Cropper (J) Regulatory News (CRPR)

Tuesday 23 June, 2015

James Cropper plc

The advanced paper products group, is pleased to announce its

Preliminary Audited Results for the year ended 28 March 2015

Financial Highlights

o Profit before tax (excluding IAS 19), up 67% to £3.5m

o Sales in TFP up 11.5% on last year, down 4.1% in Paper

o Earnings per share 20.1p, up from 15.0p on prior year

o Dividend up 7.6% to 8.5p (7.9p prior year)

Operational Highlights

o Strong revenue and profit growth in TFP

o Production capacity to double for TFP in 2015

o 19.5% profit growth in Paper

o Paper portfolio: reduced low margin and increased high margin revenues

o Customer and operational synergies from merging two paper businesses

o Increased activities to promote brand recognition

o Executive team bedded in

o New company established and investment underway

Mark Cropper, Chairman, commented:

"James Cropper Paper continues to operate in niche markets and we are honing our competitive edge, remaining focused on distinctive and technically advanced paper products, offering customers the expertise that comes from 170 years of papermaking and a continuous program of investment in people, products and knowledge.

Technical Fibre Products operates in high growth markets which offer many exciting opportunities including in green technologies, aerospace, and defence.

The Technology and Innovation division, which was set up in January 2014, has identified a diversification opportunity. A new business for James Cropper, manufacturing moulded products, which will build on our current strengths and knowledge, has been established. Investment in developing this business is underway.

I am delighted with the progress we have made in the past financial year. This was achieved as a result of the continued hard work and commitment of all my colleagues whom I wish to thank on behalf of the company and all its stakeholders. For many years I have communicated my belief that this company has great potential. Now I see that this can and will be delivered in the coming years."

Enquiries:

CHAIRMAN'S LETTER

 Dear Shareholders

I am pleased to report that James Cropper plc made considerable progress in 2014/15.

The strengthening of the business is evident in the many improvements that are being implemented across the Group and borne out in our improved profitability. During the year, the operations of James Cropper Speciality Papers and James Cropper Converting were brought together and re-branded as James Cropper Paper under a management team drawn from both businesses. This decision was well received by our customers and ensures we are able to offer them our full range of products, as well as access to excellence in supply chain management, service, quality, innovation, sustainability and brand development.

The operations of Technical Fibre Products ("TFP") have been improved in the year by manufacturing developments which have reduced costs and increased capacity, all of which helped TFP to meet increased demand and more than double profitability year on year. Investment in additional manufacturing equipment will double our capacity for TFP in the UK and this is progressing according to plan with early commissioning expected to commence mid July of this year. This additional capacity will support our ambitious growth plans.

On the human resources side, we continue to strengthen the teams in both our businesses through selective recruitment, development and training. Our commitment to investing in our people is encapsulated in our value "Continuous Learning", which is covered elsewhere in this report, and in our focus on succession planning which forms another key part of our HR strategy.

The Group's five strategic growth platforms, set out in detail in the CEO review, are now firmly established across the company and are supporting its transition to a culture which focuses on sustained growth. It has been this determination to improve margins, build operational efficiencies and sustain growth whilst maintaining a focus on our strategic platforms that has served us well and enabled us to deliver the improvement in profitability reported herein. Together with the steps taken to preserve and promote our values we are hopeful that we are building strong foundations for future success.

John Denman retired from the Board at the AGM on 30 July 2014. John served James Cropper plc for 19 years having joined the Group in 1995 and I would like to thank him for his tremendous contribution to the company over many years. I am also very pleased to congratulate Isabelle Maddock on her appointment to the Board on 31 July 2014 as Group Finance Director. Isabelle joined James Cropper plc in 2006 as Group Financial Controller and served as Head of Finance from September 2013.

Diluted Earnings per Share (after the adjustment for IAS 19) increased by 34% to 20.1 pence compared to 15.0 pence in the previous year.

The Board is recommending a final dividend of 6.3 pence per share making a total dividend for the financial year of 8.5 pence, an increase of 7.6% on the prior year.

OUTLOOK

James Cropper Paper continues to operate in niche markets and we are honing our competitive edge, remaining focused on distinctive and technically advanced paper products, offering customers the expertise that comes from 170 years of papermaking and a continuous program of investment in people, products and knowledge.

Technical Fibre Products operates in high growth markets which offer many exciting opportunities including in green technologies, aerospace, and defence.

The Technology and Innovation division, which was set up in January 2014, has identified a diversification opportunity. A new business for James Cropper, manufacturing moulded products, which will build on our current strengths and knowledge, has been established. Investment in developing this business is underway.

I am delighted with the progress we have made in the past financial year. This was achieved as a result of the continued hard work and commitment of all my colleagues whom I wish to thank on behalf of the company and all its stakeholders.

For many years I have communicated my belief that this company has great potential. Now I see that this can and will be delivered in the coming years.

Mark Cropper

Chairman

CHIEF EXECUTIVE'S REVIEW

PROFIT

I am pleased to report a 53.2% growth in operating profit before interest to £3.9m in the year to 28 March 2015, compared to £2.5m in the year to 29 March 2014 (prior to the impact of IAS 19 pension adjustments).

Profit before tax (after IAS19 adjustments) in the year was £2.6m representing an increase of 96% on the prior year.

REVENUE

Group revenue for the financial year was £83.1m, down 1.7% on the prior year.

Across both businesses, UK sales were up 3.4% whilst export sales fell 6.9%. Across the Group, sales into the USA were down 4.8%. Sales into continental Europe were down 11.4% partlyreflecting the Euro,which weakened by 13% againstSterling over the period, and partly as a resultof lower volumes.Exports represented 47% of revenuein the year (2014: 50%).

By division, revenue for James Cropper Paper fell by 4.1%. This was affected by the planned exit of a non strategic line of display board business, de-stocking by a key customer and the Sterling's strength against the Euro. In order to grow exports in the paper division, we have invested in our regional sales teams, and this is starting to bear fruit. Sales in the Greater China area, where we established a sales and marketing subsidiary in April 2014, were up 32% on the prior year.

Revenue for Technical Fibre Products increased by 11.5 % year on year, with particularly strong growth generated in our target sectors of aerospace, defence, industrial and infrastructure. The fastest growing geographical region was China with sales growth of 66%, albeit from a relatively small base. TFP's sales in the UK grew by 31%, reflecting the successful re-organisation of the sales teams. TFP has seen a strong recovery in the UK wind turbine industry and a year-on-year uplift in sales for the joint strike fighter programme.

RESEARCH AND DEVELOPMENT

Research and development (R&D) is a vital part of our growth strategy, adding to our capability, maintaining our competitiveness and bringing new product lines into our portfolios. We continue to invest in research and development across the Group. Expenditure in R & D was £1.3m this year, up 7% on prior year.

CAPITAL EXPENDITURE

Capital expenditure during the year was £2.6m (2014:£3.0m). The largest investment was on the additional capacity in TFP. This work will be completed in time for early commissioning in July 2015.

PENSION

The Groupoperates three pensionschemes. Close to 55% of employees have defined contribution personal payment plans.The Group operates two funded pensionschemes providing definedbenefits for a decreasing numberof its employees. On the definedbenefit schemes the overall value of the Schemes' assets increased by 25% over the period,whilst the schemes' liabilities also increased by 25%. The IAS19 valuations of these schemesas at 28 March 2015 revealed a combined deficitof £14.4m compared with £11.6m at the previousyear end, an increase of £2.8m. This increase in the schemes'overall deficit was principally caused by a decrease in the discountrate which is driven by new lows on corporate bond yields.

CASH AND DEBT

Having repaid£2.1m of debt during the year, the Grouphad gross debt of £8.8mat the balance sheet date. At the same date,it had £2.7m of cash, giving a net debt of £6.1m (2014:£10.3m). The Group had un-drawn overdraftfacilities of £4.7m. With short term borrowings of £2.7m to be repaid within12 months of the balancesheet date, £4.7mremained available to the Group.Post year end, theGroup has secureda £5.5m revolving credit facility, whichfurther enhances it's financial flexibility. Gearing at the financial year end, after deduction of the IAS 19 pensiondeficit, was 32%, down from 51% on the previousyear.

GLOBAL PRESENCE

The group's significant presence worldwide is built on our own international network of manufacturing, research and development and sales facilities and is supported by sales agents.

STRATEGY

Since 2013, James Cropper plc has embarked on a growth programme covering all functions within the group. The programme is built on five strategic platforms:-

Superior levels of operational excellence

High performance culture

Existing market opportunities

Gaining additional profitable market share

Customer intimacy and market presence

SUPERIOR LEVELS OF OPERATIONAL EXCELLENCE

Objective: To establish world-class standards for safety, quality, efficiency, capability, service and cost throughout our businesses.

Achievements in product development and improvement

In Paper: investment in equipment to enhance colour management, slitting and laminating capabilities.

In TFP: development of laminated and powder scattered products.

Accreditations

In Paper:  Food contact papers have been approved to European (BfRXXXVI) and USA (FDA 176.170 and 176.180) standards.

In TFP: FOD (Foreign Object Debris) controls and compliance with the AS9100 accreditation is being completed in support of our aerospace business.

Safety

The Group was awarded a Gold Award by the Royal Society for the Prevention of Accidents (RoSPA) in recognition of our safety work. This recognised consistent high standards in monitoring health and safety on site and maintaining a process of continual improvement.

Supply chain

A focus on a lean supply chain has delivered significant increases in warehousing and storage capacities and improved delivery and service capabilities at a reduced overall cost.

HIGH PERFORMANCE CULTURE

Objective: to develop our organisation by building on our existingskills and investingin our development programmes to maximise performance at all levels of the company, supportedby external recruitment as  necessary.

Development programmes

During the year the Group, in partnership with external professionals, committed substantial investment in employee development for our senior leadership and sales and marketing teams.

External recruitment

The Group has made significant hires in operations, sales and marketing and technical, building further on the company's capability.

In Paper we continue to invest in regional sales employees, with additions during the year across Europe and planned additions to follow in the USA.

Employee engagement

We implemented a number of actions following feedback from the 2013 employee engagement survey, including launching a new vision, values and leadership competencies. Our engagement levels will be measured again in our follow-up survey in 2015.

EXISTING MARKET OPPORTUNITIES

Objective: to increase our market share within our prioritised existing markets.

Credentials

In Paper: with products containing increased levels of PCW (Post-Consumer Waste) as well as reclaimed fibre from our coffee cup recycling centre, we have enhanced our sustainability credentials across the product range.

In TFP: with products specified for use in the commercial aircraft sector and products specified into the F-35 Lightning II fighter jet we will benefit from higher sales as quantities for this programme and commercial applications increase.

Phased exit of declining commodity markets

In Paper: an exit of a large portion of the display board market reducing sales by £2m, with minimal impact to profits.

Technical know-how

In Paper: through businesses restructuring we have increased our ability to provide an overall solution for customers in specialist markets in the mid and higher value-add tiers. This is particularly notable within our luxury packaging business.

In TFP: The provision of technical solutions in wind, energy and consumer electronics markets, solutions not available from other manufacturers. During the year, some key changes in the phosphoric acid fuel cell supply chain have left TFP well positioned to build a strong position in this market.

GAINING ADDITIONAL PROFITABLE MARKET SHARE

Objective: to penetrate new geographic sectors and to grow specialised markets.

Geographical focus

In Paper: the expansion of our field-based sales team with additional coverage in key markets such as Germany, France and Spain. In 2015, a significant investment in the USA will be made.

Also in Paper we have significantly strengthened the sales team's language  capability.

In TFP: new business in China and Russia generates important revenue streams, and overall we have seen a double digit percentage increase in the number of new accounts.

Also in TFP a more effective sales structure in Europe and a recognition that sales efforts are more effective when closely supported by members of the technology team.

Innovation and specialised markets

In Paper: a number of innovations branded under the James Cropper name have been launched, notably Khora, Coffee and Carvetian Suede.

Coffee is a new brand made from reclaimedcoffee cup fibre separated from the plasticin the cups in James Cropper's unique recycling plant. This is a groundbreaking product and has led to significant opportunities as well as raisingthe profile of James Cropper as a truly innovative player in the speciality paper sector.

Carvetian Suede was launched in Monaco late last year. It closely reproduces the soft, yet durable qualities of suede leathers in a paper-based form. Through the range of colours Carvetian Suede is manufactured with a minimum of 40% recycled, post-consumer waste. The product is intended to provide not only luxury brands with a lavish packaging solution, but also encourage those compiling business documents, brochures and creative advertising materials with a show stopping finish.

In TFP: investment focussed on a small number of funded programmes, which leverage government funding and relationships with primes and other supply chain partners with the aim of developing "future technologies." The emphasis here is on composites, a fast growing market.

Also in TFP a number of development projects running directly with primes and tier 1 partners. These projects will see us strengthen our position through added know how and capability in particle plating, electroplating, resistive heating and the application of thermoplastic veils in composites.

CUSTOMER INTIMACY AND MARKET PRESENCE

Objective: To increase customer intimacy and targeted geographic market presence.

Adaptation to customer needs

In Paper: development of the customer experience has been enhanced with extended customer service hours and improved product sampling, boosted by the brand experience through collateral and customer visits. Paper is implementing a relaunch of its brand which better reflects it's strong heritage and the company's values.

Customer reach

In TFP: significant marketing expenditure is helping to ensure that the company and its unique capabilities are better understood globally.

Also in TFP strengthened relationships with both aerospace primes and tier 1 suppliers, leave us well placed to benefit from future growth in the aerospace sector.

Market presence

Both businesses exhibit at key events throughout Europe, Middle-East, Asia, Australasia and North America, and actively participate as subject matter experts in our field of expertise. Our exhibitions and PR strategy are proving effective in generating increased enquiries, visits to our web sites and attracting new customers.

BUSINESS PORTFOLIO ANALYSIS - DIVERSIFICATION & INNOVATION

Over the past 24 months we have reviewed and refined the focus for each of the James Cropper businesses. As the business strategy in Paper and TFP has taken hold it has allowed time to evaluate the opportunity for the company to innovate further to diversify the group. As a result in 2014 the company established a new department: "Technology and Innovation" with the objective to build a third business for the company.

Following 18 months of testing and evaluation of a range of different opportunities, we have now concentrated our effort to develop one specific business. James Cropper 3D Products will require significant up front investment and is expected to become profitable in 2018. More details of the business as it becomes established will follow through the year.

Our strategy is now on a solid foundation and is starting to yield results across all of our businesses. I am very encouraged with the progress made by the team and I remain highly confident on our ability to achieve significant future growth in both new and existing businesses.

Phil Wild

Chief Executive Officer

JAMES CROPPER PLC

GROUP STATEMENT OF COMPREHENSIVE INCOME

STATEMENT OF FINANCIAL POSITION

STATEMENT OF CASH FLOWS

For the period ended 28 March 2015 (2014: for the period ended 29 March 2014)

STATEMENT OF CHANGES IN EQUITY

GROUP

All figures in £'000

Notes to Preliminary Results for the year ended 28 March 2015

· The accounting "year" for the Group is a 52 week period ended 28 March 2015, (2014: 52 week period ended 29 March 2014).

· Both the parent company financial statements and the Group financial statements have been prepared and approved by the directors in accordance with International Financial Reporting Standards as adopted by the EU ("IFRS") and the Companies Act 2006, as applicable to companies reporting under IFRS.

· The financial information set out above does not constitute the statutory accounts for the year ended 28 March 2015. Statutory accounts for 2014 have been delivered to the Registrar of Companies and those for 2015 will be delivered following the Company's Annual General Meeting. The auditor has reported on these accounts, the report was unqualified and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.

· Basic earnings per share have been calculated on the profit after taxation of £1,881,000 (2014: £1,371,000) divided by the weighted average number of Ordinary shares in issue during the period of 9,045,719 (2014: 8,904,249).

· The dividend will, if approved, be paid in cash only on 7 August 2015 to all shareholders on the register on 10 July 2014. The ex-dividend date will be 8 July 2015.

· The Group operates two funded pension schemes providing defined benefits for a decreasing number of its employees. The defined benefit pension 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 rate of inflation and the mortality assumptions for members of the schemes. Changes in these assumptions will impact the deficit positively or negatively.

· The latest actuarial "on-going" valuations of the Group's pension Schemes at April 2013, determined the combined deficit of the schemes to be £12.7million. These valuations are conducted on a tri-ennial basis and provide a steady platform to manage the deficit from one valuation to the next. It is the Group's legal responsibility to fund the defined benefit pension scheme deficits. The next tri-ennial "on-going" valuation is in April 2016, following this there will be a review of management options and payments to reduce the deficit are subject to a new agreement with the trustees. Under IAS 19 the pension deficit is likely to be volatile and may in the future be very different from this current year end position. The IAS 19 pension deficit net of Deferred Tax, increased by £2,242,000 over the year to £11,554,000.

· A reconciliation of the movement in the Statement of Financial Position of Retirement benefit liabilities is shown below:

· The Annual Report and accounts for 2015 will be posted to shareholders on 7 July 2015. They will also be available on the Company's website (www.cropper.com/financials/) shortly and on request from the Company's registered office, Burneside Mills, Kendal, Cumbria LA9 6PZ from 7 July 2015.

· The Annual General Meeting of the Company will be held at 11.00am on Wednesday 29 July 2015 at the Bryce Institute, Burneside, Kendal, Cumbria.