Cropper (J) Regulatory News (CRPR)

23 Jun 2009 07:00



James Cropper PLC

James Cropper plc (AIM:CRPR.L) the niche specialist paper and materials group, is pleased to announces its

Preliminary Audited Results for the year ended 28 March 2009

Technical Fibre Products ("TFP")

Turnover increased by £1.5 million to £11.6 million, up 15%

Operating profit up 47% to £2.1 million, the highest to date

James Cropper Speciality Papers ("Speciality Papers") 

Turnover increased by £1.5 million to £49.8 million, up 3%

Raw materials and energy costs increased by £3.4 million, up 13%

Operating loss of £0.3 million compared to a profit of £1.3 million last year

An exceptional Deferred Tax charge of £0.6 million was incurred relating to the phasing out of Industrial Buildings Allowance. 

James Cropper, Chairman, said:

"In the second half of the financial year Speciality Papers made significant progress in reducing its first half losses". 

"TFP's good performance is expected to continue. It is beginning to experience an increase in demand for materials to service aerospace, security and fuel cell markets, all of which are of strategic long-term importance to the business. Sales in the first half of the new financial year will be depressed as a consequence of re-structuring at a major customer, but it is anticipated that strong growth will resume in the second half".

"Despite the uncertainties surrounding the forward trend in exchange rates, quoted energy prices and pulp costs, Speciality Papers is expected to continue its recovery in the year ahead".

"The down-turn in the global economy creates a challenging trading climate for the Group. Nevertheless, I am confident that in the short-term our existing management approach will enable the Group to capitalise on opportunities when the economic climate becomes more favourable thus leading to significant growth in the medium to long-term".

All references to:

1. "Trading Operating Profit" refers to profits prior to income from joint ventures, other income and expenditure, interest on borrowings and "Net IAS 19 pension adjustment"

2. "Trading Profit before Tax" refers to profits prior to "Net IAS 19 pension adjustment".

3. "Net IAS 19 pension adjustment" in the Profit and Loss Account refer to the net impact on the Profit and Loss Account of the pension schemes' operating costs and finance costs, as described in the IAS 19 section of the Financial Review.

  CHAIRMAN'S REVIEW

The Group recorded an increase in turnover of 3% to £74,803,000 and a profit before tax of £858,000 for the year, having recovered from a loss before tax of £261,000 in the first half of the year. Although the previous year's profit before tax was higher at £1,580,000 this was nonetheless a pleasing result given the difficult trading climate. 

The first half loss arose as a consequence of the severe impact of rising energy and pulp costs on James Cropper Speciality Papers Limited ("Speciality Papers"). In the second half of the financial year Speciality Papers made significant progress in reducing its first half losses. 

Technical Fibre Products Limited ("TFP") traded strongly throughout the year and recorded its highest profit to date.

Prior to net IFRS pension adjustments the Group recorded a trading profit before tax of £1,108,000 compared to £1,963,000 in 2008.

Dividends

The Board proposes a final dividend payment of 4.0p to reflect the second half recovery, making a total dividend for the full year of 5.1p compared to 7.3p in 2008. The Board is disappointed to have had to reduce the dividend as a consequence of the first half loss and the current global economic climate. However it is the Board's intention to reward the loyalty of shareholders by resuming its progressive dividend policy as soon as circumstances allow.

Technical Fibre Products ("TFP")

TFP's operating profit for the year was £2,099,000 compared to £1,426,000 in 2008, with turnover improving overall by 15% on the previous year to £11,648,000. 

Sales into the North American market grew by 4% in US$ terms and by 19% in £Sterling terms reflecting the dramatic strengthening of the US$ against £Sterling. This growth was attributable to fire protection materials. At the average exchange rate for the year, sales to the North American market represented approximately 48% of TFP's turnover in £Sterling terms. Sales to "Rest of the World" were ahead by 12%.

James Cropper Speciality Papers ("Speciality Papers")

Speciality Papers reported an operating loss of £310,000 against an operating profit of £1,281,000 in the previous year, down £1,591,000. Volume declined by 8% over the year, primarily due to a down-turn in UK sales. In contrast turnover grew by £1,482,000 to £49,824,000, a 3% increase, as a consequence of changing mix and general price rises, the latter reflecting recovery of the raw material and energy cost increases. In total Speciality Papers' raw material and energy costs increased by £3.4 million over the year, an increase of 13%.

Northern Bleached Softwood Kraft ("NBSK") pulp opened the financial year at US$880 per tonne and increased by an additional US$20/tonne to plateau at US$900/tonne for four months. By the end of the first half-year the price of NBSK had fallen to US$890/tonne and then to US$580/tonne by the year end. However the benefit from the fall in the cost of pulp was greatly reduced by the dramatic decline in the value of £Sterling against the US$ in the second half of the year. Market forecasters believe that the price of pulp has now hit its floor and anticipate that progressive, moderate increases will take place in the course of the coming twelve months.

The price of natural gas in the second-half of the previous financial year climbed steeply to 55p/therm in March 2008 and averaged 62p/therm throughout the year to March 2009. The cost of gas in the financial year was £4.3 million compared to £2.8 million in the prior year, up 59%.

Throughout the year strenuous efforts continued to be made to reduce the cost base through greater energy efficiency, improved productivity and lower wastage.

James Cropper Converting ("Converting")

Converting's turnover declined by 7% to £10,995,000, with volume down by 18% resulting from recessionary pressures. This was partly off-set by the favourable impact on Converting's margins arising from the growth in the value of the US$ against the £Sterling. New sales of high value added grades contributed to the operating profit. Operating profit was £406,000 compared to £548,000 in the previous year.

The Paper Mill Shop ("TPMS")

Turnover was £5,674,000, down 9% on the previous year. However overhead rationalisation, margin improvement and increased internet sales enabled the operating loss to remain in-line with the previous year loss at £388,000. The depreciation charge was £250,000 and as there were no new store openings in the year cash out flow remains relatively low. 

Taxation

The phasing out of Industrial Buildings Allowance in the year resulted in an exceptional Deferred Tax charge of £587,000. This had a significant impact on earnings per share, however there is no immediate cash flow implication.

Pensions and International Accounting Standard 19 ("IAS 19")

The Group operates two funded pension schemes providing defined benefits for the majority of its full time employees. Over the course of the year the gross IAS19 deficit increased by £7,263,000 to £9,076,000 as at 28 March 2009 reflecting the dramatic changes to financial markets during the year thus reversing the gains of the past two years. 

Outlook

TFP's good performance is expected to continue. It is beginning to experience an increase in demand for materials to service aerospace, security and fuel cell markets, all of which are of strategic long-term importance to the business. Sales in the first half of the new financial year will be depressed as a consequence of re-structuring at a major customer, but it is anticipated that strong growth will resume in the second half.

Despite the uncertainties surrounding the forward trend in exchange rates, quoted energy prices and pulp costs, Speciality Papers is expected to continue its recovery in the year ahead.

Internet sales by The Paper Mill Shop have grown considerably during the past year. To encourage this trend a new enhanced website was launched in April 2009. It remains the intention to exit a number of under performing stores as their leases expire unless it is more economic to do so earlier. 

At 28 March 2009 gross drawn down finance facilities totalled £7.1 million, with £2.6 million held as cash at bank. In addition the Group had un-drawn overdraft facilities of £3.4 million, US$1.0 million and €1.0 million. Borrowing is expected to increase in the second half of the new financial year as a consequence of increased capital expenditure to enhance capacity, capability and efficiency improvements.

The down-turn in the global economy creates a challenging trading climate for the Group. Nevertheless, I am confident that in the short-term our existing management approach will enable the Group to capitalise on opportunities when the economic climate becomes more favourable thus leading to significant growth in the medium to long-term.

James Cropper

Chairman

  Audited Group Income Statement for the period ended 28 March 2009

  Audited Balance Sheets as at 28 March 2009

  Audited Cash flow Statements for the period ended 28 March 2009

  Audited Statements of recognised Income and Expense for the period ended 28 March 2009

Preliminary Results for the year ended 28 March 2009

1. Basic losses per share have been calculated on the loss after taxation of £87,000 (2008: profit £1,190,000) divided by the weighted average number of Ordinary shares in issue during the period of 8,472,368 (2008: 8,472,368).

2. The dividend will, if approved, be paid on 14 August 2009 to all shareholders on the Register on 17 July 2009.

3. The financial information set out above does not constitute the statutory accounts for the years ended 28 March 2009. Statutory accounts for 2008 have been delivered to the Registrar of Companies and those for 2009 will be delivered following the Company's Annual General Meeting. The auditors have reported on these accounts, their reports were unqualified and did not contain statements under section 237 (2) or (3) of the Companies Act 1985.

4. The Annual Report and Accounts for 2009 will be posted to shareholders on 8 July 2009. They will also be available on the Company's website (www.cropper.com) and on request from the Company's registered office, Burneside Mills, Kendal, Cumbria LA9 6PZ.

5. The Annual General Meeting of the Company will be held at 11.00am on Wednesday 29 July 2009 at the Bryce Institute, Burneside, Kendal, Cumbria.