Chairman s Statement 2. Board of Directors 5. Directors Report 7. Corporate Governance Statement 14. Report of the Remuneration Committee 16

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1 Crawshaw Group plc (formerly Felix Group plc) Report and Financial Statements for the year ended 31 January 2009

2 Contents Chairman s Statement 2 Board of Directors 5 Directors Report 7 Corporate Governance Statement 14 Report of the Remuneration Committee 16 Statement of Directors Responsibilities in respect of the Directors Report and the Financial Statements 19 Independent Auditors Report to the members of Crawshaw Group plc (formerly Felix Group plc) 20 Consolidated Income Statement 22 Statements of Recognised Income and Expense 23 Balance Sheets 24 Cash Flow Statements 25 Notes to the financial statements 27 Page Advisors Company Secretary L J Sherratt Company Number Registered Office Unit 15 Bradmarsh Business Park Bow Bridge Close Rotherham S60 1BY Auditors KPMG Audit Plc 1 The Embankment Neville Street Leeds LS1 4DW Bankers Royal Bank of Scotland plc Yorkshire Corporate Banking First Floor 1 St Paul s Place 121 Norfolk Street Sheffield S1 2JR Nominated Adviser and Broker Investec Investment Banking 2 Gresham Street London EC2V 7QP Registrars and Receiving Agents Capita Registrars Northern House Woodsome Park Fenay Bridge Huddersfield HD8 0LA Report and Financial Statements for the year ended 31 January

3 Chairman s Statement Trading Performance Trading was strong during the period under review as good quality food available locally at a value price remained popular with our customers. As indicated at the half year, it is difficult to make useful comparisons when reviewing performance against the prior year, largely due to exceptional costs incurred in relation to the reverse acquisition in April The comparative figures reported below for the prior year also only include 42 weeks of trading. However, based on the underlying performance of the trading company, Crawshaw Butchers Limited, I am delighted to say that sales for the year rose to just over 16m, up 1.5m (+10%) versus the comparable prior year period. 1.3m of this increase was accounted for by the opening of 5 new stores and 0.2m was generated from improved sales performance from existing stores. Wholesale sales were 1.5m for the period under review (2008: 1.4m). Sales from existing units were higher than the prior year despite the closure of units at Rotherham Market in November 2007 and Meadowhall in July Like for like sales for the full year (52 week period) are ahead by 2% which has been strengthened by an improved second half performance with like for likes for Q3 ahead by 5% and Q4 ahead by 6%. Second half sales performance was positively impacted by the store rebranding exercise. Gross profit margin reduced slightly as a consequence of higher input prices. Operating profit was 854k (2008: 954k) before exceptional costs of 1,521k (2008: 125k) which were mostly associated with the reverse acquisition. EBITDA before exceptional costs was 1.2m (2008: 1.1m). Loss before tax including exceptional costs was (846k) (2008: profit 458k). Gross margins were slightly lower than expected as increases in product costs, particularly towards the end of the period, were absorbed by the business to maintain our competitive advantage and value proposition. Net margins for the period were 5.32% (2008: 8.42%). This reduction was due to (i) the costs associated with being an AIM listed business, (ii) greater ongoing focus on food safety, (iii) processes and systems to support expansion, (iv) investment in training and HR, and (v) additional resource and pre opening costs associated with the new store opening programme. No dividend is proposed. New Units Despite most of the new stores not opening until towards the back end of the year they did start to generate a trading profit by the end of the reporting period. New stores typically take two to three months of trading before a sufficient level of performance is generated to produce a positive cash return after pre-opening costs. As indicated in our pre close statement on 9 March 2009, the new stores cover a variety of different locations and the board now wishes to delay opening new stores until such a time as the financial returns of each store type can be fully evaluated enabling the board to maximise its returns on further new stores 2

4 going forward. The board feels this cautious approach is appropriate in the current external financial environment. During the year five new stores were opened: Retford in July, Castleford in October, Chesterfield and Mansfield in November and Huddersfield in January. Of these five stores one store is trading significantly above, three are in line and one is below management s sales expectations. Cash Flow and Balance Sheet At 31 January 2009, the Group had cash in bank of approximately 1.5m, total interest bearing loans and borrowings of approximately 4.2m and gross assets of 14.4m. In line with the Group s stated expansion strategy, cash has been utilised on the opening of new retail outlets and on the repayment of a proportion of the loan notes. As a result, the net debt position as at 31 January 2009 was approximately 2.7m consisting of a cash balance of 1.5m, a bank loan of 1.1m, a loan note balance of 2.3m, and 0.8m related to mortgages secured on the Group s distribution centre in Grimsby and a store in Hull. In February 2009, the Board finalised the conversion of 1m of debt owed to the loan note holders into shares issued by the Company reducing the net debt position to 2.0m. The 2.5m facility agreement with the Royal Bank of Scotland PLC has been extended to 30 June Food Safety Food safety is a key priority for the business and during the period under review the company has embarked on the development and implementation of two food safety management systems (one for the distribution centres and the other to support the retail sites) to ensure that consistent safe quality products are always provided to all our customers. During 2008, both distribution centres gained EC Approval from the Food Standards Agency (FSA) recognising improvements in our quality management systems and standards within all our retail sites have been verified by the relevant local authority as being consistently high. In addition nutritional calculations have been completed for meat preparations which will now allow the company to provide customers with calorific and nutritional information for company manufactured meat preparations in accordance with the FSA traffic light initiative. Crawshaws, as far as we are aware, would be the first SME independent retail butcher to be able to supply this information in this format. People Over the last year our people have provided an excellent service to our customers whilst managing new shop openings, integrating new systems and improving standards. I would like to express the Board s appreciation to all the members of the Crawshaw team for their continued hard work and commitment to our success. Report and Financial Statements for the year ended 31 January

5 Chairman s Statement (continued) Current trading and Outlook Like for like sales for the first 13 weeks of the current year are ahead of the corresponding period last year. Retail gross margin across the group for the current year to date is approximately 4 percentage points lower than planned as a consequence of much higher input prices and promotional activity at new stores. Whilst the new opening promotions have now ended at all but the most recently opened store and this has reduced the margin shortfall at these stores, input prices remain high across most product categories. We continue to absorb a proportion of these increases to maintain our competitive market advantage and intend to keep the situation under review. A further new store was opened in April 2009 and is trading significantly ahead of management s expectation. The Board expects that the Group s 20th store will open in June Richard S Rose Chairman 12 May

6 Board of Directors Richard Rose, Chairman (Age: 53) (appointed non-executive Director 1 September 2006, appointed executive Chairman 1 October 2007) Richard Rose was formerly Chief Executive of Whittard of Chelsea plc ( Whittard ), a multi-site retailer of tea and coffee. He joined Whittard in 2001 following a reported loss before taxation of approximately 3.0m in the year to 31 May He led a significant recovery in profits Whittard reported a profit before taxation of 2.4m in the year ended 31 May The share price of Whittard increased by approximately 274% between his appointment on 13 September 2001 and 10 January 2006 when the business was sold to Baugur. Previously he was a director of Hagemeyer (UK) Limited, a distributor of professional products and services with sales in the UK approaching 1bn. Prior to that he had been CEO of WF Electrical plc, a fully listed company, where he created a substantial increase in shareholder value. Hagemeyer purchased WF Electrical plc in 2000 for approximately 100m. He was also non-executive Chairman of AC Electrical Holdings Limited ( AC ) where he led a successful growth strategy resulting in a very substantial increase in shareholder value. AC was sold to Wolseley in Richard was asked to become Chairman of Blueheath plc, a small AIM quoted loss making grocery wholesaler, by a major shareholder in In 2007 Booker, the UK s largest food cash and carry business was acquired by Blueheath through a reverse takeover creating a significant increase in shareholder value. The business was re-named Booker Group plc and he remains Chairman. Booker reported sales of approximately 3.1bn and profit before tax of approximately 36.2m in the 52 weeks to 28 March He is also Chairman of Kiotech International plc an AIM quoted business. This business has been built by acquiring larger, more established businesses. Richard is also Chairman of DRL Ltd, an internet retailer of domestic appliances and is executive Chairman of Helphire Group PLC a listed credit hire business. Richard Rose was appointed Chairman of Crawshaw Holdings Limited (Crawshaw Holdings) in April Richard Rose 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. Kevin Boyd, Managing Director (Age: 40) (appointed 11 April 2008) Kevin joined Crawshaw Butchers Limited (Crawshaw Butchers) in 1990 and worked his way through various roles in the business moving from being appointed shop manager in 1993, to Operations Director by Kevin was promoted to Managing Director of Crawshaw Holdings in April Following the reverse acquisition Kevin was appointed as Managing Director of the Company. Report and Financial Statements for the year ended 31 January

7 Board of Directors (continued) Andrew Richardson, Finance Director (Age: 40) (appointed 11 April 2008, resigned 8 May 2009) Andrew was Finance Director of the Company until 8 May 2009 and joined the business in July Andrew is a FCCA, having qualified at RMT Accounting Solutions Limited, a large independent practice in the North East of England in From January 2005 to July 2007 he was Finance Director of Toms Group of Companies Limited, a multi site 5 star Hotel Spa and Restaurant chain based in the North of England. From January 1999 to March 2004 Andrew was Finance Director at Spark Response Limited, an outsourced multi-channel customer contact centre and fulfilment house. During this time, the business was established as a leading provider of outsourced multi-channel services with leading blue chip clients such as B&Q, Powergen and Kimberly Clark. Lynda Sherratt, Finance Director (Age: 43) (appointed 8 May 2009) Lynda was previously Finance Director of Felix Group PLC prior to the acquisition of Crawshaw Group Ltd in April, 2008 and has subsequently acted as Company Secretary for the Group. In her new role Lynda will be Finance Director and Company Secretary. Lynda is an ACMA having qualified in 1993 at Ford Motor Company. In 1996, Lynda moved to Sportech PLC (formerly Littlewoods Pools), where she held several senior Finance positions before taking the role of Operations Director Interactive Media, a position she held until 2005, when she joined Felix Group PLC. Colin Crawshaw, Buying Director (Age: 50) (appointed 11 April 2008) Colin has spent his entire working career in the butchery business. Colin established Crawshaw Butchers in 1989 and is currently Buying Director of the Group. He has responsibility for buying and liaising with factory managers. Colin was responsible for the acquisition of ten retail outlets from David Jenkins Meats Limited in 2000 and a further six outlets between 2001 and Colin disposed of part of his interest in Crawshaw Butchers when the company was acquired by Crawshaw Holdings in April Philip Kanas, Non-Executive Director (Age: 73) (appointed 10 February 2004) Philip Kanas is a chartered accountant who, until 1998, had been a partner in a number of firms of Chartered Accountants. Since 1999, he has acted as a business consultant and also holds a number of non-executive directorships including Sterling Green Group Plc. 6

8 Directors Report The directors present their directors report and financial statements for the year ended 31 January 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 19 retail locations across Yorkshire, Lincolnshire and Nottinghamshire. Business Review On 11 April 2008 Felix Group PLC acquired Crawshaw Group Limited via a reverse acquisition, and subsequently changed its name to Crawshaw Group PLC. 100% of the ordinary and preference shares were acquired in Crawshaw Group Limited, which subsequently changed its name to Crawshaw Holdings Limited. The accounting rules surrounding a reverse acquisition are complex and detailed and have resulted in certain exceptional items in the year under review. Under IFRS3 Crawshaw Holdings Limited is deemed the acquirer and as such the comparative figures for the Group are those of Crawshaw Holdings Limited for the period ended 31 January The comparative period includes the trading results of Crawshaw Butchers Limited from the date of acquisition of 15 April 2007 to 31 January Note 1 to the financial statements fully explains the transaction. Exceptional items were incurred in both the year ended 31 January 2009 and the period ended 31 January The exceptional items in the current reporting year relate to transaction costs related to the reverse takeover ( 1,052k), renegotiating new bank facilities ( 255k) and impairment of intangible assets ( 214k). The intangible asset represents the excess of consideration over net assets acquired, under IFRS3 this is deemed to be as if Crawshaw Holdings Limited was the acquirer. As Felix Group PLC was a non trading cash shell, at the time of the acquisition the directors have deemed that a full impairment of this intangible balance be made. Adjusting for the exceptional items above would result in an operating profit of 854k and adjusted earnings per share of 1.27p for the reporting period. The Company s principal subsidiary, Crawshaw Butchers Limited, which operates the primary business of the group, traded profitably such that the group reported an operating profit before one off costs of 854,349 (2008: 954,497) on turnover of 16,044,771 (2008: 11,338,631). The business continued to perform well despite the closure of the Meadowhall unit in the year, increasing input prices (meat products, energy and fuel costs) plus a general downturn in the economic environment. Margins are slightly behind budget as the increases in product costs over the period were absorbed by the business to maintain our competitive advantage and value proposition. This level of performance is set to continue in the short term as costs look likely to remain relatively high in the coming months. However, we Report and Financial Statements for the year ended 31 January

9 Directors Report (continued) continue to focus on retaining our competitive advantage and the board believe the business is ideally positioned to maximise returns from its expansion strategy. During the year we opened 5 new stores: Retford in July, Castleford in October, Chesterfield and Mansfield in November and Huddersfield in January. Of these 5 stores, as compared to our sales expectations, 1 store is trading significantly above, 3 are in line and 1 is below. Admin expenses which include significant costs such as rent, rates, staff costs and packaging have increased by less than 2% of sales versus the prior year (37.3% 2009; 35.6% 2008). This has mainly been driven by the opening of new stores but also our continuing investment in processes and systems to reduce risk in the business. Retail like for like sales for the first 13 weeks of the current year are ahead of the corresponding period last year, and new stores sales overall continue to perform ahead of management forecast. A new store was opened on 9 April and sales performance to date is well ahead of forecast indicating another successful store opening. A further store will open in June. As indicated in our pre close statement on 9 March 2009, the new stores cover a variety of different locations and the board now wish to delay opening new stores until such a time as the financial returns of each store type can be fully evaluated enabling the board to maximise its returns on further new stores going forward. The board feels this cautious approach is appropriate in the current external financial environment. Retail gross margin for the current year to date is approximately 4 percentage points lower than planned as a consequence of much higher input prices and promotional activity at new stores. Whilst the new opening promotions have now ended at all but the latest stores and this has had a positive effect on the margin, input prices remain high across most product categories. We continue to absorb a proportion of these increases to maintain our competitive market advantage and intend to keep the situation under review. Performance of the Group Excluding exceptional costs the result for the year is a profit of 854k compared to 954k (2008). The level of net profitably to sales reported is lower than it has been historically due to additional ongoing expenses incurred in connection with (i) the costs associated with being an AIM listed business, (ii) greater ongoing focus on food safety, (iii) processes and systems to support expansion, (iv) investment in training and HR, and (v) additional resource and pre opening costs associated with the new store opening programme. Balance sheet position At our reporting date, the Group had cash in bank of approximately 1.5m, total interest bearing loans and borrowings of approximately 4.2m and gross assets of 14.4m. 8

10 In line with the Group s stated expansion strategy cash has been utilised on the opening of new retail outlets and on the repayment of a proportion of the loan notes. As a result the debt position as at 31 January, 2009 was approximately 4.2m consisting of the total outstanding revolving credit facility of 1,110k, loan note balance of approx 2,252k and 840k related to mortgages secured on the Group s distribution centre in Grimsby and a store in Hull. The 2.5m facility with the Royal Bank of Scotland PLC has been extended to 30 June Post Balance Sheet Event As we announced to the market in January this year, given the current economic climate and its general impact on the costs and restrictions associated with borrowings the Board decided that it would be prudent to reduce the Group s dependency on bank borrowings and provide the Group with greater financial flexibility in the future. Therefore, two weeks after the reporting date, the Board finalised the conversion of 1m of debt owed to the loan note holders into shares issued by the Company. Added to this, the scheduled loan note repayment was also made in February of 602k and therefore by the end of February the Group had reduced the net debt position to 2.0m. Proposed dividend The directors do not recommend the payment of a dividend. Key performance indicators Like for Like sales % +2% +2% Year on Year sales comparison Gross profit 42.52% 43.54% Gross profit/revenue Current ratio Current assets: current liabilities Sales per employee 84,446 79,545 Turnover/average number employees The principal risks and uncertainties affecting the Group include the following: Raw material availability and prices: the group monitors raw material sources on a global basis and negotiates forward purchase contracts where appropriate with key suppliers. However, the volatility of international currency markets and their impact on spot raw material prices is an ongoing issue. Environmental risks: the group places considerable emphasis upon environmental compliance in its business and not only seeks to ensure ongoing compliance with relevant legislation but also strives to ensure that environmental best practice is incorporated into its key processes. Major disruption/disaster: business continuity planning is reviewed regularly. Food Safety: compliance with legislation is continually assessed and monitored at every location. The effect of legislation or other regulatory activities: the group monitors forthcoming and current legislation regularly. Report and Financial Statements for the year ended 31 January

11 Directors Report (continued) Key areas of strategic development and performance of the business include: Sales and marketing: new store locations are continually sought to expand the business in line with the group s strategy; key supplier and customer relationships are monitored on a regular basis. Competition: it is important that the business continues to deliver a value proposition to our customers. Key price points from competitors are monitored regularly. Key financial performance indicators include the monitoring of the management of profitability and working capital. Substantial Shareholdings At 30 April 2009, the directors had been notified of the following interests in the company s issued ordinary share capital: Number of Shareholder ordinary shares % Schroder Investment Management 12,135, % Gartmore Investment Management 5,744, % Richard Rose 7,670, % Colin Crawshaw 6,265, % Unicorn Asset Management 4,895, % Kevin Boyd 3,316, % Sagemoss Holdings 1,538, % 10

12 Directors and their interests The interests of the directors in the ordinary shares of the Company are shown below: 31 January January 2008 Number of Number of 5p Ordinary 1p Ordinary Shares Shares Richard S Rose 6,199,547 Colin B Crawshaw 5,383,358 Kevin P Boyd 1,845,723 Andrew Richardson 438,359 Philip E Kanas 7, ,000* * Felix Group PLC changed its name to Crawshaw Group PLC as part of the reverse acquisition of Crawshaw Group Limited on 11 April This acquisition also contained a Capital Reorganisation which had a direct impact on the number and value of shares. To implement the capital reorganisation for existing shareholders a resolution was passed to make the following changes: i. Each existing ordinary share of 1p were divided into one deferred share of 0.9p and one new ordinary share of 0.1p; ii. The new ordinary shares of 0.1p each were consolidated on the basis of one new ordinary share of 5p for every 50 new ordinary shares of 0.1p. The interests of the Directors in options to acquire shares are shown below: 31 January January 2008 Number of Number of 5p Ordinary 1p Ordinary Shares Shares Richard S Rose 807,754* Colin B Crawshaw Kevin P Boyd 235,294 Andrew Richardson 176,470 Philip E Kanas L J Sherratt 1,750,000* M D Masters 75,000* A J Uren 75,000* * The options issued to Richard Rose, Lynda Sherratt, Mike Masters and Alan Uren were all waived as at 11 April 2008 and related to shares held prior to the capital reorganisation. Financial Instruments The Company s financial risk management objectives can be found in notes 23 and 24 to the financial statements. Report and Financial Statements for the year ended 31 January

13 Directors Report (continued) 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 Company s average creditor payment period at 31 January 2009 was 36 days (2008: 36 days). Employee involvement The Group places 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 After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements. Political and charitable contributions The Company made no political or charitable donations or incurred any political expenditure during the period. 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 company s auditors are unaware; and each director has taken all the steps that he ought to have taken as a director to make himself aware of any relevant audit information and to establish that the company s auditors are aware of that information. 12

14 Auditors In accordance with Section 489 of the Companies Act 2006, a resolution for the re-appointment of KPMG Audit plc as auditors of the company is to be proposed at the forthcoming Annual General Meeting. By order of the board L J Sherratt Company Secretary Unit 15 Bradmarsh Business Park Bow Bridge Close Rotherham South Yorkshire S60 1BY 12 May 2009 Report and Financial Statements for the year ended 31 January

15 Corporate Governance Statement CODE OF BEST PRACTICE The Board acknowledges the importance of the Combined Code ( the Code ) and has reviewed the Company s compliance with the provisions of the Code as appended to the Listing Rules of the Financial Services Authority. This statement explains how the Company has voluntarily applied the principles of the Code and confirms that it has consistently complied with these requirements throughout the year. The board of directors The Company is controlled and led by the Board of Directors with an established schedule of matters reserved for their specific approval. The Board met regularly throughout the period and is responsible for the overall Company strategy, acquisition and divestment policy, approval of major capital expenditure and consideration of significant financial matters. It reviews the strategic direction of the Company, its annual budget, its progress towards achievement of these budgets and its capital expenditure programmes. The function of the Chairman is to supervise and manage the Board and to ensure its effective control of the business. All Board members have access, at all times, to sufficient information about the business, to enable them to fully discharge their duties. Also, procedures exist covering the circumstances under which the Directors may need to obtain independent professional advice. The Board has established the following committees to fulfil specific functions: The Audit Committee is chaired by P E Kanas and also comprises R S Rose. It meets on a regular basis, monitoring and reviewing the Group s financial reporting and internal control procedures. Due to the nature and size of the Company at present it would not be appropriate for the Company to have its own internal audit department reporting directly to the Audit Committee. The Remuneration Committee is chaired by P E Kanas and also comprises R S Rose. Meetings were convened during the year to monitor, assess and report to the full Board on all aspects and policy relating to nomination, appointment and remuneration of executive Directors. The Board, as a whole, determines the remuneration of the Non-Executive Directors. Internal control The Board is responsible for ensuring that the Company maintains adequate internal control over the business and its assets. The effectiveness of the Company s system of internal financial controls, for the period to 31 January 2009 and for the period to the date of approval of the financial statements, has been reviewed by the Directors. Although they are aware that no system can provide for absolute assurance against material misstatement or loss, they are satisfied that effective controls are in place. 14

16 On the wider aspects of internal control, relating to operational and compliance controls and risk management, as required by provision D.2.1 of the Code, the Board, in setting the control environment, now identifies, reviews, and regularly reports on the key areas of business risk facing the Company. The Executive Directors maintain close day to day involvement in all of the Company s activities which enables control to be achieved and maintained. This includes the comprehensive review of both management and technical reports including KPI s, interest rate fluctuations, environmental considerations, government and fiscal policy issues, employment and information technology requirements and cash control procedures. In this way, the key risk areas can be monitored effectively and specialist expertise applied in a timely and productive manner. Relations with shareholders The Company maintains effective contact with its principal shareholders and welcomes communications from its private investors. Report and Financial Statements for the year ended 31 January

17 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 charged to the consolidated income statement (see note 8) For the period ended 31 January 2009 Salaries and fees Pre reverse Post reverse Pension acquisition acquisition contributions Total K P Boyd 9,270 41,733 52, ,340 C B Crawshaw 13,970 72,431 86,401 P E Kanas (from 11 April 2008) 35,003 35,003 J J Kelly 2, ,750 A Richardson 16,917 72,250 9,292 98,459 R S Rose 11,833 49,848 61,681 54, ,057 61, ,634 A Richardson, K P Boyd and R S Rose received private health insurance cover during the year. Emoluments of the directors For the year to 31 January 2008 Salaries Pension and fees contributions Total K P Boyd 38,711 37,212 75,923 C B Crawshaw 35,137 33,250 68,387 J J Kelly 11,875 11,875 A Richardson 46,423 4,603 51,026 R S Rose 47,500 47, ,646 75, ,711 16

18 Emoluments paid by Crawshaw Group PLC in the period to 11 April 2008: Salaries Benefits Total Total Pension Pension and fees excluding contributions contributions pension A Egan 81,849 6,636 P E Kanas 3,750 3,750 10,000 M D Masters 4,166 4,166 16,667 R S Rose 9,167 9,167 28,334 L J Sherratt 63,500 63,500 70, ,336 A Uren 2,500 2,500 12,000 83,083 83, , ,972 L J Sherratt resigned as a director of the company on 11 April 2008 and received compensation for loss of office of 115,200. After her resignation, she acted as company secretary for the group and received a salary of 11,250. R S Rose was paid a fee of 75,000 by the Company in the period to 31 January 2008, for consultancy services which did not form part of his contractual salary and fees as Chairman. 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 R Rose, C Crawshaw, K Boyd and A Richardson service contracts are terminable on twelve months notice. P E Kanas appointment as Non-Executive Director is terminable on six months notice. Report and Financial Statements for the year ended 31 January

19 Report of the Remuneration Committee (continued) Directors share options Details of the individual share options held by the Directors as at 31 January 2009, which are summarised in the Directors Report on page 11, are as follows: Option Number Director Exercise period price (p) of Shares K Boyd From 14/4/08 to 13/4/ p 235,294 A Richardson From 14/4/08 to 13/4/ p 176,470 The market price of the Company s 1p shares at 31 January 2008 was 0.7p and at 31 January, 2009 the market price of the Company s 5p shares was 10p, with a highest value in the year of 42.5p. This report was approved by the Board on 12 May 2009 and signed on its behalf by: P E Kanas Chairman of the Remuneration Committee 18

20 Statement of Directors Responsibilities in respect of the Directors Report and the Financial Statements The directors are responsible for preparing the Directors Report and the Group and Parent Company financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare the Group and Parent Company financial statements for each financial period. As required by the AIM Rules of the London Stock Exchange the directors are required to prepare the group financial statements in accordance with IFRSs as adopted by the EU and applicable laws and have elected to prepare the Parent Company financial statements on the same basis. The Group and Parent Company financial statements are required by law and IFRSs as adopted by the EU to present fairly the financial position of the Group and Parent Company and the performance for that period; the Companies Act 1985 provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their achieving a fair presentation. 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 judgments 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 proper accounting records that 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 They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the company 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. Report and Financial Statements for the year ended 31 January

21 Independent Auditors Report to the Members of Crawshaw Group PLC (formerly Felix Group PLC) KPMG Audit Plc 1 The Embankment Neville Street Leeds LS1 4WD We have audited the group and parent company financial statements (the financial statements ) of Crawshaw Group PLC (formerly Felix Group PLC) for the year ended 31 January 2009 which comprise the Consolidated Income Statement, the Group and Parent Company Balance Sheets, the Group and Parent company Cash Flow Statements, the Group and Parent company Statements of Recognised Income and Expense and the related notes. These financial statements have been prepared under the accounting policies set out therein. This report is made solely to the company s members, as a body, in accordance with section 235 of the Companies Act Our audit work has been undertaken so that we might state to the company s members those matters we are required to state to them in an auditor s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors The directors responsibilities for preparing the Directors Report and the financial statements in accordance with applicable law and International Financial Reporting Standards (IFRSs) as adopted by the EU are set out in the Statement of Directors Responsibilities on page 19. Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies Act We also report to you whether in our opinion the information given in the Directors Report is consistent with the financial statements. In addition we report to you if, in our opinion, the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors remuneration and other transactions is not disclosed. We read the Directors Report and consider the implications for our report if we become aware of any apparent misstatements within it. Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the group s and company s circumstances, consistently applied and adequately disclosed. 20

22 We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. We read the other information contained in the Annual Report and consider whether it is consistent with the audited group financial statements. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the group financial statements. Our responsibilities do not extend to any other information. Independent auditors report to the members of Crawshaw Group PLC (formerly Felix Group PLC) (continued) Opinion In our opinion: the group financial statements give a true and fair view, in accordance with IFRSs as adopted by the EU, of the state of the group s affairs as at 31 January 2009 and of its loss for the year then ended; the parent company financial statements give a true and fair view, in accordance with IFRSs as adopted by the EU as applied in accordance with the provisions of the Companies Act 1985, of the state of the parent company s affairs as at 31 January 2009; the financial statements have been properly prepared in accordance with the Companies Act 1985; and the information given in the Directors Report is consistent with the financial statements. KPMG Audit Plc Chartered Accountants 12 May 2009 Registered Auditor Report and Financial Statements for the year ended 31 January

23 Consolidated Income Statement for the year ended 31 January 2009 Year ended Period ended 31 January 31 January Note Revenue 16,044,771 11,338,631 Cost of sales 9,221,902 (6,452,804) Gross profit 6,822,869 4,885,827 Other operating income 5 12, ,250 Administrative expenses (7,501,617) (4,161,854) Operating profit before one-off costs 854, ,497 Restructuring costs 3 (63,671) Refinancing costs 3 (254,908) Reverse acquisition costs 3 (1,051,522) Costs for flood remedial works 3 (61,603) Intangible impairment 3 (214,247) Operating profit (666,328) 829,223 Financial income 9 42,883 19,943 Financial expenses 9 (235,715) (410,133) Net finance expense (192,832) (390,190) Share of profit of equity accounted investees (net of income tax) 13,414 18,852 (Loss)/profit before income tax (845,746) 457,885 Income tax expense 10 (118,977) (161,286) (Loss)/profit for the period attributable to equity holders of the parent (964,723) 296,599 Earnings per share (pence) basic (2.21p) 1.09p diluted (2.21p) 1.09p Figures for the period ended 31 January 2008 only include the trading results of Crawshaw Butchers Limited from 15 April 2007 onwards, the date that Crawshaw Butchers Limited was acquired by Crawshaw Holdings Limited. 22

24 Statements of Recognised Income and Expense for the period ended 31 January 2009 Group Group Company Company Note Year ended Period ended Year ended Period ended 31 January 31 January 31 January 31 January (Loss)/profit for the period (964,723) 296,599 (1,086,688) (25,844,242) Total recognised income and expense 21 (964,723) 296,599 (1,086,688) (25,844,242) Report and Financial Statements for the year ended 31 January

25 Balance Sheets At 31 January 2009 Group Group Company Company Note Non-current assets Property, plant and equipment 12 4,231,603 2,318,610 Intangible assets 13 7,720,084 7,754,762 Investment in equity accounted investees ,746 96,332 Investments in subsidiaries 15 11,700,000 Total non-current assets 12,061,433 10,169,704 11,700,000 Current assets Inventories , ,226 Trade and other receivables , ,890 4,732, ,630 Cash and cash equivalents 1,463, ,443 2,616,701 Total current assets 2,372,594 1,043,559 4,732,966 2,753,331 Total assets 14,434,027 11,213,263 16,432,966 2,753,331 Current liabilities Loans and borrowings 22 2,252, ,335 Trade and other payables 19 2,376,787 1,372,995 37, ,383 Tax payable 118,983 Total current liabilities 4,628,805 2,205,313 37, ,383 Non-current liabilities Loans and borrowings 22 1,950,000 7,978,118 Other payables ,289 9,136 Deferred tax liabilities , ,816 Total non-current liabilities 2,507,522 8,379,070 Total liabilities 7,136,327 10,584,383 37, ,383 Net assets 7,297, ,880 16,395,466 1,865,948 Equity Share capital 21 2,334,009 2,406,763 2,334,009 2,406,763 Share premium 21 4,981,049 15,981,764 4,981,049 15,981,764 Reverse acquisition reserve ,563 (18,175,942) Capital contribution reserve , ,696 Merger reserve 21 10,140,000 Retained earnings 21 (613,232) 296,599 (1,059,592) (16,522,579) Total equity attributable to equity holders of the parent 7,297, ,880 16,395,466 1,865,948 These financial statements were approved by the board of directors on 12 May 2009 and were signed on its behalf by: Lynda Sherratt Director 24

26 Cash Flow Statements for the period ended 31 January 2009 Group Group Company Company Note Year ended Period ended Year ended Period ended 31 January 31 January 31 January 31 January Cash flows from operating activities (Loss)/profit for the period (964,723) 296,599 (1,086,688) (26,260,232) Adjustments for: Depreciation and amortisation 259, ,532 Impairment of intangible 214,247 Impairment of fixed asset investments 11,830,258 Impairment of debt due from subsidiary 12,952,356 Financial income (42,883) (19,943) (96,477) Financial expenses 235, ,133 Share based payment charge 54,892 Share of profit of equity accounted investees (net of income tax) (13,414) (18,852) Profit on sale of property, plant and equipment 12,817 (2,225) Taxation 118, ,286 Operating cash flow before movements in working capital (124,802) 1,008,530 (1,086,688) (1,574,095) (Increase)/decrease in trade and other receivables (212,376) 26,807 (85,038) (1,624,699) (Increase)/decrease in inventories (184,295) (33,324) Increase/(decrease) in trade and other payables 1,019, ,969 (841,883) 841, ,593 1,434,982 (2,013,609) (2,357,523) Income tax paid (172,806) (293,853) Net cash from operating activities 324,787 1,141,129 (2,013,609) (2,357,523) Report and Financial Statements for the year ended 31 January

27 Cash Flow Statements (continued) for the period ended 31 January 2009 Cash flows from investing activities Proceeds from sale of property, plant Group Group Company Company Note Year ended Period ended Year ended Period ended 31 January 31 January 31 January 31 January and equipment 3,860 20,636 96,477 Interest received 42,883 19,943 Interest paid (206,100) (277,991) Dividend received 5,000 Proceeds from sale of investments 235,000 Acquisition of property, plant and equipment (2,154,564) (101,374) Acquisition of subsidiary, net of cash acquired (6,889,492) Net cash recognised on reverse acquisition 4 1,666,899 Net cash from investing activities (647,022) (7,223,278) 331,477 Cash flows from financing activities Proceeds from issue of share capital 2,012,152 4,160,793 Proceeds from medium term loan 3,555,500 Mortgage 840,000 Loan notes 752,690 Repayment of loans (3,771,869) (546,750) Bank loan 1,110,000 Movements in amounts owed by group companies (4,519,298) Proceeds from issue of share capital (net of issue costs) 3,916,206 Issue of ordinary shares (net of issue costs) 3,916,206 Net cash from financing activities 1,254,337 6,613,592 (603,092) 4,160,793 Net increase/(decrease) in cash and cash equivalents 932, ,443 (2,616,701) 2,134,747 Cash and cash equivalents at 1 February ,443 2,616, ,954 Net cash and cash equivalents at 31 January ,463, ,443 2,616,701 26

28 Notes to the financial statements (forming part of the financial statements) 1. BACKGROUND AND BASIS OF PREPARATION The consolidated financial information presented for the year ended 31 January 2009 comprise Crawshaw Group PLC ( Company formerly Felix Group PLC) and its subsidiaries (together referred to as the Group ). On 11 April 2008, the Company, then named Felix Group PLC, became the legal parent company of Crawshaw Group Limited (which subsequently changed its name to Crawshaw Holdings Limited) in a share for share exchange. Due to the relative sizes of the companies, the former Crawshaw Holdings Limited became the majority shareholders of the enlarged group. Following the transaction the Company s continuing operations and executive management were predominantly those of Crawshaw Holdings Limited. Accordingly the substance of the combination was that Crawshaw Holdings Limited acquired Felix Group PLC in a reverse acquisition. Felix Group PLC subsequently changed its name to Crawshaw Group PLC. As a consequence of applying reverse acquisition accounting, the results of the Group at 31 January 2009 comprise the results of Crawshaw Holdings Limited for the year ended 31 January 2009 and those of Crawshaw Group PLC from 11 April However the equity structure appearing in these consolidated financial statements reflects the equity structure of the legal parent, including the equity instruments issued by the legal parent to effect the combination. The comparative figures for the Group are those of Crawshaw Holdings Limited for the period ended 31 January The fair values of Crawshaw Group PLC s assets and liabilities as at 11 April 2008 have been consolidated as set out in note 4. The consolidated financial information have been prepared and approved by the directors in accordance with International Financial Reporting Standards as adopted by the European Union ( IFRSs ). 2. ACCOUNTING POLICIES Significant accounting policies The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in this financial information. Judgements made by the directors, in the application of these accounting policies that have significant effect on the financial information and estimates with a significant risk of material adjustment in the next period are discussed below. The financial statements have been prepared on the going concern basis, notwithstanding net current liabilities of the Group of 2,256,211 which the directors believe to be appropriate given the long term financing in place, the post balance sheet conversion of 1m of debt into equity (see note 29) and the directors assessment of the adequacy of future cash flows. Adherence to the Groups short term obligations is a key focus and closely monitored via working capital management, short term cash flow forecasting and cost control. The directors believe that it remains appropriate to prepare the financial statements on a going concern basis. Report and Financial Statements for the year ended 31 January

29 Notes to the financial statements (continued) (forming part of the financial statements) 2. ACCOUNTING POLICIES (continued) The directors have reviewed the Group s projected working capital requirements and fixed asset expenditure and believe that the Group has sufficient funding for the foreseeable future. Basis of consolidation The consolidated financial information includes the financial information of the company and its subsidiary undertakings made up to 31 January Subsidiaries are defined as entities controlled by the group. Control exists when the group has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. On 11 April 2008, Crawshaw Holdings Limited acquired by a reverse acquisition Crawshaw Group PLC. As a result of the business combination, the shareholders of Crawshaw Holdings Limited became the majority shareholders of the enlarged group. Accordingly the transaction was accounted for as a reverse acquisition in accordance with IFRS 3 Business Combinations. As a consequence of applying reverse acquisition accounting, the results of the Group at 31 January 2009 comprise the results of Crawshaw Holdings Limited for the year ended 31 January 2009 and those of Crawshaw Group PLC from 11 April However the equity structure appearing in these consolidated financial statements reflects the equity structure of the legal parent, including the equity instruments issued by the legal parent to effect the combination. The comparative figures for the Group are those of Crawshaw Holdings Limited for the period ended 31 January The fair values of Crawshaw Group PLC s assets and liabilities as at 11 April 2008 have been consolidated as set out in note 4. 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) (b) 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 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. 28