Cropper (J) Regulatory News (CRPR)

James Cropper plc

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

Preliminary Audited Results for the year ended 29 March 2014

Mark Cropper, Chairman, commented:

"I am very pleased with progress in the past financial year. The Group made a number of significant investments across all aspects of its businesses during the year and whilst these combined with higher input costs to impact on profitability in 2013/14 I am confident that they provide a stronger platform to future growth.

"It was inevitable that as we succeeded in growing sales in the USA our exposure to the US dollar would increase. We will be taking further measures in the coming year to create a natural hedge by purchasing more raw materials and equipment in dollars.

 "I am confident that TFP will grow strongly in the coming year with sales into Aerospace and Defence sectors leading the way.

"In Paper Products, Luxury Packaging continues to present a significant growth opportunity. Although not without its challenges, I believe we now have traction within Paper Products to grow profitable sales on a global basis enhanced by greater market awareness of our capability."

All references to:

1. "Trading Profit before Interest" refers to profits prior to interest on borrowings, "Net IAS 19 pension adjustment" and tax.

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

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 Strategic Report.

4. All referencesto:

"Profit and Loss Account" refers to the Statement of Comprehensive Income.

"Balance Sheet" refers to the Statement of Financial Position.

"Reserves" refers to the Statement of changes in Equity.

Management have chosen to maintain the terminology that readers are familiar with.

5. The results for 2013 have been restated to reflect the changes required following the adoption of IAS 19 Revised.

CHAIRMAN'S REVIEW

Profit before tax was £2,088,000 compared to £2,052,000 in 2012/13 (prior to the IAS 19 pension adjustment).

Although turnover grew strongly in the year, profitability was adversely affected by exchange rate fluctuations, exceptional restructuring expenditure, increased pulp and energy costs and the consequence of increased UK and EU environmental taxes.

Profit after the IAS 19 pension adjustment but before tax was £1,313,000 compared to £1,246,000 in 2012/13.

Group turnover for the financial year was £84,518,000, up 7% on last year with UK sales up 6% and export sales up 7%. Across the Group, sales into the USA were up 15%, whilst sales into continental Europe were down 2%. Exports represented 50% of turnover. The US dollar weakened by 9.3% against sterling over the period and as a consequence the Group's profitability was adversely affected.

Diluted Earnings per Share after the adjustment for IAS 19 curtailment was 15.0 pence compared to 10.0 pence in the previous year.

Dividend

The Board will recommend to the AGM that the final dividend be maintained at 5.7 pence per share making a total dividend for the financial year of 7.9 pence (7.9 pence in 2012/13).

Group Structure

Management responsibility for James Cropper Speciality Papers and James Cropper Converting is being brought together in a new division, James Cropper Paper Products, in order to achieve greater customer and operational synergies. Phil Wild, the Group's CEO, is the Managing Director of James Cropper Paper Products.

Operations and Technology & Innovation Directorates were created in January 2014.

In April 2014 Paper Products established a subsidiary company in mainland China for the purpose of selling and marketing within China. This will allow customers to retain full chain of custody over products supplied and to be invoiced in local currency. The subsidiary is staffed by Chinese nationals.

Technical Fibre Products ("TFP")

TFP reported an operating profit for the year of £1,278,000 compared to £1,450,000 in 2012/13, with turnover up by 4% on the previous year at £13,047,000, of which 85% was exported.

Profitability was significantly affected by the weakening of the US dollar against sterling over the course of the year. Sales to the USA accounted for 57% of TFP's turnover, compared with 55% in the previous year. Sales to the USA were up by 6% in sterling terms. Sales outside of the USA were in line with the previous year.

TFP grew strongly in the Aerospace sector with sales up 25% during the year and represented 25% of total sales. TFP is at an advanced stage of qualification to supply material for a major new airliner programme which, on commercialisation will lead to a long term revenue flow. Sales into the Defence sector were down on last year as a consequence of a shift in the ordering pattern of a major customer. We fully expect sales to this customer to accelerate in the coming year.

All US activities have now been relocated to our new facility inSchenectady, New York State. During the year TFP commissioned a £1.5 million nano-carbon coating line at Schenectady encouraged by the requirements of existing and potential new customers. We believe this investment will place TFP in a leading position with regard to the development of this new technology and will be of long term benefit.

James Cropper Paper Products ("Paper Products")

Paper Products reported an operating profit for the year of £2,023,000 compared to £1,679,000 in 2012/13.

Turnover rose by £4,830,000 to £71,471,000, up 7% with volume increasing by 8%. Exports represented 43% of turnover.

We are beginning to see benefits flowing from our increased market focus with sales of Luxury & Packaging, Creative Print & Design, Bindings & Coverings, Industrial and Digital Print grades growing strongly.

Environmental responsibility is at the heart of our manufacturing and corporate ethos and central to our product development programme. In this regard we were highly honoured that HM The Queen agreed to officially commission our new Reclaimed Fibre plant in July 2013.

Our pioneering innovation in the area of processing and inclusion of otherwise waste materials in high quality grades was also recognised at two prestigious exhibitions during the year. In October we won the "In Green Award" at the annual Luxepack exhibition held in Monaco. The Reclaimed Fibre plant was hailed as the most innovative, eco-friendly paper production development of 2013. This success was followed six months later when in April we received the first ever "In Green Award" to be presented at a Luxepack exhibition held in Shanghai. On this occasion the accolade was awarded for the inclusion of 10% cocoa shell waste in paper grades used in confectionery wrapping. Produced at the request and in collaboration with Barry Callebaut,the world's leading manufacturer of high-quality cocoa and chocolate products, Cocoa Paper is a strong and naturally coloured fibre suitable for food packaging.

These awards, our Royal visit and our attendance at high profile events in the UK and abroad have served to increase market awareness of our capability.

2014 marks the centenary of the outbreak of World War One. James Cropper plc is very proud to be the exclusive supplier of red and green paper to the Royal British Legion from which their iconic Remembrance Poppies are made.

Considerable progress has been made with regard to pulp substitution by fibre produced from the Reclaimed Fibre plant, with levels of substitution achieving 10% by the end of the financial year. The plant uses innovative technology to extract fibre from specific paper-based consumer products, such as disposable coffee cups, which would otherwise be difficult to recycle. This fibre is extremely high quality which makes it an ideal substitute for wood-pulp and helps us to both mitigate the impact of pulp price volatility and to target customers who are focused on the recycled content of our product.

The cost of Northern Bleached Softwood Kraft ("NBSK") wood-pulp opened at US$830/tonne rising progressively to US$920/tonne by the end of the financial year. In late May 2014, the price had risen to US$925/tonne. As a result pulp costs were up some £0.9 million on the previous financial year.

The unit commodity cost of natural gas was up 6% on the previous financial year with the overall cost of consumption being £4.8 million compared to £4.5 million in the comparable period.

Phase 3 of EUETS, a mandatory EU scheme relating to carbon dioxide emissions, was introduced as from 1 January 2013. Under Phase 3 our annual allowances were reduced from 41,000 tonnes to an average of 16,000 tonnes per annum. Given that our annual emissions are in the region of 39,000 tonnes, carbon credits had to be purchased for the balance of 23,000 tonnes. In addition, as from 1 April 2013 the Group was also subject to the Carbon Price Floor. This levy is a UK Government "green" tax, which places UK producers at a competitive disadvantage compared with competitors in the rest of EU as well as those in the rest of the world. These two measures added £0.4 million to the cost base in the financial year. I am pleased to say that after heavy lobbying by James Cropper plc, the Confederation of Paper Industries and other UK intensive energy users HM Government announced changes to legislation that will exempt the Group from the Carbon Price Floor from 2015 onwards. This will reduce our future "green taxation" bill by £0.2 million per annum.

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

The Group operates two funded pension schemes providing defined benefits for just over 40% of its employees. The overall value of the schemes' assets declined by 1.2% over the period, whilst their liabilities increased by 0.4%. The IAS19 valuations of these schemes as at 29 March 2014 revealed a combined deficit of £11,640,000, compared with £10,353,000 at the previous year end, an increase of £1,287,000. The primary reason for the increase in the schemes' liabilities is the discount rate of 4.50% used at March 2014 compared to 4.65% at March 2013, reflecting the decline in corporate bond yields over this period.

The accounting standard IAS19 has changed for accounting periods beginning on or after 1 January 2013. In previous years it was possible to take credit for the expected return on plan assets in excess of the discount rate. Under the revised standard the income from plan assets allowed for in the net interest cost is based only on the discount rate. The result of this change is to increase the cost shown in the Profit and Loss Account, with a corresponding decrease in losses recognised in Other Comprehensive Income. As a result of the revision of IAS19 the profit before tax reported is £1,037,000 lower than it would have been under the old basis (£573,000 lower in the prior year). The IAS19 pension adjustment required under the old basis would have been an increase to profit of £569,000 (an increase of £193,000 in the prior year) whereas the new basis decreases profit by £468,000 (a decrease of £380,000 in the prior year).

People

It has been a period of considerable change within the Board and Executive Committee.

George Quayle retired from the Board and his position as Managing Director of TFP at the last AGM on 31 July 2013. George was succeeded by Martin Thompson who joined the Board of James Cropper plc on 10 June 2013.

Dave Watson joined the Group and Board as Chief Operating Officer on 2 January 2014 being responsible for all our global manufacturing activities. Dave has a strong manufacturing background with more than 25 years' experience in the Industrial, Automotive, Healthcare and Security markets. Prior to joining us he was the Site Manager for 3M Personal Safety Division at Aycliffe.

On 2 January 2014 Patrick Willink was appointed Chief Technology Officer with the brief to explore, develop and deploy new products and technologies to support both the Group's existing businesses and any future investment in new business opportunities. Patrick was previously Operations Director for James Cropper Speciality Papers.

Nigel Read retired from the Board and his position as Sales & Marketing Director of James Cropper Speciality Papers on 2 May 2014. Nigel was fundamental to the development of the long-standing and successful relationships that have been built between Speciality Papers and its customers. I am very grateful to Nigel for his exceptional commitment to the Group and its customers during the course of his career. Nigel joined the Group in 1981 and the Board in 1998.

Chris Brown joined the Group in the position of Commercial Director of Paper Products on 31 March 2014. He is also a member of the Executive Committee. Chris brings an extensive sales, marketing and technical experience to the role, together with a vast international network within the paper industry. He joined the Company from Favini, an Italian competitor, where he has worked for the past twelve years; the last five of which as Marketing & European Sales Director.

John Denman will retire and resign from the Board at the AGM on 30 July 2014. John has served James Cropper plc with distinction for 19 years since joining the Group and Board in 1995. On behalf of the Board I would like to extend our gratitude to him and wish him well for his retirement.

Isabelle Maddock will be appointed to the Board on 31 July 2014 as Group Finance Director.

Isabelle joined James Cropper plc in 2006 as Group Financial Controller and has served as Head of Finance since September 2013.

We have also continued to strengthen the sales and marketing capability of each of our businesses through selective recruitment in order to deliver our growth plans.

Cash and borrowings

Capital expenditure during the year was £3.0 million (£4.1 million in 2012/13). At 29 March 2014, gross drawn down loans totalled £11.0 million, with £0.7 million held as cash at bank. In addition the Group had un-drawn overdraft facilities of £4.1 million. Gearing at the financial year end, after deduction of the IAS 19 pension deficit, was 51% up from 46% the previous year. Working capital remains under tight control.

Outlook

"I am very pleased with progress in the past financial year. The Group made a number of significant investments across all aspects of its businesses during the year and whilst these combined with higher input costs to impact on profitability in 2013/14 I am confident that they provide a stronger platform to future growth.

It was inevitable that as we succeeded in growing sales in the USA our exposure to the US dollar would increase. We will be taking further measures in the coming year to create a natural hedge by purchasing more raw materials and equipment in dollars.

I am confident that TFP will grow strongly in the coming year with sales into Aerospace and Defence sectors leading the way.

In Paper Products, Luxury Packaging continues to present a significant growth opportunity and we are especially proud of our strong relationship with leading brands such as Burberry. This British super-brand uses distinctive high quality paper made at Burneside in nearly all their packaging. Although not without its challenges, I believe we now have traction within Paper Products to grow profitable sales on a global basis enhanced by greater market awareness of our capability.

Mark Cropper

Chairman

Statement of Financial Position

Company Registration No: 30226

Statement of Cash Flows

For the period ended 29 March 2014 (2013: for the period ended 30 March 2013)

Statement of Changes in Equity

Group

The Consolidated Statement of Changes in Equity has been restated to reflect the impact of amendments to IAS 19.

Company

The Statement of Changes in Equity has been restated to reflect the impact of amendments to IAS 19.

James Cropper plc

Preliminary Results for the year ended 29 March 2014

1. Basic profits per share have been calculated on the profit after taxation of £1,371,000 (2013: £872,000) divided by the weighted average number of Ordinary shares in issue during the period of 8,904,249 (2013: 8,618,766).

2. The dividend will, if approved, be paid in cash only on 8 August 2014 to all shareholders on the Register on 11 July 2014. The ex-dividend date will be 9 July 2014.

3. The financial information set out above does not constitute the statutory accounts for the year ended 29 March 2014. Statutory accounts for 2013 have been delivered to the Registrar of Companies and those for 2014 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.

4. The Annual Report and Accounts for 2014 will be posted to shareholders on 8 July 2014. 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 30 July 2014 at the Bryce Institute, Burneside, Kendal, Cumbria.