TAX EXPENSE

The 2012 Budget on 21 March 2012 announced that the UK corporation tax rate will reduce to 22% by 2014. A reduction in the rate from 26% to 25% (effective from 1 April 2012) was substantively enacted on 5 July 2011, and a further reduction to 24% (effective from 1 April 2012) was substantively enacted on 26 March 2012.

This will reduce the company's future current tax charge accordingly and further reduce the deferred tax liability at 31st January 2012 (which has been calculated based on the rate of 25% substantively enacted at the balance sheet date) by £19,814.

It has not yet been possible to quantify the full anticipated effect of the announced further 2% rate reduction, although this will further reduce the company's future current tax charge and reduce the company's deferred tax liability accordingly.

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 57,818,801 (31/1/11: 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 57,818,801 (31/1/11: 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.

For details of security given over property, plant and equipment see note 20.

PRIOR YEAR

11. 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 twenty years. The remaining amortisation period is 15 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. As such 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. The rate assumed is marginally higher than last year and reflects managements focus on product promotion and pricing for growth.

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.

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 17-25 John Street,Rotherham,South Yorkshire S60 1EQ.The last year end being 30 September 2011.The Group does not exert control over the entity.

The carrying value of investments in equity accounted investees includes £14,845 (2011: £ 20,207) 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 period

15. INVENTORIES

Finished goods recognised as cost of sales in the year amounted to £10,729,334 (2011: £10,745,622)

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 granted prior to the reverse acquisition are held by former associates of Felix Group PLC. Further 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 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 current year, share options were granted to a key member of Group management.

The calculated fair value of options granted on 14 December 2011 at the grant date was £nil. This was determined using the Black-Scholes option pricing model. The model inputs were the share price at the date of grant of 2.5p, the exercise price of 10p, expected volatility of 18%, expected dividends of £nil, an exercise period of 8 years and a risk free rate of 5%.

The expected volatility is based wholly on the historic volatility (calculated based on the weighted average remaining life of the share options) adjusted for any expected changes to future volatility due to publicly available information.

During the year the Group recognised a charge of £nil (2011: £19,723) in relation to equity settled share based payments in the income statement. No further charge is expected in relation to options in issue.

19. CAPITAL AND RESERVES

Reconciliation of movements in capital and reserves - Group

The reverse acquisition reserve was established under IFRS3 'Business Combinations' following the deemed acquisition of Crawshaw Group Plc by Crawshaw Holdings Limited on 11 April 2008.

The capital contribution reserve arose in relation to the waiver of shareholder loan note interest

prior to the reverse acquisition.

On 8th February 2011 Crawshaw Holdings Ltd undertook a capital reduction as part of this process the capital contribution reserve was cancelled.

Reconciliation of movement in capital and reserves - Company

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).

During the year ended 31 January 2012, CHL transferred its investment in CBL to the Company at book value (£9,631,854). Immediately following the transfer, the Company's investment in CHL was written down by this value against the merger reserve,reflecting the transfer of investment in CBL to the Company.

The original carrying value of the Company's investment in CHL reflected the value paid for the underlying net assets and goodwill at the time of the reverse acquisition. Following the reorganisation noted above and the reduction of the merger reserve, the value of the Company's investment in CHL fell below the amounts at which they were stated in the Company's accounting records. However, on the basis that there was considered to be no overall change or loss to the Group in these circumstances, no provision for impairment has been reflected in the accounts at the time of this transfer.

20. LOANS AND BORROWINGS - GROUP

Terms and debt repayment schedule

The following liabilities disclosed under bank loans are secured by fixed and floating charges over the assets of the Group.

The principle features of the loans are as follows:

(a) The loan outstanding at 31 January 2012 relates to a mortgage of £840,000 against freehold property taken out on the 21st May 2008 over a 5 year period at a rate of LIBOR +1.5%.

21. FINANCIAL INSTRUMENTS

The Group's principal financial instruments comprise loans and borrowings, 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's exposure to market risk for changes in interest rates relates primarily to the Group's long-term debt obligations.

The Group has not currently entered into any steps to mitigate its risk to variability in interest rates.

Credit risk

The Group's principal financial assets are cash and receivables. The Group's credit risk is primarily attributable to trade receivables. Trade receivables are included in the balance sheet net of a provision for doubtful receivables, estimated by the Group's management based on prior experience and their assessment of current economic conditions.

At the balance sheet date the Directors consider there to be no significant credit risk.

Liquidity risk

The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of cash and bank facilities. The cash generative nature of the business is forecast to continue and therefore we have been reducing our bank facility requirements over the last year. We currently have a reduced overdraft facility of £0.25m in place which will be reviewed again in April 2013. The Directors are confident that there will continue to be sufficient headroom to cover liquidity risk.

Effective interest rates

In respect of income-earning financial assets and interest-bearing financial liabilities, the following table indicates their effective interest rates at the balance sheet date and the periods in which they mature or, if earlier, are repriced.

22. CAPITAL MANAGEMENT

The capital structure of the group is a mixture of (i) net debt made up of borrowings and cash balances and (ii) equity comprising issued share capital and reserves as detailed in note 19.

The Group's primary objective is to safeguard its ability to continue as a going concern, through the optimisation of the debt and equity balance, and to maintain a strong credit rating and headroom. The Group manages its capital structure through detailed management forecasts and clear authorization procedures for significant capital expenditure. The Board makes appropriate decisions in light of the current economic conditions and strategic objectives of the Group.

There has been no change in the objectives, policies or processes with regards to capital management during the years ended 31 January 2012 and 31 January 2011.

23. CAPITAL COMMITMENTS

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

24. OPERATING LEASES

Non-cancellable operating lease rentals are payable as follows:

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 £852,746 (2011: £821,149) was recognised as an expense in the income statement in respect of operating leases.

25. RELATED PARTY TRANSACTIONS

Transactions with key management personnel

The Board and certain members of senior management are related parties within the definition of IAS 24 (Related Party Disclosures). Summary information of the transactions with key management personnel is provided in note 6. Detailed disclosure of the individual remuneration of Board members is included in The Report of the Remuneration Committee on pages 12 to 13. 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 2012 totalled £nil (2011: £6,745,951). Amounts owed to subsidiary undertakings by the Company at 31 January 2012 totalled £1,834,887 (2011: £nil).

The Company has suffered no expense in respect of bad or doubtful debts of subsidiary undertakings in the year (2011: £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 2012 totalled £3,600 (2011: £8,669). Amounts owed to jointly controlled entities by the Group at 31 January 2012 totalled £21,139 (2011: £9,655).

The Group has suffered no expense in respect of bad or doubtful debts of jointly controlled entities in the year (2011: £nil).

Transaction with other related parties

During the year the Group paid £40,000 (2011: £36,667) to Electro Switch Limited in respect of Director's services. Electro Switch Limited is a company which provides Directors services and is under the significant influence of Mr R Rose, a Director of Crawshaw Group Plc. Amounts owed to Electro Switch Limited by the Group at 31 January 2012 totalled £nil (2011: nil).

The Group leases a property owned by The Colin Crawshaw Pension Scheme for factory facilities and paid rental fee of £13,500 in 2012 (2011: £13,500). Amounts owed to The Colin Crawshaw Pension Scheme by the Group at 31 January 2012 totalled £nil (2011: £nil).

26. PRINCIPAL SUBSIDIARY UNDERTAKINGS

At 31 January 2012 Crawshaw Group PLC had the following principal subsidiary undertakings:

Crawshaw Holdings Limited - United Kingdom - Non-trading subsidiary

Crawshaw Butchers 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.

27. ULTIMATE PARENT COMPANY

The Company is the ultimate parent company of the Group.

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

ANNUAL REPORT

The Annual Report will be posted to shareholders on 8th May, 2012 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 Bradmarsh Business Park, Bow Bridge Close, Rotherham S60 1BY on 25 June 2012 at 12 noon.

The financial information set out above does not constitute the Company's consolidated statutory accounts for the periods ended 31 January 2012 or 31 January 2011 but is derived from those accounts. Statutory accounts for the period ended 31 January 2011 have been delivered to the Registrar of Companies, and those for the period ended 31 January 2012 will be delivered following the Company's Annual General Meeting. The auditors, KPMG Audit Plc, have reported on those accounts; their reports were unqualified and did not contain statements under section 498(2) or (3) of the Companies Act 2006 or equivalent preceding legislation.