James Cropper : Annual Report

About this update from James Cropper Plc

FUTURE IN FOCUS Annual Report and Accounts 2025 FINANCIAL HIGHLIGHTS GROUP PERFORMANCE FINANCIAL YEAR ENDED 29 MARCH 2025 Total revenue £99.3m 2025 2024 2023 2022 2021 99.3 103.0 129.7 104.9 78.8 Adjusted EBITDA 1 6.7 6.6 £6.7m 2025 2024 2023 2022 2021 9.0 STRATEGIC REPORT GOVERNANCE FINANCIALS 8.6 9.0 Adjusted profit before tax 2 1.3 0.8 3.2 £1.3m Profit/(Loss) before tax (£6.7m) 2025 2024 2023 2022 4.0 2025 2024 2023 2022 (6.7) (5.3) 1.3 2.8 2021 4.0 2021 1.7 Net cash generated from operating activities £7.6m Basic and diluted earnings/ (loss) per share (55.1p) 2025 2024 2023 2022 2021 3.4 5.6 7.6 7.2 7.9 2025 2024 2023 2022 2021 (55.1) (41.8) 5.4 14.2 13.2 Net debt 3 £12.9m 2025 2024 2023 2022 2021 7.5 12.9 15.5 16.6 12.3 Net debt to Adjusted EBITDA ratio 1.9 1.8 1.5 0.8 1.9 2025 2024 2023 2022 2021 2.4 Non-GAAP Measures: Adjusted EBITDA: EBITDA refers to profit before interest, tax, depreciation and amortisation. Adjusted EBITDA is EBITDA prior to the impact of IAS 19 and exceptional items. Adjusted profit before tax equates to profit before tax excluding the impact of IAS 19 and exceptional items. Net debt is calculated as total loans and borrowings less cash and cash equivalents. Included in net debt from 2020 are lease liabilities for right-of-use assets under IFRS 16. James Cropper Annual Report 2025 01 STRATEGIC REPORT Financial Highlights At a Glance Chair's Letter Market Trends CEO Strategy Review Our Business Model CEO Review Chief Financial Officer's Review Pension Report Risk Management S.172 Statement ESG Report Non-Financial and Sustainability Information Statement 01 02 04 06 08 14 28 34 38 40 46 48 57 GOVERNANCE Board of Directors Corporate Governance Report How we apply the QCA Code Report of the Audit and Risk Committee Report of the Nomination Committee Report of the Remuneration Committee Directors' Report Statement of Directors' Responsibilities 63 65 70 71 74 76 83 86 FINANCIAL STATEMENTS Group Independent Auditor's Report Group Statement of Comprehensive Income Statement of Financial Position Group Statement of Cash Flows Statement of Changes In Equity Notes to the Financial Statements Shareholder Information 89 97 98 99 100 101 137 CONTENTS The Group was 1845 Supplies products founded in 50 used in over countries worldwide Global workforce 500 of over people STRATEGIC REPORT GOVERNANCE FINANCIALS ‌02 James Cropper Annual Report 2025 James Cropper Annual Report 2025 03 AT A GLANCE GLOBAL REVENUE: £99.3m UK REVENUE:£42.9m 43% OF TOTAL REVENUE AMERICAS REVENUE:£24.4m 25% OF TOTAL REVENUE EUROPE REVENUE:£26.0m 26% OF TOTAL REVENUE ASIA REVENUE:£5.2m 5% OF TOTAL REVENUE OTHER REVENUE:£0.7m 1% OF TOTAL REVENUE READ MORE ON PAGE 16 READ MORE ON PAGE 22 JAMES CROPPER IS GLOBALLY RECOGNISED FOR ITS SPECIALIST CAPABILITIES IN THE DESIGN AND MANUFACTURE OF ADVANCED MATERIALS AND PAPER PRODUCTS. Operating through two principal businesses-Advanced Materials and Paper G Packaging-the Group serves a diverse range of customers with high-performance solutions tailored to specialised applications. PURPOSE Pioneering materials to safeguard our future VALUES Forward-thinking, Caring, Responsible THE ADVANCED THE PAPER G MATERIALS BUSINESS PACKAGING BUSINESS is at the forefront of materials develops and manufactures science, developing state-of- bespoke creative papers and the-art nonwoven materials and luxury packaging incorporating electrochemical coatings, which industry-leading thermoformed are supplied to leading innovative fibre solutions, innovative equipment manufacturers recycled fibre capabilities and globally from four locations colour expertise, which are in Burneside (UK), Crewe supplied to some of the world's (UK), Launceston (UK) and most well-known and prestigious Schenectady (USA). global brands, creative paper merchants, printers and publishers from its base in Burneside (UK). STRATEGIC REPORT GOVERNANCE FINANCIALS ‌James Cropper Annual Report 2025 05 CHAIR'S LETTER DEAR SHAREHOLDERS The financial year ended 29 March 2025 was a significant year for James Cropper, marked by changes in the Group's executive leadership and an evolution of our strategy, focused on stability and growth. PERFORMANCE OVERVIEW Performance in the period was largely consistent with the prior year, with a slight reduction in revenue, balanced by rigorous management of our cost base against a backdrop of economic uncertainty. Adjusted EBITDA remained level with the prior year with a modest improvement in the Group's adjusted operating profit and adjusted profit before tax, linked to lower levels of depreciation. The Group's net debt saw a significant improvement owing to robust cash management driving a reduction in working capital. CEO SUCCESSION In October 2024, following a thorough succession process led by the Nomination Committee, the Board was delighted to announce the appointment of David Stirling as Chief Executive Officer Designate. David joined the business in January 2025 and was appointed Chief Executive Officer in February 2025. David brings a wealth of experience, having previously served as CEO of Zotefoams plc for 24 years, following his time as a chartered accountant with KPMG in the UK and PricewaterhouseCoopers in the US and Europe. His deep operational, commercial, financial and technical experience, along with a proven track record in delivering growth and developing new products across diverse markets, will be instrumental as the Company embarks on its next phase. David succeeded Steve Adams, who retired as CEO and stood down from the Board in February 2025 after a short handover period. Steve first joined James Cropper as Managing Director of the Paper & Packaging business in 2017 and was appointed CEO in August 2022. He navigated the Group through a challenging period and led a restructure in FY24, resulting in operational changes and a significant reduction in the Company's cost base. On behalf of the Board, I thank Steve for his contributions and wish him the best in retirement. STRATEGY DEVELOPMENT Following his appointment as CEO, David Stirling led a detailed review into the business and the development of a revised strategy for the Group. The revised strategy has full Board endorsement and was presented to analysts and institutional investors at a Capital Markets Event on 18 June 2025. A recording of the event is available to view on the Company's website at https:// jamescropper.com/investors/. For more information, see the CEO Strategy Review on pages 08-13. The Board is confident that the revised strategy, developed under the leadership of David Stirling, provides a clear and credible roadmap for delivering sustainable performance improvement. Mark Cropper Non-Executive Chair BOARD SUCCESSION During the year, we welcomed Jon Yeung as an independent Non-Executive Director and Chair of the Audit Committee (now the Audit & Risk Committee) following our AGM in September 2024. Jon is a chartered accountant with significant experience in finance, leadership and business transformation. Jon succeeded Jim Sharp, who stood down as a Non-Executive Director and Audit Committee Chair following the AGM. On behalf of the Board, I thank Jim for his significant contributions over 15 years and welcome Jon to James Cropper. At the end of the financial year, as part of a structured retirement process, Patrick Willink stood down from the Board and as Chief Innovation Officer on 29 March 2025. Patrick joined James Cropper in 1990 and has served on the Board since 1998. He will continue to support the company as a Strategic Advisor and member of the Executive Committee until April 2026. Patrick's contributions over the past 35 years have been considerable, including the development of key innovations such as CupCycling® and Colourform® in the Paper & Packaging business. On behalf of the Board, I extend our sincere thanks to Patrick for his exceptional leadership and dedication, which have significantly shaped the company's development. I also confirm that Sarah Miles has informed the Board that she will not stand for re-election at the Company's AGM in September 2025 and will therefore step down as a Non-Executive Director following the AGM. The Board is grateful for Sarah's contribution since being appointed in November 2021 and wishes her every future success. RISK MANAGEMENT To enhance its oversight and management of risks, during the year the Board introduced an enhanced strategic risk management framework. This framework is designed to provide robust management of risks and support the delivery of our strategic objectives. Additionally, the Board expanded the remit of the Audit Committee, to become the Audit & Risk Committee. This change strengthens our approach to strategic risk management and enhances Board oversight, enabling us to better navigate the complexities of the current economic environment. STAKEHOLDER ENGAGEMENT Stakeholder engagement is a crucial aspect of our business. Section 172 of the Companies Act 2006 requires the Directors to promote the success of the Group for the benefit of its members, having regard to the interests of broader stakeholders. For more information about how the Board considers stakeholder interests, please see our s.172 Statement on pages 46-47. During the year, I and other members of the Board engaged closely with our largest shareholders to discuss the Group's business, current performance challenges, changes on the Board and to our Executive leadership, and strategy. These meetings and discussions provided valuable insights into the views of our investors, and the Board is grateful for the level of engagement and feedback offered. We look forward to welcoming shareholders at our forthcoming AGM in September 2025. GROUP FACILITIES AND DIVIDENDS In June 2024, the Board announced temporary adjustments to the covenants under its UK banking facility (the UK Facility) which would apply for the period to 31 December 2024. The Group complied with these adjusted covenants during that period and has complied with the original covenants since. No further covenant relief is expected to be required. Following the year end, on 9 June 2025, the Board announced that revised repayment terms had been agreed under the UK Facility, which would provide greater liquidity headroom to support implementation of the Company's strategic plans. At the time of the Group's interim results on 19 November 2024, the Board determined that no interim dividend would be paid to shareholders for the first half of FY25 in the light of financial performance during that period. As announced on 9 June 2025, the Board does not intend to pay dividends during the period through to September 2026. No final dividend will therefore be recommended to shareholders at the AGM in September 2025. The Board is confident that retaining earnings will at this stage better support the Board's strategic objectives. LOOKING AHEAD The Board is confident that the revised strategy, developed under the leadership of David Stirling, provides a clear and credible roadmap for delivering sustainable performance improvement. With disciplined capital allocation, the Board believes both divisions are well placed to deliver against their strategic objectives and create enduring value for shareholders. I would like to thank our employees for their unwavering support and dedication over the last 12 months. We look forward to updating you on progress against our strategic objectives in the coming year. Mark Cropper Non-Executive Chair 16 July 2025 ‌06 James Cropper Annual Report 2025 James Cropper Annual Report 2025 07 MARKET TRENDS ADVANCED MATERIALS PAPER G PACKAGING HYDROGEN AND CLEAN ENERGY TRANSITION 15% of FY25 Advanced Materials revenue Global momentum for hydrogen Hydrogen is increasingly recognised as a key enabler of global decarbonisation targets, including the Paris Agreement's goal of net zero emissions by 2050. Governments worldwide are investing heavily to scale up hydrogen production and adoption across transport, industry and energy sectors. SELECTED MARKET TRENDS PEM electrolysis leadership Proton Exchange Membrane (PEM) electrolysis is emerging as the leading technology for green hydrogen generation, offering high efficiency and compatibility with renewable energy sources. Market demand for PEM electrolysers is expected to grow significantly by 2030, driven by cost reduction, regulatory support, and innovation in materials and system integration. Positioned to scale HOW JAMES CROPPER WILL RESPOND We are strategically positioned to capture this growth. PEM electrolysis is projected to contribute significantly to growth in FY26, with further expansion anticipated through FY30. Our innovation strategy-focused on platinum group metal (PGM) reduction, advanced deposition technologies and next-generation coatings-directly supports Original Equipment Manufacturers' (OEMs') needs for scalable, cost-effective electrolyser stacks. Building competitive advantage With established partnerships and a growing portfolio of proprietary technologies, we are building a defensible position in a rapidly expanding market. These capabilities will be instrumental in securing long-term contracts, entering new geographies, and differentiating from competitors. ENERGY STORAGE AND BATTERY INNOVATION 8%* of FY25 Advanced Materials revenue Accelerating electrification The global transition to electrification is accelerating demand for batteries with higher energy density, faster charging and longer life cycles-while also reducing environmental impact. Governments in the UK, US and EU are investing in domestic battery production, recycling infrastructure and R&D to support this shift. Grid-scale storage demand As renewable energy capacity grows, grid-scale battery storage must expand significantly by 2030. This creates opportunities for innovation in materials, circularity and manufacturing efficiency. * This includes fuel cell revenue. Nonwoven solutions for batteries Our expertise in engineered nonwovens positions us to supply critical components for next-generation batteries, including: Separators Electrode scaffolds Fire protection layers Thermal management materials Sustainable supply chains Our UK manufacturing base and active participation in collaborative R&D projects enhance our credibility and access to funding, partnerships and pilot opportunities. As countries seek to reshore battery production and reduce reliance on critical imports, our ability to deliver sustainable, locally sourced and customisable materials becomes a key differentiator-supporting OEM compliance and strengthening our role in a rapidly localising supply chain. AEROSPACE EFFICIENCY THROUGH COMPOSITE MATERIALS 15% of FY25 Advanced Materials revenue Adoption of advanced composites To reduce emissions and improve fuel efficiency, aerospace manufacturers are accelerating the adoption of advanced composite materials and automated production processes. Innovations such as multifunctional laminates and automated layup systems are helping reduce part count, simplify assembly and enhance structural performance. Innovation investment The UK Aerospace Technology Institute (ATI) has committed over £3.9 billion in joint funding with industry to support lightweight materials, automation and sustainable manufacturing-positioning the UK as a global leader in next-generation aerospace technologies. Leveraging nonwoven expertise Our capabilities in wet-laid nonwovens, including recycled carbon fibre and unidirectional (UD) reinforcements, align directly with these needs. Our participation in ATI-funded projects and collaborations with industry partners enable us to accelerate the commercialisation of sustainable aerospace materials. Driving lightweighting and circularity As global aviation targets net zero emissions, the adoption of recyclable, high-performance composites is essential. Our focus on quality, recyclability, processability and lightweight design gives us a competitive edge in a market that increasingly values circularity and integration. LUXURY GOODS, BEAUTY AND COSMETICS 17% of FY25 Paper & Packaging revenue Shift towards sustainability The luxury goods, beauty and cosmetics industries are undergoing a significant transformation, with consumer expectations and regulatory changes making sustainability a central focus. The response from brands and retailers, who are increasingly the subject of SELECTED MARKET TRENDS such pressures, is to move towards renewable, recyclable materials without compromising on aesthetics or performance. Meeting legislative requirements while maintaining visual and functional excellence is now a qualifier in the market. These design changes present an opportunity for packaging that is not only environmentally responsible but also clean, bright, and premium in appearance. Rydal Packaging Collection We are responding to this market evolution with our Rydal Packaging Collection, HOW JAMES CROPPER WILL RESPOND a premium paper range developed specifically for the luxury packaging sector. Designed to meet the highest standards of sustainability without compromising on quality, Rydal incorporates up to 100% recycled fibre content, biodegradable materials, and streamlined designs that reduce waste. Innovations such as Rydal Eco White deliver a pristine, bright white finish while meeting stringent environmental legislation offering brands a compliant, high-performance, and visually striking alternative to traditional packaging. As the industry continues to evolve, James Cropper remains committed to delivering solutions that align with both regulatory demands and consumer values. This market trend is coincident with pressure to reduce the amount of packaging used, again to optimise sustainability and minimise costs and the regulatory tax burden. SECONDARY PACKAGING IN FOOD AND BEVERAGE 2% of FY25 Paper & Packaging Revenue Increasing consumer awareness The drive for sustainability is accelerating a shift away from plastic-based secondary packaging. As regulatory pressure mounts and consumer awareness grows, brands are seeking alternatives that are both compliant and environmentally responsible. Regulatory changes The EU's upcoming Packaging and Packaging Waste Regulation (PPWR), effective August 2026, mandates: Full recyclability of packaging by 2030 A ban on PFAS and other harmful substances in packaging "Right-sizing" of packaging to reduce waste and emissions In parallel, the UK's Extended Producer Responsibility (EPR) reforms reinforce these goals, pushing brands to rethink materials and formats in secondary packaging. Moulded fibre packaging solutions Our mono-material moulded fibre packaging solutions are ideal for secondary packaging in premium sectors such as wines and spirits. These: Are made from natural or recycled fibres Offer structural integrity, design flexibility, and customisation in shape and colour Enable the creation of wraps, tops, and bases that elevate product presentation and brand identity Are fully recyclable and biodegradable, aligning with circular economy principles Moulded fibre allows brands to meet evolving regulatory demands and sustainability expectations without compromising on quality or aesthetics. It reinforces James Cropper's position as a trusted partner in delivering high-performance, future-ready packaging. SPECIALITY CORRUGATED PACKAGING STRATEGIC REPORT GOVERNANCE FINANCIALS 5% of FY25 Paper & Packaging Revenue Market growth The UK corrugated packaging market, valued at over £4 billion and growing steadily, is increasingly shaped by sustainability, design innovation, and brand differentiation. As Extended Producer Responsibility (EPR) and recyclability mandates take hold, brands are seeking packaging that is both compliant and visually distinctive. Evolving brand identities Coloured fluting, the wavy middle layer of corrugated card, presents a compelling opportunity to enhance shelf appeal, support brand identity, and enable premium unboxing experiences without compromising recyclability. With growing demand for bespoke, right-sized, and sustainable packaging, coloured fluting offers converters and brands a new dimension in design flexibility. As digital print technologies advance and consumer expectations evolve, the integration of colour into structural packaging elements is poised to become a key differentiator in a competitive, sustainability-driven market. Leveraging deep expertise We are leveraging our fibre innovation and sustainability expertise to expand into the corrugated sector. With early traction for its recycled black fluting liner, we are well-positioned to diversify our portfolio and capture increased value in this market. This move supports our strategic goals of broadening revenue streams, advancing circular economy solutions, and delivering fibre-based alternatives that meet both brand and regulatory expectations. ‌08 James Cropper Annual Report 2025 James Cropper Annual Report 2025 09 CEO STRATEGY REVIEW SHAPING TOMORROW TODAY QGA WITH DAVID STIRLING, CEO Since being appointed as Chief Executive Officer in February, my focus has been the development of a credible and structured plan to reset the business for long-term success. While trading in recent years has been disappointing, we now have a clear and actionable plan to improve performance, supported by disciplined capital management. Our aim is to rebuild momentum and create long-term value for our stakeholders. David Stirling CEO STRATEGY REVIEW At James Cropper, we are resetting our business for long-term success. Our revised strategy, launched at our Capital Markets Event on 18 June 2025, is built around three core themes: unlocking growth in Advanced Materials, delivering profitability in Paper & Packaging, and maintaining disciplined capital allocation. These pillars are underpinned by our deep fibre expertise, technical platforms, and customer partnerships. STRATEGIC OBJECTIVES 01 ORGANIC GROWTH IN THE ADVANCED MATERIALS BUSINESS The Advanced Materials business is profitable but has not delivered organic growth commensurate with the Board's expectations for many years. We intend for this business to deliver underlying double-digit sales growth over the medium term, although this may not be possible in FY26. 02 PROFITABILITY IN THE PAPER G PACKAGING BUSINESS The Paper & Packaging business posted a significant loss in FY25, unfortunately something which has been a familiar outcome in recent years. Restoring profitability is of critical importance to the continuation of the business. 03 DISCIPLINE IN CASH MANAGEMENT AND CAPITAL ALLOCATION Cash flow is the lifeblood of all organisations. James Cropper is no different and we must generate cash and allocate this to provide value for stakeholders; including maintaining appropriate leverage and liquidity, reinvestment to generate future returns, and of course shareholder dividends in due course. What were your initial impressions of James Cropper ? STRATEGIC REPORT GOVERNANCE FINANCIALS A Q James Cropper is obviously a historied business and it carries this proudly today. Individuals are knowledgeable about their roles and the technicalities of the business. There was a noticeable difference between the culture and performance of the Advanced Materials business, which is well-organised, and the Paper & Packaging business, where it was immediately apparent there were significant disconnects between functions and organisation layers. A Initially, yes. To the casual observer who may not be familiar with the history or technology, Advanced Materials and Paper & Packaging do not obviously belong together. Their markets are definitely different, but there is an underlying technology continuum from James Cropper origins in papermaking, to technical fibres which are essentially paper-like structures made with a variety of fibres, through to coated technical fibres and coatings more generally. The manufacturing infrastructure and operational skill sets are similar, and the skills and experience of individuals in the businesses are clearly complementary - with a significant number of employees in Advanced Materials having previously worked in Paper & Packaging. There are other advantages to having two connected, but different, businesses together. Paper & Packaging can be more cyclical than Advanced Materials markets but, properly run, it can also offer balance to the more unpredictable markets in which Advanced Materials operates. Interestingly, I believe there is significant longer-term opportunity in the space between the highly technical fibres in Advanced Materials and our paper products, which will be explored over the coming years. More information on these strategic objectives is set out on the following pages. Q Did you wonder why James Cropper exists as a Group? 10 James Cropper Annual Report 2025 James Cropper Annual Report 2025 11 CEO STRATEGY REVIEW cont. Q How do you see the markets for the different businesses? A In Advanced Materials, I would characterise the markets in which we operate as either 'established' or 'nascent'. Markets such as aerospace are well-established, with some overall growth and opportunities for new or improved products. These markets are generally more predictable with established supply chains and defined operating rhythms. Nascent markets are often immature with lots of growth potential, developing supply chains, immature technology and timing which is difficult to predict. In nascent markets, participants often drop out, and being partnered with the right organisation can be as important as the market or technology opportunity. Some of our business in these markets is in pilot stage. In Paper & Packaging, many of the markets in which we participate are in decline. They are also often large and therefore our market share is small, giving considerable scope for growth based on innovative products or good service offerings. One other difference is that Advanced Materials are typically sold into long and complex supply chains in which it can be difficult to effect change and grow new opportunities. In Paper & Packaging, we are often dealing directly with brands or their immediate supplier, with more ability to directly influence sales. Q How are you ensuring financial discipline? A We've already reduced net debt and reprofiled our banking facilities. Going forward, we're enhancing capital discipline across the business. That means prioritising investments with clear returns, maintaining leverage below 2x EBITDA, and preparing to reinstate dividends when appropriate. Paper & Packaging underwent a significant restructuring in FY24. What's different this time? STRATEGIC REPORT GOVERNANCE FINANCIALS A Q The FY24 restructure looked to 'right-size' the Paper & Packaging business by reducing cost and exiting lower-margin product lines. While the project delivered cost savings, business performance did not improve, and certain vulnerabilities were exposed which have been considered as part of our review into the business. We learned that removing lower-priced, high-volume products reduced our ability to flex production and maintain asset utilisation. These products, while less profitable on a per-unit basis, played a critical role in absorbing recycled fibre and balancing operational throughput. Their removal also left us more exposed to demand fluctuations and overly reliant on a narrower set of customers and segments. What we are doing differently now is developing a balanced and more flexible business model, based upon a '3 Peaks' of production model: Peak 1: Commodity papers to stabilise operations and improve asset utilisation. Peak 2: Core products that deliver consistent value and service. Peak 3: Technical paper innovations that deliver higher value. This model allows us to flex with market conditions while building towards a more resilient and profitable future. We're also embedding better margin management practices, focusing on operational effectiveness, and realigning the organisation to support this strategy. In short, profitability must go hand-in-hand with flexibility. Our new approach reflects that balance. Q What should shareholders expect over the next 12-24 months? A Shareholders can expect disciplined execution of our revised strategy, with a clear focus on building a stronger, more resilient business. In the near term, this means delivering operational improvements in Paper & Packaging, maintaining financial discipline, and progressing key commercial initiatives in Advanced Materials. Shareholders should view this period as one of strategic delivery and foundation building, positioning James Cropper to deliver sustainable growth and shareholder value into the longer term. STRATEGIC OBJECTIVE 01 Organic growth in the Advanced Materials business CONTEXT Higher organic growth rates are needed to create more shareholder value. IMMEDIATE PRIORITIES Ensure share of business is maintained with existing customers by aligning with their needs and delivering service. Clearly define our value proposition from existing business and replicate this to new opportunities. Identify a limited number of key growth markets where we have, or can create, technologies to deliver value. Focus on a small number of niche projects which have the potential for break-out growth. LONGER-TERM PLANS Ensure our business has the agility to respond to changes in markets. Engage more closely with partners closer to OEM. Be positioned as 'partner of choice' in defined markets. HOW WE WILL MEASURE SUCCESS Organic growth rates with targets of consistent double digit growth. Opportunity pipeline growth from: Existing customers, applications or technologies. New customers, applications or technologies. STRATEGIC REPORT GOVERNANCE FINANCIALS 12 James Cropper Annual Report 2025 James Cropper Annual Report 2025 13 CEO STRATEGY REVIEW cont. STRATEGIC OBJECTIVE 02 Profitability in the Paper G Packaging business CONTEXT Profitability must be restored to support continuity of the business. IMMEDIATE PRIORITIES Execute operational improvement programme. Realign commercial offering and rebalance production across commodity (Peak 1) and core (Peak 2) papers. Enhance asset utilisation through flexible production models. Enhance quality, service and cost efficiency. LONGER-TERM PLANS Develop technical papers (Peak 3) that bridge into Advanced Materials. Expand use of recycled fibre to support circular economy goals. HOW WE WILL MEASURE SUCCESS Asset utilisation and production efficiency metrics. Customer satisfaction and service-level improvements. Growth in technical and recycled-content product lines. STRATEGIC OBJECTIVE 03 Discipline in cash management and capital allocation CONTEXT Maintaining balance sheet strength and flexibility is necessary for organisation resilience and to support delivery of strategic priorities. IMMEDIATE PRIORITIES Maintain capital expenditure and working capital discipline. Reduce net debt and embed leverage below 2x EBITDA. Fund strategic growth in Advanced Materials. LONGER-TERM PLANS Align capital investment with strategic priorities. Build financial headroom to support innovation and resilience. Reinstate dividends as part of balanced capital allocation strategy. Eliminate the Group's pension deficit over time. HOW WE WILL MEASURE SUCCESS Net debt to EBITDA ratio. Free cash flow generation and conversion. Progress on pension deficit reduction. ‌James Cropper Annual Report 2025 15 REVENUE MODEL The Group generates revenue by designing, manufacturing and supplying high-performance materials and sustainable packaging solutions to a global customer base. In the Advanced Materials business, approximately two thirds of revenue is driven by long-term supply arrangements linked to high-specification products which are often embedded in customers' technology platforms across established industries. This creates recurring income streams and deep integration into customer systems. The balance of revenue is generated from more nascent industries which, whilst variable in the short term, have the potential to deliver significant growth in the medium term. In the Paper & Packaging business, revenue is generated through the sale of premium creative papers and bespoke moulded fibre packaging, often co-developed with luxury brands and converters. These high-value products command premium pricing due to their customisation and technical performance. Alongside this, the business looks to strategically balance its operations by producing more commoditised papers, which play a crucial role by contributing to overhead recovery, waste utilisation, and ensuring operational efficiency across production assets. Both businesses units have a high fixed-cost asset base where asset utilisation is a key component of profitability. The Group has underutilised assets in both Advanced Materials nonwoven and Paper & Packaging allowing us to grow in these areas with limited capital investment. GROUP STRUCTURE Innovation and technology Underpinned by shared operational platforms and fibre expertise, the Advanced Materials and Paper & Packaging businesses possess deep technical knowledge and capabilities that drive product excellence and customer value across a diverse range of markets. Innovation frequently serves as the foundation for new customer collaborations and is often the root source of revenue generation. STRATEGIC REPORT GOVERNANCE FINANCIALS Technology continuum Our Paper & Packaging business targets three 'Peaks' of business including Commodity, Core and Technical papers. These products incorporate a mix of recycled and virgin fibres and are frequently colour critical. Our Advanced Materials business similarly produces wet-laid nonwoven materials using recycled and virgin technical fibres. This business also produces coated nonwoven fibres, and develops and applies specialist coatings to components which enhance performance and product lifespan. The two businesses increasingly work together to develop customers-focused solutions. Structure In addition to the technology overlap, the Group's structure is designed to balance strategic alignment with operational focus. The Group is organised around two principal trading businesses and supported by centralised functions. This approach enables each business to focus on its distinct markets, technologies and customer needs- while leveraging shared expertise, governance and strategic alignment. Group leadership ensures that each business remains aligned with Group strategy and stakeholder interests. Group-level functions such as Finance, HR, IT, Legal and Risk Management provide consistent support and oversight, ensuring efficiency, compliance and scalability. The structure is designed to encourage cooperation and knowledge-sharing between businesses, and achieve synergies benefits through shared resource within a framework of governance including policies, practices and controls. Technology Natural fibre Other fibre Coatings continuum Recycled, Virgin Recycled, Virgin COMMODITY Colour Critical CORE PAPER NONWOVENS COATINGS TECHNICAL Paper & Packaging Advanced Materials 14 James Cropper Annual Report 2025 JAMES CROPPER IS GLOBALLY RECOGNISED FOR ITS SPECIALIST CAPABILITIES IN THE DESIGN AND MANUFACTURE OF ADVANCED MATERIALS AND PAPER PRODUCTS. Operating through two principal businesses-Advanced Materials and Paper G Packaging-the Group serves a diverse range of customers with high-performance solutions tailored to specialised applications. VALUE PROPOSITION James Cropper delivers high-performance and sustainable material solutions by combining technical expertise with a commitment to innovation and adding value. With a legacy of over 180 years, the company partners with global brands and industries-from clean energy and aerospace to luxury packaging-offering bespoke solutions that meet complex functional and aesthetic demands. James Cropper stands out through its approach to innovation, end-to-end manufacturing capabilities, and dedication to enabling a low-carbon future through recyclable, renewable and responsibly sourced materials. The Group is structured around two principal trading businesses, which are supported and empowered by specialist central functions within a framework of Group governance and controls. Whilst serving distinct end-markets, the Group's Advanced Materials and Paper & Packaging businesses share a common foundation of expertise and innovation. Both businesses: Utilise highly bespoke equipment to manufacture materials across a technology continuum (see opposite). Leverage deep capabilities and embedded know-how in materials science, sustainability and advanced production processes. Deliver solutions aligned with global trends such as decarbonisation, circularity and regulatory compliance. Carry significant and reputable brands that reflect a commitment to quality and performance. Sources of Group revenue in FY25 Advanced materials £35.7m Paper G Packaging £63.7m OUR BUSINESS MODEL 16 James Cropper Annual Report 2025 James Cropper Annual Report 2025 17 OUR BUSINESS MODEL cont. ADVANCED MATERIALS WHAT WE DO Our Advanced Materials business supplies technically advanced nonwoven materials and electrochemical coatings. This business comprises two sub-units: Composite Solutions Burneside Our Composite Solutions business partners with innovative manufacturers worldwide to create nonwoven materials for various applications including electromagnetic shielding, carbon capture and lightweight materials for aircraft. These products are supplied into a broad range of industries including aerospace, defence, automotive and construction. Energy Solutions Our Energy Solutions business develops coatings and nonwoven materials to support the transition to clean energy. Products include glass nonwovens for battery systems, gas diffusion layer substrates for fuel cells, and coatings for proton exchange membrane electrolysers. These products are often supplied into nascent and growing markets including hydrogen and battery industries. OUR CUSTOMERS STRATEGIC REPORT GOVERNANCE FINANCIALS Our end customers are leading and innovative equipment manufacturers globally, with whom we develop close and longstanding relationships founded upon cutting-edge materials science, strong collaboration, a commitment to best-in-class solutions, and continuing excellence. We are typically positioned in Tiers 3 to 5 of global supply chains supplying materials to component and equipment manufacturers. Our objective is to develop forward-looking and transformative technologies that best enable our customers to succeed. Schenectady USA MANUFACTURING LOCATIONS UK Crewe Launceston PRODUCTS AND MARKETS PRODUCT RANGE MARKETS % REVENUE FY25 MARKET CATEGORY EXPECTED MARKET GROWTH Nonwovens Aerospace 15% Established <10% CAGR Automotive 2% Construction 7% Medical 5% Sporting Goods 4% Wind Energy 2% Other 21% Battery 0% Nascent 10-25% CAGR Carbon Capture 2% Fuel Cell 8% eVTOL 0% Coated nonwovens Defence 21% Established <10% CAGR Component coatings PEM electrolysis 13% Nascent >25% CAGR Energy solutions Composite solutions SUSTAINABLE COMPETITIVE ADVANTAGES Intellectual property: deep materials chemistry knowhow, product and process technology and trade secrets, bespoke machinery, people and expertise. Longstanding and trusted customer partnerships and supplier relationships. Collaborative approach and ability to develop bespoke solutions to meet industry challenges. Culture of innovation, with continued investment in the development and optimisation of product ranges. Strong standing, reputation and brand recognition across a broad range of established and nascent industries. 150 Advanced Materials workforce people 18 James Cropper Annual Report 2025 James Cropper Annual Report 2025 19 CASE STUDY STRATEGIC REPORT GOVERNANCE FINANCIALS TAKING FLIGHT WITH RECYCLED CARBON FIBRE INNOVATION ADVANCED AIR MOBILITY MEETS SUSTAINABLE MATERIALS In partnership with the University of Sheffield Advanced Manufacturing Research Centre (AMRC), James Cropper Advanced Materials is helping shape the future of Advanced Air Mobility (AAM) through the development of lightweight, sustainable composite materials. This collaboration focuses on using recycled carbon fibre to reinforce structural components in uncrewed aerial vehicles (UAVs), supporting the aerospace sector's drive towards net zero emissions. THE APPLICATION UAV WING SKIN REINFORCEMENT The AMRC used OPTIVEIL® to reinforce high-stress areas of a UAV wing skin demonstrator. The goals were to: Maintain structural integrity while minimising weight. Use a single fibre type to simplify recycling at end of life. Validate the performance of recycled carbon fibre in aerospace-grade composites. The results were compelling: OPTIVEIL® delivered the required strength and processability, and benefits including: Weight savings critical to electric flight. Sustainable sourcing through fibre reuse. Design flexibility for next-generation UAVs and eVTOL aircraft. THE MATERIAL OPTIVEIL® RECYCLED CARBON FIBRE VEILS At the heart of this innovation is OPTIVEIL®-a high-performance nonwoven veil made from recycled carbon fibre. Designed to deliver ultra-lightweight reinforcement, OPTIVEIL® offers: Consistent fibre distribution Ensuring uniform mechanical properties and enhancing structural reliability. Excellent resin compatibility Promoting strong fibre bonding to enhance quality. Enhanced surface finish and interlaminar strength Improving the aesthetic and mechanical integrity. OPTIVEIL® can also offer thermal and electrical conductivity. For this project, James Cropper supplied an OPTIVEIL® composite designed for use in Tailored Fibre Placement-a precision stitching method that aligns fibres along load paths for optimal structural performance. I'm very pleased with the project's outcome, as we demonstrated the feasibility of processing very lightweight, efficient structures with this method. I look forward to doing more work in this area to further develop the process and use the design opportunities it presents. Dr Tim Swatt Technical Fellow at the University of Sheffield AMRC 20 James Cropper Annual Report 2025 James Cropper Annual Report 2025 21 CASE STUDY EMPOWERING THE HYDROGEN ECONOMY WITH READY2STACK™ STRATEGIC COLLABORATION TO SUPPORT THE ENERGY TRANSITION In 2025, James Cropper's Advanced Materials division joined forces with global industrial technology leader HOERBIGER to launch Ready2Stack™-a fully integrated bipolar plate (BPP) solution for proton exchange membrane (PEM) electrolysers. This strategic alliance addresses one of the most pressing challenges in the hydrogen economy: the need for scalable, cost-effective and high-performance components to accelerate green hydrogen production. THE INNOVATION READY2STACK™ Ready2Stack™ is a drop-in BPP solution that consolidates all design and manufacturing processes into a single point of supply. It combines: James Cropper's Resillion™ coating technology and electrochemical expertise. HOERBIGER's industrial-scale metal forming, automation and precision engineering. This synergy delivers: Reduced system complexity Enhanced in-stack durability Lower total cost of ownership Minimised production downtime By combining advanced metallurgy, electrochemistry and precision engineering, we are enabling the rapid scaling of PEM electrolyser production-accelerating the shift to a cleaner, more sustainable energy landscape. David Stirling, CEO, James Cropper MARKET IMPACT AND OPPORTUNITY STRATEGIC REPORT GOVERNANCE FINANCIALS PEM electrolysers are central to the production of green hydrogen, but their scalability has been hindered by fragmented supply chains and high component costs. Ready2Stack™ directly addresses these barriers, offering: A turnkey solution for OEMs Streamlined supply chains Improved reliability and performance A pathway to mass adoption of hydrogen as a source of energy A SHARED VISION FOR SUSTAINABILITY This collaboration exemplifies how cross-sector innovation can unlock transformative solutions. With HOERBIGER's global reach-operating in 43 countries-and James Cropper's legacy of material innovation, Ready2Stack™ is poised to play a pivotal role in the global energy transition. 22 James Cropper Annual Report 2025 James Cropper Annual Report 2025 23 OUR BUSINESS MODEL cont. PAPER G PACKAGING WHAT WE DO Craft G Speciality Papers Our Paper & Packaging business offers industry-leading thermoformed fibre solutions, bespoke papermaking and innovative recycled fibre capabilities. WATERCOLOUR BOARD & PAPER PACKAGING ACCESSORY Utilising 180 years of papermaking and colour expertise, this sub-unit develops premium art papers, digital printing papers, mountboards, stationery and publishing papers. Products incorporate up to 100% recycled fibres from a variety of sources, including recycled single-use coffee cups which are processed using our CupCycling® facility on-site. The business comprises two main sub-units, which are predominantly 'Peak 2' classification. Approximately 5-10% of sales volume is 'Peak 1' in the Corrugating and Box Board categories. Luxury Packaging Collaborating closely with prestigious brands globally, this sub-unit provides unique packaging solutions and sustainable alternatives to plastics. Products include luxury bag kraft, box wrap, corrugating boards and the award-winning Colourform® bespoke moulded fibre packaging solution. Our mono-material products support the transition to a circular economy. OUR CUSTOMERS STRATEGIC REPORT GOVERNANCE FINANCIALS We develop longstanding and trusted relationships with some of the most well-known and prestigious global brands, together with art, mountboard and creative paper merchants, printers and publishers, and commercial digital printers. Our objective is to develop innovative, high-quality and sustainable products which best ensure the success of our customers. Burneside UK MANUFACTURING LOCATION CORRUGATING TOPS & GREETING CARDS BOX BOARD BOX COVERING PAPER BASES ECOSYSTEM SUSTAINABLE COMPETITIVE ADVANTAGES Deep-rooted technical, fibre and colour knowhow, product and process trade secrets, people and expertise. Patent-protected product ranges and trusted industry-recognised brands. Culture of innovation and passion for creativity. MOUNT BOARD Deeply established and longstanding customer relationships built on decades of trust and product quality. 1 2 9 10 12 3 11 4 13 PAPER 5 BAGS 8 DIGITAL ART PAPER 14 6 7 15 1 OUTER PACKAGING WRAPS BOOK BINDING Watercolour board G paper High-quality substrates designed for professional and amateur artists, offering excellent absorbency and texture for water-based media. 5 Retail bags Durable and visually appealing paper-based bags designed for retail environments, supporting brand presentation and sustainability goals. 9 Box board High-strength board used in the manufacture of rigid boxes, offering excellent printability and structural performance. Tops G bases 2 Core components used in packaging and display products, providing structural integrity and aesthetic appeal. 6 Book binding G end papers Specialist papers used in the construction and finishing of books, providing strength, flexibility, and aesthetic quality. 10 Packaging accessory paper Complementary paper products used in packaging, such as liners, dividers, and decorative elements, enhancing functionality and presentation. Corrugating 3 Materials engineered for strength and durability in packaging applications, particularly in transit and storage solutions. 7 Outer packaging Robust paperboard solutions designed to protect goods during transit while offering branding opportunities. 11 Inserts Customisable paper components used within packaging to protect, separate, or present products effectively. Greeting cards 4 Premium card stock tailored for the production of greeting cards, combining printability with tactile quality. 8 Digital art paper Specially coated paper designed for digital printing technologies, delivering vibrant color reproduction and fine detail for digital artworks. 12 Box cover paper Premium decorative paper used to wrap and finish rigid boxes, combining visual appeal with durability. Paper & Packaging workforce 344 people 13 Photographic reproduction Specialised paper and board products designed for high- fidelity image reproduction in photographic and fine art printing. Wraps 14 Flexible and decorative paper products used for wrapping gifts and retail packaging, combining visual appeal with functional protection. Mountboard 15 Sturdy boards used for mounting artwork and photographs, offering archival quality and dimensional stability. STRATEGIC REPORT GOVERNANCE FINANCIALS 24 James Cropper Annual Report 2025 James Cropper Annual Report 2025 25 CASE STUDY REDEFINING RECYCLED PAPER FOR LUXURY PACKAGING INNOVATION IN SUSTAINABLE MATERIALS In 2025, James Cropper launched Rydal Eco, setting new standards for papers manufactured from recycled materials. Crafted from post-consumer coffee cups and industrial waste, Rydal Eco is an uncoated board, made entirely from recycled paper fibres, that performs like a coated board. It delivers a superb printing surface with whiteness equivalent to virgin fibre materials, meaning sharper print, more vivid colours, cleaner die cutting, and better registration when using finishing techniques such as varnishing and debossing. Designed with luxury goods in mind, Rydal Eco offers incredible versatility to both brands and converters. Its luxurious tactile feel makes it ideal for a wide range of applications, from cosmetics and wines to fragrance packaging, while its precision-engineered converting characteristics mean it is compatible with diverse production techniques including lithography, silk screen printing, die stamping, laser cutting, foil blocking, and more. The collection also supports antimicrobial protection through PaperGard™ silver ion technology, offering added value for brands seeking hygiene assurance. We continue to raise the bar for the industry on what can be achieved using recycled fibres. Paul Barber Managing Director, Paper & Packaging Our products were made into over 51.5m luxury retail shopping bags last year. STRATEGIC REPORT GOVERNANCE FINANCIALS 26 James Cropper Annual Report 2025 James Cropper Annual Report 2025 27 CASE STUDY CIRCULAR INNOVATION SUPPORTING MCDONALD'S GERMANY Following almost a decade of collaboration in recycling cups with McDonald's restaurants, James Cropper partnered with McDonald's Germany in 2024 to deliver a closed-loop recycling initiative that transformed used paper cups into children's books. The project utilised James Cropper's proprietary CupCycling® technology-which was the world's first recycling process dedicated to upcycling takeaway cups-demonstrating the commercial application of circular fibre innovation at scale. TECHNOLOGY IN FOCUS CUPCYCLING® CupCycling® is a proprietary process developed by James Cropper to recycle disposable paper cups, which are typically difficult to process due to their plastic lining. The process: Separates the plastic lining from the paper fibre using a water-based method. Recovers high-quality cellulose fibre suitable for premium paper applications. Reduces the need for virgin fibre and diverts waste from landfill or incineration. The process is carried out at our dedicated facility in Cumbria, UK, which is capable of processing millions of cups annually. IMPACT AND OUTCOMES Over 15 million paper cups were recycled into children's books through this initiative, reducing demand for virgin pulp and associated carbon emissions, and producing a high-visibility and quality end-use product. VALUE CREATION This collaboration demonstrates how James Cropper's fibre innovation capabilities can be integrated into global supply chains, and reinforces the scalability and relevance of its recycling technologies in commercial applications. Capacity to upcycle 70m coffee cups per year into paper and packaging. ‌James Cropper Annual Report 2025 29 FY25 PERFORMANCE Group Group revenue was marginally lower than the prior year, with Advanced Materials growing 3% and Paper & Packaging declining 7%, much of this decline being attributable to product mix with sales tonnage in Paper & Packaging being similar to the prior year. Despite lower revenue, Adjusted Operating Profit improved by 32%, although this was substantially due to lower depreciation as a result of asset impairment in the prior period. With further asset impairment in relation to Paper & Packaging assets this year, the Board has decided that Adjusted EBITDA (explained more fully in the CFO review) is a metric more reflective of underlying business profitability and performance. Adjusted EBITDA of £6.7m was at a similar level to the prior year (FY24: £6.6m). The mechanism for recharging Group costs to Business Units was amended in the period, to better reflect the ownership of these costs, leading to a lower recharge to the two Business Units which is more in line with the services used. DAVID STIRLING, CEO Excluding the impairment of assets in Paper & Packaging, the balance sheet strengthened in the period, with a significant reduction in Net Debt resulting from a reduction in capital expenditure coupled with effective management of working capital. After the year end, on 1 May 2025, the Group announced the sale of certain non-core intellectual property assets, in a transaction which generated an initial STRATEGIC REPORT GOVERNANCE FINANCIALS cash consideration of €1.75 million, and the potential for further deferred and royalty-based income over the next nine years. The intellectual property assets remain available to the Group under licence without fee for internal use. Subsequently, on 9 June 2025, the Group announced that revised repayment terms had been agreed with its lenders under its principal UK banking facility. Each of these transactions provides enhanced liquidity headroom to support delivery of the Board's strategy. Group performance FY25 FY24 Change Revenue £99.3m £103.0m -4% Adjusted EBITDA £6.7m £6.6m +1% Adjusted Operating Profit £2.6m £2.0m +32% Adjusted Profit Before Tax £1.3m £0.8m +77% Net Debt £12.9m £15.5m -17% The strategic reset has been thorough, data-driven, and grounded in a clear understanding of our capabilities and market opportunities. We believe this plan provides the right balance of ambition and realism, positioning the Group to build long-term shareholder value. David Stirling CEO 28 James Cropper Annual Report 2025 INTRODUCTION I am pleased to present my first review as Chief Executive Officer of James Cropper, covering the financial year ended 29 March 2025. Following my appointment as Chief Executive Officer in February 2025, I have identified the priorities for the Group and for the two Business Units: Advanced Materials and Paper G Packaging. This was based on a comprehensive review of the business which, in the case of Advanced Materials, was well progressed by the business' management and which- following review and endorsement by the Board-was presented at a Capital Markets Event held on 18 June 2025. The revised strategy, which is described further below, incorporates plans to develop organic growth in the Advanced Materials business together with a structured programme of work to improve the performance and robustness of the Paper & Packaging business, supported by a disciplined approach to cash and capital management. As we make progress to deliver these priorities, there will undoubtedly be challenges which will test the resilience of our business, our people and the strategy. James Cropper has a team of talented and resilient people ready to face these challenges. CEO REVIEW 30 James Cropper Annual Report 2025 James Cropper Annual Report 2025 31 CEO REVIEW cont. ADVANCED MATERIALS Advanced Materials manufacture nonwoven materials and electrochemical coating solutions. Our customers are in two main categories: Composites and Energy, with most products being sold into complex supply chains, often with 3-5 layers before being incorporated into the final product. Nonwoven papers, made using carbon, glass, polymer or other fibres are predominantly used in Composites markets, with some applications in energy transition, while electrochemical coatings are almost exclusively sold into Energy markets. Advanced Materials performance FY25 FY24 Change Revenue £35.7m £34.5m +3% Adjusted EBIDTA £10.6m £9.3m +14% Adjusted Operating Profit £9.0m £7.7m +17% Many of our customers are in markets which are relatively immature and usually developing rapidly -we term these 'nascent markets' - while the majority of revenue comes from more established markets. Nascent markets offer higher levels of growth and return, with commensurately higher risk levels and are often more volatile and difficult to predict. The PAPER G PACKAGING Paper & Packaging operates in a number of segments globally, with the UK, Continental Europe and the USA being the main geographic markets where James Cropper supplies merchants and packaging fabricators in the creative, luxury packaging and speciality papers business. These markets are, for the most part, declining and our performance is partly market related. However, the business' share of the addressable paper market is small and delivering sales growth through agility and improved service is possible. Energy markets in which we operate, such as battery technology and hydrogen fuel-cells and electrolysis, are largely nascent markets while Composite markets are typically more established and would be expected to deliver lower, but more predictable, growth. Revenue in the Advanced Materials business increased by £1.2m or 3% in the period. Composites, which represents around 70% of sales, grew by 13% with pricing being the main factor. Sales in Energy declined by 17%, delivering good growth momentum in the second half of 2025 while recognising the strong comparative in the first half of FY24 when fuel cell revenue was at an elevated level. Across the Business Unit, operational improvements helped improve margins. Overall, sales volumes were at similar levels to FY24 but a sharp decline in Colourform moulded fibre products, to 2.1% of Business Unit revenue (FY24: 6.2%), where the business is more linked to luxury packaging markets and is project driven, together with other product mix changes led to the decline in revenue. Depreciation declined to £2.1m (FY24: £2.7m) due to impairment of assets in the prior accounting period and the mechanism for allocating Group costs to Business Units was refined in the period to better reflect the services used, both of which contributed to the lower Adjusted Operating Loss in the Business Unit. BUSINESS REVIEW AND REVISED STRATEGY Upon joining the business, I was impressed by the depth of technical expertise and commitment across our teams. However, it was also clear that performance had been inconsistent. A more focused, disciplined, and commercially driven approach was required to strengthen the operational and commercial foundations, ensure consistent performance and ultimately drive value for shareholders and broader stakeholders. STRATEGIC OBJECTIVE Organic Growth in Advanced Materials 01 While the Advanced Materials business has historically delivered strong margins, it has lacked consistent top-line growth. Our revised strategy aims to deliver underlying double digit revenue growth over the medium term by focusing on high-potential markets where we either have a competitive edge or potential to develop one. These markets include established sectors, such as aerospace and defence, where we have long-standing customer relationships, qualified product specifications, and proven product performance, as well as nascent sectors like hydrogen and carbon capture, which offer significant long-term growth potential but are inherently more volatile and less predictable. To support growth, we are aligning more closely with customers in our focus markets, ensuring that our technical capabilities are tightly matched to customer needs and market dynamics. We are implementing a more structured approach to opportunity To address this, we conducted a comprehensive review of the business. This review assessed the business model, commercial and strategic positioning, operational effectiveness and long-term potential. STRATEGIC REPORT GOVERNANCE FINANCIALS This led to the development of a revised strategy for the Group, which has the full support of the Board, and was presented at our Capital Markets Event on 18 June 2025. A recording of the Capital Markets Event together with copies of the materials presented are available to view on the Group's website at https://jamescropper.com/ investors/. The revised strategy is designed to reset the business for long-term success and is built around three core pillars: development, including deeper engagement with existing customers, replication of proven applications across adjacent markets, and proactive identification of new use cases where the attributes of our materials can deliver differentiated value. This strategy is underpinned by a more agile operating model and investment in technical leadership, enabling us to scale effectively as demand increases. By focusing our efforts on a defined set of markets and opportunities, we are building a more resilient and growth-oriented business positioned to deliver longterm sustainable value. Paper & Packaging performance FY25 FY24 Change Revenue £63.7m £68.5m -7% Adjusted EBITDA £(2.1)m £(2.5)m +16% Adjusted Operating Loss £(4.1)m £(5.1)m +19% 32 James Cropper Annual Report 2025 James Cropper Annual Report 2025 33 CEO REVIEW cont. STRATEGIC REPORT GOVERNANCE FINANCIALS STRATEGIC OBJECTIVE STRATEGIC OBJECTIVE 02 Profitability in Paper G Packaging 03 Disciplined Capital Allocation The Paper & Packaging business has faced persistent challenges in recent years, including decline in certain segments of our markets, inflationary cost pressures, and operational complexity. While previous restructuring efforts delivered cost savings in some areas, predominantly direct operational labour, they did not address deeper structural issues, such as unclear accountability and the need for improved management systems to drive broader operational and cost efficiencies. Additionally, operating below optimal asset utilisation has increased operational gearing risks. To address these challenges, we have introduced a new '3 Peaks' model, that rebalances our operations and commercial positioning across three distinct product categories: (i) commodity papers, (ii) core products, and (iii) technical papers. In the near term, our focus is on stabilising performance through Peaks 1 and 2, commodity and core products. These categories provide the volume and flexibility needed to optimise asset utilisation, improve cost recovery, and support consistent service levels. There is ample opportunity to operate more effectively and efficiently in delivering these products, with reductions in fixed and operating costs, such as labour, energy, material utilisation and procurement, expected to contribute substantially to improvements in the Paper and Packaging business profitability. Over time, we will increasingly invest in Peak 3, technical papers, to develop higher-value, innovation-led products that more closely align to our Advanced Materials business. This will enable us to open new market opportunities and deliver differentiated solutions to customers seeking sustainable, fibre-based alternatives. The 3 Peaks model also improves our ability to absorb and reuse recycled fibre and internal waste streams, supporting both cost efficiency and our customers' sustainability goals. A balanced, flexible product mix strengthens our ability to respond to market dynamics while driving operational efficiency. Alongside these structural changes, we are embedding stronger commercial discipline, improving margin management, and focusing on customer segments where we can deliver the greatest value. We expect this revised approach to improve performance in FY26, and to play a key role in restoring long-term profitability. Along with operational efficiency, commercial positioning and discipline, increased asset utilisation the other primary lever to improve profitability. Increasing revenue through growth in sales volume is therefore an important objective. The recent announcement, that a significant merchant customer of the Paper & Packaging business would no longer source certain coloured paper ranges from the Company, decreases expected asset utilisation in the near future. While unexpected and unwelcome, this does not change our strategy or intent and an assessment of optimal operational structures, which also considers our business growth pipeline and expected outcome from this, is currently being undertaken. The profit performance of the Paper & Packaging business has meant that, in the last two financial years, we have had consecutive asset impairment charges of £4.4m and £7.2m. These non-cash charges reflect the expected returns of the business based on its financial position as at the relevant reporting date, and do not take into account the revised strategy outlined above and presented at our Capital Markets Day on 18 June 2025 or other events since that time. Financial discipline is a core component of any robust business strategy. In addition to stabilising the balance sheet in FY25 and improving the repayment profile on our UK facility, our immediate priorities are to maintain capital expenditure, working capital and cash management disciplines, and to embed leverage LOOKING AHEAD I am confident that our new strategy provides a clear and credible roadmap for delivering sustainable performance improvement across the Group. Our focus now is on disciplined execution, embedding accountability at every level, aligning our teams around clear priorities, and delivering measurable value to our customers and stakeholders. In Advanced Materials, our strategy is to deliver consistent, modest growth in our established markets, such as aerospace, while positioning ourselves to capitalise on the significant upside potential in nascent sectors like hydrogen, battery systems, and carbon capture. These emerging markets are still maturing, but we are well positioned to grow with them, supported by our deep technical expertise, strong customer relationships, and a focused innovation pipeline. In the Paper & Packaging business, our immediate priority is to stabilise and strengthen the business. We are focused on restoring profitability by optimising our product mix, improving asset utilisation, and embedding stronger margin management. Where we are targeting some volume growth in the near term, particularly through Peak 1 (commodity papers), we are doing so in large markets where even a modest share gain can deliver meaningful throughput and cost recovery benefits. This approach supports both financial resilience and broader sustainability goals through increased use of recycled fibre and waste streams. For FY26, the Board expects to see the initial results from the implementation of the new strategy and is confident that the Group will deliver significant growth in Adjusted EBITDA profitability against FY25. Trading in the first quarter was ahead of the Board's expectations and at a similar level to the strong start recorded in FY25. Despite headwinds from the loss of business at a merchant customer, referenced above, at <2x EBIDTA. Subject to this, we will look to support investment in growth, primarily expected to be in the Advanced Materials business, and to reinstate dividends when appropriate. We are working with the Trustee to develop a strategy to eliminate the deficit in the defined benefit pension schemes. expectations are for Paper & Packaging to deliver a significant improvement in Adjusted EBITDA against FY25, and to achieve run-rate Adjusted EBITDA breakeven in the final quarter. The Advanced Materials business is expected to report high single-digit revenue growth for full year FY26, with planned operational cost investments during the period focused on revenue growth beyond FY26. In the longer term, innovation remains critical to our future. Our technology continuum, from natural fibres to technical fibres, coated technical fibres, and ultimately advanced coatings, gives us a depth or expertise and unique platform to develop differentiated solutions to drive value. Our asset base, of older machines in Paper & Packaging and bespoke machinery in Advance Materials, combined with deep technical expertise gives us an opportunity to develop highly differentiated materials for the future. The strategic reset has been thorough, data-driven, and grounded in a clear understanding of our capabilities and market opportunities. We believe this plan provides the right balance of ambition and realism, positioning the Group to build long-term shareholder value. I would like to thank our employees for their resilience, professionalism, and commitment during a period of significant change. Their expertise and dedication are the foundation of our future success. Whilst external uncertainties will always exist, I am confident we have the right strategy, leadership, and capabilities in place to deliver sustainable growth and create enduring value for all our stakeholders. David Stirling Chief Executive Officer 16 July 2025 ‌34 James Cropper Annual Report 2025 James Cropper Annual Report 2025 35 CHIEF FINANCIAL OFFICER'S REVIEW RESULTS FOR THE PERIOD 2025 £'000 2024 £'000 Change % REVENUE Group revenue for the financial period of £99.3m was 3.5% below the prior period figure of £103m. Revenue ADJUSTED OPERATING PROFIT STRATEGIC REPORT GOVERNANCE FINANCIALS Adjusted Group operating profit (APM1) for the financial period of £2.6m was £0.6m above the prior GROUP REVENUE 99,343 102,968 -3.5% ADJUSTED EBITDA APM4 6,694 6,606 +1.3% Profit summary Paper & Packaging (4,142) (5,138) +19% Advanced Materials 8,992 7,715 +17% Other Group expenses (2,242) (600) -274% Adjusted profit before tax APM2 1,345 758 +77% Exceptional costs (7,229) (5,010) +44% Exceptional finance costs - (262) - Adjusted loss before tax after exceptional items APM3 (5,884) (4,514) +30% Net IAS 19 pension adjustments Net IAS 19 pension impact (804) (747) +8% LOSS BEFORE TAX (6,688) (5,261) +27% The full Statement of Comprehensive Income is on page 88. ALTERNATIVE PERFORMANCE MEASURES The Board uses four alternative performance measures (APMs) to evaluate business performance. The purpose of these APMs is to highlight underlying business performance by removing the impact of exceptional gains and losses and removing IAS 19 pension costs that can vary significantly across reporting periods. APM 1 'Adjusted operating profit': Adjusted operating profit refers to operating profit before interest and prior to the impact of IAS 19 and exceptional items. APM2 'Adjusted profit before tax': Adjusted profit before tax refers to profit before tax prior to the impact of IAS 19 and exceptional items. APM3 'Adjusted profit before tax after exceptional items': Adjusted profit before tax after exceptional items refers to profit before tax prior to the impact of IAS 19. APM4 'Adjusted EBITDA': EBITDA refers to profit before interest, tax, depreciation and amortisation. Adjusted EBITDA is EBITDA prior to the impact of IAS 19 and exceptional items. in the first half of the financial period was 12% below the same period a year earlier when comparatives were stronger in both businesses. Revenue in the second half of the financial period was 6.5% above the same period a year earlier, reflecting a return to growth in our Advanced Materials business and stabilisation of the paper merchant market. Adjusted operating profit APM1 2,608 1,977 +32% revenue from established defence and aerospace Net finance costs (excluding IAS 19 impact) (1,263) (1,219) +4% markets across the period was partly offset by a drop Revenue in the Advanced Materials business increased by £1.2m or 3.4% in the financial period. Growth in Net current service charge required 25 6 +316% orders. Net interest (829) (753) +10% Revenue in the Paper & Packaging business fell by in revenue from more nascent hydrogen fuel cell and PEM electrolyser markets in the first half of the period, due to continued challenges around end-market project economics. Fuel cell and electrolyser revenue increased in the second half of the financial period, reflecting the success of our customers in winning new £4.8m or 7.0% in the financial period due to continued weakness in luxury packaging markets, partly offset by a recovery in core paper merchant business following the end of destocking in the onward supply chain. COSTS AND EXPENSES Material costs (including the impact of changes in inventories) for the financial period of £35.4m were £2.0m below the prior period cost of £37.4m. Material costs as a percentage of revenue fell slightly during the financial period to 35.6% (prior period: 36.3%), reflecting operating efficiencies in the Advanced Materials business, partly offset by adverse product mix and the impact of rising pulp prices in the Paper & Packaging business. Energy costs for the financial period of £6.0m were £1.1m below the prior period cost of £7.1m due to lower unit energy prices in the financial period and a modest drop in Paper & Packaging production volumes. Employee costs of £32.7m in the financial period were £1.8m below the prior period cost of £34.5m, falling from 33.6% of revenue in the prior period to 32.9%, due to efficiencies in indirect labour costs that outweighed the cost of the Group's annual pay award. Other expenses fell by £0.7m from £19.5m in the prior period to £18.8m in the financial period, in line with the drop in revenue. ADJUSTED EBITDA Adjusted Group EBITDA (APM4) for the financial period of £6.7m was £0.1m above the prior period, giving an Adjusted EBITDA margin for the financial period of 6.7% (prior period: 6.4%). period figure of £2.0m, giving an adjusted operating profit margin for the financial period of 2.6% (prior period: 1.9%). The allocation to the trading businesses of expenses managed by the Group office was revised in the financial period to better reflect underlying cost and service provision. This resulted in a reduced allocation to the Paper & Packaging business. Adjusted operating profit in the Advanced Materials business increased by £1.3m in the financial period to £9.0m (prior period: £7.7m) due to revenue growth of £1.2m and an increase in the operating profit margin to 25.2% (prior period: 22.4%) as a result of more robust pricing and cost efficiencies. The adjusted operating loss in the Paper & Packaging business in the financial period of £4.1m was an improvement of £1.0m from the prior financial period operating loss of £5.1m. The improvement was due to overhead cost savings and lower energy prices, partly offset by the adverse impact of the £4.8m drop in revenue, higher pulp prices and adverse product mix. ADJUSTED PROFIT BEFORE TAX Adjusted Group profit before tax (APM2) for the financial period of £1.3m was £0.6m above the prior period due to the £0.1m increase in Adjusted Group EBITDA and a drop in depreciation during the financial period as a result of the asset impairment charge in the prior financial period. EXCEPTIONAL COSTS During the period the Group recognised a £7.2m non-cash impairment of the carrying value of the property, plant and equipment and right-of-use assets in its Paper & Packaging business. The Board believes that the reduced asset carrying value better reflects the position of the Paper & Packaging business at the balance sheet date after four years of operating losses. The Board remains confident in the future of the Paper & Packaging business and the success of the turnaround plan being implemented after the balance sheet date by the new management team. Exceptional operating costs in the prior period principally comprised restructuring costs of £2.3m, a non-cash tangible fixed asset impairment charge of £4.4m, a credit of £1.4m from settlement of a legal claim in respect of the Group's pension arrangements, and a credit of £0.4m based on reassessment of the contingent consideration due in respect of the acquisition of TFP Hydrogen Limited. 36 James Cropper Annual Report 2025 James Cropper Annual Report 2025 37 CHIEF FINANCIAL OFFICER'S REVIEW cont. STATEMENT OF FINANCIAL POSITION (SFP) 2025 £'000 2024 £'000 Non-current assets (excluding deferred tax) 26,921 36,510 Total current assets (excluding cash) 34,586 34,829 Total current liabilities (excluding loans and borrowings) (16,255) (15,570) Deferred tax assets less deferred tax liabilities 3,958 2,628 49,210 58,397 Net IAS 19 pension deficit (15,914) (17,293) 33,296 41,104 Net borrowings (12,889) (15,537) Equity shareholders' funds 20,407 25,567 NET DEBT, FUNDING AND FACILITIES NET DEBT AT YEAR END £'000 £'000 UKEF UK bank loan 15,000 15,000 US term loan 3,463 4,059 Less capitalised transaction fees (121) (145) Lease liabilities 5,161 5,834 Total borrowings 23,503 24,748 Less: Cash and cash equivalents (10,614) (9,211) Net debt 12,889 15,537 FUNDING AVAILABILITY AT YEAR END Cash and cash equivalents 10,614 9,211 Overdraft facility 3,500 3,500 Funds available at year end 14,114 12,711 2025 STRATEGIC REPORT GOVERNANCE FINANCIALS 2024 Equity shareholders' funds fell by £5.2m during the financial period, primarily due to the non-cash fixed asset impairment charge of £7.2m in the Paper & Packaging business. The net book value of non-current assets fell by £9.6m across the financial period due to the £7.2m impairment of the carrying value of the tangible fixed assets in the Paper & Packaging business noted above. In addition, capital expenditure of £1.7m in the period (prior period: £3.8m) was below the underlying depreciation charge for the period, reflecting the Group's focus on cash management. Total current assets less total current liabilities 2025 £'000 2024 £'000 Net cash inflow from operating activities 7,646 7,170 Net cash outflow from investing activities (3,246) (4,315) 4,400 2,855 Net cash outflow from financing activities (2,798) (1,483) Net increase in cash and cash equivalents 1,602 1,372 CASH FLOW fell by £0.9m across the financial period due to improved working capital management and the timing of creditor payments around the period-end reporting date. The £1.3m increase in the deferred tax balance during the financial period was primarily due to the drop in deferred tax liabilities in respect of accelerated capital allowances in respect of the fixed asset impairment charge. Net debt fell by £2.6m across the financial period, reflecting control of capital expenditure and working capital. The Group funds its operations from operating cash flow, a UK bank loan, a US bank loan, finance and right-of-use leases, and also has a £3.5m overdraft facility to provide additional liquidity. The UK bank loan is a £15m facility (prior period: £25m facility) with HSBC Bank plc and National Westminster bank plc under the UKEF's Export Development Guarantee scheme. At 29 March 2025, £15m (30 March 2024: £15m) was drawn under this facility. The facility is repayable in 20 quarterly instalments from June 2025 to March 2030 inclusive, in line with the profile below. £400,000 per quarter for the six quarters from June 2025 to September 2026 inclusive. £750,000 per quarter for the four quarters from December 2026 to September 2027 inclusive. £960,000 per quarter for the remaining ten quarters to March 2030. Opening cash and cash equivalents 9,211 7,679 to March 2030. Closing cash and cash equivalents 10,614 9,211 The interest rate on the facility is SONIA +1.95%. The The repayment instalments were amended to the profile set out above by a Facility Amendment dated 9 June 2025. Prior to this Amendment, the amount Both financial covenants were amended for the June, September and December 2024 test dates to provide additional headroom against potential downside scenarios. The financial covenants reverted to the levels set out above for the March 2025 test date. The Group was in compliance with its banking covenants at 29 March 2025 and throughout the financial period that ended on that date. At 29 March 2025 the net debt to Adjusted EBITDA ratio was 1.9x (30 March 2024: 2.4x). The US bank loan is a term facility with HSBC Bank USA at an interest rate of SOFRA + 2.75%. At 29 March 2025, $4.5m (30 March 2024: $5.1m) was outstanding under the facility. The facility is being repaid at $187,500 per quarter to December 2025 and $225,000 per quarter from March 2026, with the remaining balance of $3.2m repayable in December 2026. This facility does not have any financial covenants. The Group has a number of right-of-use and finance leases that run for terms between three and five years Effects of exchange rate fluctuations on cash held (199) 160 Net increase in cash and cash equivalents 1,403 1,532 drawn at 29 March 2025 was repayable in 20 equal quarterly instalments of £750,000 each from June 2025 floating interest rate cost on the £15m drawn under the that are typically secured on the asset they were used to purchase at various rates of interest. The total amount borrowed on these facilities at 29 March 2025 was £5.2m of which £0.9m was repayable within 12 months (30 March 2024: £5.8m borrowed of which £1.1m was The net cash inflow from operating activities in the financial period of £7.6m (prior period: £7.2m) includes: Adjusted EBITDA (APM 4) of £6.7m (prior period: £6.6m). cash inflow from working capital of £2.2m (prior period: £2.9m). pension deficit payments of £1.5m (prior period: £1.4m) The net cash outflow from investing activities in the financial period of £3.2m (prior period: £4.3m) includes capital expenditure of £1.7m, significantly below the prior period figure of £3.8m due to careful control of expenditure as part of the Group's focus on cash management, and the final £1.2m contingent consideration on the TFP Hydrogen acquisition (prior period: interim contingency consideration payment of £0.25m). The net cash outflow from financing activities of £2.8m in the financial period includes repayments of £1.8m on the US bank loan, right-of-use assets and finance leases (prior period: repayments of £1.9m) and £1.0m of cash interest payments (prior period: £0.9m). No drawdowns were made during the financial period on the UK bank loan (prior period: £2m drawdown). The net cash inflow from operating activities for the period is 114% of Adjusted EBITDA (prior period: 109%). facility is capped at 1.5% until 31 March 2026. The UK bank loan has two financial covenants that are measured on the company's financial quarter-end dates. The ratio of net debt to the last 12 months' EBITDA is required to be no higher than 3.5. The ratio of EBITDA to net interest, both calculated by reference to the 12-month period ending on the test date, is required to be no less than 4.0. For the purpose of these covenants, right-of-use assets are accounted for as operating leases, and EBITDA excludes exceptional items and all IAS 19 pension adjustments. repayable within 12 months). The Group has a £3.5m overdraft facility with HSBC Bank plc with an annual renewal date of May 2026 and an interest rate of Bank of England base rate plus 1.95%. The facility was undrawn throughout the year to 29 March 2025. Andrew Goody, CFO ‌38 James Cropper Annual Report 2025 James Cropper Annual Report 2025 39 THE PENSION REPORT The Group operates two defined benefit pension schemes providing defined benefits for a number of its employees: the James Cropper plc Pension Scheme (the 'Staff Scheme') and the James Cropper plc Works Pension Plan (the 'Works Scheme'). Staff THE STATEMENT OF FINANCIAL POSITION IAS 19 DEFICIT The combined pension scheme deficits of the two defined benefit schemes measured on an IAS 19 basis has fallen over the financial period from £17.3m to £15.9m (before deferred tax), reflecting the deficit reduction payments made by the Group during the period. The table below shows the overall value of the schemes' assets which decreased by 7.3% in the period, whilst the schemes, liabilities decreased by 7.4%. Works Both schemes Finance costs Finance costs comprise the interest cost on the accrued pension scheme liabilities less the interest income on pension scheme assets. The cost and income figures are based on the discount rate at the start of the period. The retirement benefits note to the financial statements can be found on pages 129-132. DEFINED BENEFIT SCHEMES TRIENNIAL VALUATION STRATEGIC REPORT GOVERNANCE FINANCIALS The Group is committed to agreeing a funding plan with the Scheme Trustee based on the triennial actuarial valuation with the aim of returning the two defined benefit pension schemes to full funding over an appropriate period of time, taking into account the circumstances of the Group and the pension schemes. The most recent triennial actuarial valuations were carried out at April 2022 and calculated the combined deficit of the schemes to be £16.6m. The previous triennial valuation at April 2019 calculated The IAS 19 pension valuation 2025 Scheme Scheme 2025 2024 Change % the combined deficit of the schemes to be £19.9m. The actuarial valuation at April 2025 is in progress. Discount rate 5.65% 5.75% 5.71% 5.03% £000s £000s £000s £'000 THE APRIL 2022 TRIENNIAL VALUATIONS Assets 29,620 35,036 64,656 69,727 (7.3%) Staff Scheme Works Scheme Total Liabilities (33,279) (47,290) (80,569) (87,020) (7.4%) £000s £000s £000s (Deficit) (3,659) (12,254) (15,913) (17,293) Discount rate 2.75% 2.75% 2.75% IAS 19 Funding level - % 89% 74% 80% 80% Assets 48,846 59,226 108,072 Liabilities (48,277) (76,378) (124,655) The schemes' liabilities fell during the period, primarily due to an increase in the discount rate of 0.65% for the Staff Scheme and 0.7% for the Works Scheme, The actuarial gains and losses arising from variances against previous actuarial assumptions are recognised in the Statement of Financial Position Surplus/(Deficit) 569 (17,152) (16,583) Funding level - % 101% 78% 87% reflecting the increase in corporate bond yields during the period. The schemes' assets fell during the period, primarily due to a reduction in the value of the liability-driven investments as a result of an increase in government bond yields. In line with previous periods, the IAS 19 valuation includes a correction for sex inequalities inherent in Guaranteed Minimum Pensions (GMPs), along with the estimated cost of equalising GMPs for past transfer value payments. The 'true' cost of GMP equalisation will take a few years to fully evaluate. Variances against the original estimates will be recognised in the Other Comprehensive Income (OCI) statement. A full retirement benefit disclosure is provided in note 20 to the financial statements. IAS 19 ASSUMPTIONS The bi-annual IAS 19 valuations are adopted for statutory reporting purposes and do not form part of the ongoing management of the pension schemes. IAS 19 requires the Group's actuaries to make assumptions on a different basis to the underlying valuations and to discount liabilities based on corporate bond yields, which does not reflect the investment strategy of the schemes that use government bonds (not corporate bonds) to partially hedge the impact of interest rate movements on future liabilities. As a result, the deficit under IAS 19 can be volatile across reporting periods and does not always move in line with the underlying valuations that are used to set the Group's contributions to the schemes. with corresponding movements in reserves. Actuarial changes in previous assumptions are recognised in the OCI statement. THE IAS 19 IMPACT ON PROFITS The Group's reported profit before tax is stated after the charge required by IAS 19 in respect of the two defined benefit schemes. In the period ended 29 March 2025, the IAS 19 charge amounted to £804,000 (prior period: £747,000), of which operating costs accounted for a small credit of £25,000 (prior period: credit of £6,000) and finance costs accounted for a charge of £829,000 (prior period: £753,000). The increase in IAS 19 finance costs in the period reflects the increase in interest rates since the start of the prior financial period. Operating costs The cost of providing pension benefits is included within 'employee benefits costs' in the Statement of Comprehensive Income and includes the costs of the defined contribution schemes, personal pension plans, defined benefit schemes, life assurance arrangements, government pension protection levies and the IAS 19 charge noted above. The IAS 19 charge comprises the cost of the benefits earned by members of the funded pension schemes in the current period net of employee contributions, the cost of changes to benefit entitlements, curtailment and settlement costs, and pension protection levies paid over the period. The valuations of the defined benefit schemes are sensitive to a number of key factors: the value of the assets, the discount rate used to calculate the schemes' liabilities (based on a premium above gilt yields), the expected rate of future inflation, and the mortality assumptions for members of the schemes. The liabilities of the schemes decreased in the April 2022 valuation due to an increase in discount rates from 2.5% in April 2019 to 2.75% in April 2022, and a reduction in life expectancies based on a review of future mortality rates, partly offset by an increase in future inflation expectations. Following the triennial valuation, the Group agreed with the Scheme Trustees to pay annual deficit recovery plan contributions of £1.4m per annum to reduce past service deficits. The Group will also continue to cover the cost of the annual Pension Protection Fund (PPF) levy. Key risks relating to the pension schemes The Group is exposed to a number of risks in relation to the pension schemes, including investment risks, demographic and mortality risks, and inflation risks for those benefits linked to inflation. Risk management activity over the years includes the following: The Schemes were closed to new members in the year 2000 in order to contain the Group's exposure to rising pension costs and to safeguard the accrued benefits of existing members. Future annual increases in pensionable pay were capped at a maximum of 2% from 1 April 2011. In April 2014, employee contributions were increased. From 1 July 2017, the staff scheme rate of pensionable accrual was reduced from 1/60th to 1/75th for each future year of pensionable service. From 2017, for both the staff and the works schemes, increases in pension once it is in payment, for future benefits accrued, will be in line with the annual increase in the Consumer Price Index. In April 2018, a liability-driven investment strategy was adopted by the Trustee, aimed at reducing exposure to the impact of future changes in interest rates and inflation on scheme liabilities, whilst maintaining a similar level of overall return. In December 2021, the Trustee increased the level of hedging in place as part of the liability-driven investment strategy, from 80% of the value of scheme assets to 90%. Whilst improving long-term risk management, the timing of this increase in hedging percentage meant the overall scheme valuation did not benefit from the subsequent rise in interest rates to the extent it otherwise would have done. Andrew Goody, CFO ‌40 James Cropper Annual Report 2025 James Cropper Annual Report 2025 41 RISK MANAGEMENT RISK MANAGEMENT PURPOSE AND OBJECTIVE Strategic risk management at James Cropper is a core enabler of the Group's long-term vision to deliver innovation, sustainability and value creation across its Advanced Materials and Paper & Packaging businesses. The objective of risk management is to proactively identify, assess and manage circumstances which could impact the achievement of strategic goals, ensuring the Group remains resilient, agile and responsive to events or economic and geopolitical changes. In FY25, the Board and Executive team undertook a review of the Group's risk management practices and introduced an enhanced Group-wide framework for the management of risks. The framework directly links risk to the achievement of strategic objectives, applies consistent practices and drives greater accountability for the identification and management of risks at all levels of the organisation. To provide more effective management and oversight of principal and emerging risks by the Board, the remit of the Audit Committee was expanded (now the Audit & Risk Committee), and now carries out detailed risk reviews and reports to the Board at least twice yearly. The enhanced approach supports informed decision-making, enhances the Group's ability to achieve strategic goals, and builds stakeholder confidence. 01 STRATEGY OBJECTIVES RISKS 02 03 KEY RESPONSIBILITIES Board Oversight The Board plays a central role in overseeing risk management, ensuring that governance and controls are aligned with strategic objectives, stakeholder expectations and regulatory standards. To ensure robust oversight, the Board regularly reviews principal and emerging risks together with control arrangements and mitigation plans. This is supported by the Audit & Risk Committee, which holds two risk-focused meetings each year to consider the strategic risk management framework (including risk identification and management systems), together with the principal and emerging risks, risk governance and accountabilities, and actions in place and planned to manage risks. The Board also considers the internal controls in place across the Group (such as the Group's Delegation of Authority framework) and whether these provide appropriate levels of assurance. Day-to-Day Management Day-to-day responsibility for the management of risk and delivery of strategic objectives sits with the Executive Committee. The Group's strategic risk management framework is decentralised but strategically coordinated, with risks being identified and managed at various levels of the organisation. Risk review meetings take place quarterly. Information collected from each review is consolidated and reviewed centrally to enable principal and emerging risks to be identified, reviewed and managed by the Executive Committee. Compliance and Reporting BOARD/AUDIT & RISK COMMITTEE Governance assurance and external reporting The Group maintains robust compliance and reporting mechanisms to ensure adherence to legal, ethical and industry standards. Centralised functions such as Health and Safety, Environment, Human Resources, Legal and Finance provide oversight and ensure transparency across the organisation. GOVERNANCE FRAMEWORK AND RISK CULTURE STRATEGIC REPORT GOVERNANCE FINANCIALS Risk management is a strategic tool, not merely a compliance obligation. It is designed to support the achievement of the Group's objectives by enabling proactive behaviours and informed decision-making. Risks are assessed in the context of current and proposed objectives. In turn, identified risks inform the setting and evolution of strategic goals, creating a dynamic feedback loop. The Group's structure-organised around two principal trading businesses and supported by centralised functions-facilitates cross-functional collaboration, knowledge sharing and governance consistency. PRINCIPAL RISKS On the following pages we have identified the risks we regard as most significant to the Group, together with steps taken to mitigate these risks where practicable. It is acknowledged that it is not possible to have certainty of the success of mitigating actions, and that where mitigation actions are not successful, the Group's performance, financial position and reputation could be materially adversely affected. Following a review of the approach to risk management in FY25, some of the risk categorisations have changed (compared to the prior year) to better reflect the nature of risks impacting the Group. Where there is a change to the risk in the year, this is indicated in the report. EMERGING RISKS Part of our approach to identifying risks involves horizon scanning, taking into consideration the Group's position and forward-looking strategy. In the year, the Group kept under consideration the physical and transitional risks associated with CHALLENGE AND SUPPORT REPORTING AND ACCOUNTABILITY climate change, particularly the risks associated with extreme weather events, changes to climate policy, the transition to net zero, and the potential for impact on raw material availability. Further information is set out on the following pages and in our non-financial and sustainability information statement on pages 57-61. Aggregation and group review/management EXECUTIVE COMMITTEE Day-to-day review and management BUSINESS UNITS AND GROUP FUNCTIONS 42 James Cropper Annual Report 2025 James Cropper Annual Report 2025 43 RISK MANAGEMENT cont. STRATEGIC REPORT GOVERNANCE FINANCIALS PRINCIPAL RISKS NO CHANGE - HEALTH AND SAFETY NO CHANGE - PEOPLE FINANCE AND TREASURY Risk description and impact The risk of accident or injury to people on our sites can never be eliminated entirely and the risks involved in manufacturing are inherently higher than many other industries. An accident or injury can cause significant distress and impact on wellbeing, as well as causing significant disruption and exposure to cost and penalties. Damage can also be caused to the Group's reputation. Mitigation Providing a safe environment across our sites, minimising the risk of injury, is of utmost priority. The company maintains safety protocols, training programmes and emergency response systems, and the Executive Committee and Board consider health and safety as a high-agenda item at every meeting. For more information regarding the Group's health and safety strategy and approach, please see page 56. Risk description and impact Our ability to deliver our strategy relies heavily on the knowledge, skills, experience and capability of our people. The nature of our products and services, combined with the customers and markets we serve, means we need highly skilled engineers, scientists, operators and commercial people. Our ability to attract and retain this talent is influenced by factors such as our culture and reputation, pay and benefits, working environment, company performance and location. Mitigation Our people policies and practices, and remuneration arrangements, are designed to attract and retain employees with the ability and experience to deliver the Group's strategy. We offer a variety of development opportunities at all levels of the organisation and encourage participation in our leadership development programme where appropriate. Our aim is to create desirable environments and a business our people are proud to be part of, and to ensure our employees are rewarded and recognised for their contributions. Leaders are encouraged to demonstrate positive behaviours to drive trust, cooperation and involvement. We also engage in regular dialogue with employees on key matters and provide support as may be requested in connection with organisational changes. For more information on our approach, please see page 54. Risk description and impact NO CHANGE - The Group is exposed to a range of financial risks, including liquidity and credit risks. These risks may arise from fluctuations in market conditions...

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