Cropper (J) Regulatory News (CRPR)

James Cropper plc ("James Cropper" or the "Group")

the niche specialist paper and materials group, is pleased to announce its

Half-year results to 29 September 2012

"The recovery of TFP and Converting in the first six months is very pleasing and is expected to be sustained in the second half.

"I anticipate that we will make further gains in Speciality Papers' home market in the second half to offset reduced sales into continental Europe. Recent investments and the completion of the restructuring process will also impact favourably on the profitability of Speciality Papers from the beginning of the next financial year.

"The Government's conditional decision to provide support from the Regional Growth Fund for our proposed steam raising plant is great news for the Group. Subject to the Government's due diligence criteria being satisfied, an agreed grant offer of £3.1 million is expected early in the new financial year. The plant, once operational, would reduce our energy related costs by an estimated £1.0 million per annum and our CO2 emissions by at least 10%.

"Despite the troubled economic climate it is very clear to me that I can be confident that there are many opportunities to build upon our global strengths and thus make James Cropper PLC a more profitable enterprise in the future. The Board expects the Company's full year trading results to be in line with market expectations."

Mark Cropper, Chairman

STATEMENT BY THE CHAIRMAN, M A J CROPPER

In the first six months the Group recorded a profit before tax (but after IAS19 pension adjustment) of £1,029,000 compared with £1,386,000 for the same period last year.

Prior to the IAS19 pension adjustment, profit before tax was £1,185,000, just ahead of last year.

Group turnover was £39.0 million against £39.6 million for the comparable period, a decrease of 1%.

Dividend

The board has decided to maintain the interim dividend at 2.2p pence per share.

Technical Fibre Products ("TFP")

TFP opened the year strongly, most notably in the Aerospace, Defence and Energy sectors. Overall sales were up 12% on the comparable period last year with sales into the USA up 19%.

As the first step in consolidating our US facilities, the Cincinnati operation was closed in April 2012 and has now been relocated to our new facility in Schenectady, New York State.

James Cropper Speciality Papers ("Speciality Papers")

In Speciality Papers total sales in the opening half were down 7% on the comparable period. Export sales value declined by 17% whilst UK sales were in line with last year. Overall volume was down 7% with export volumes down 15% and UK volumes down 3%. The economic uncertainty, which led to the loss of confidence amongst customers in many export paper markets in the second half of last year, shows no immediate sign of lifting. We have been successful in winning business in new areas in the UK market which has helped to fill the capacity gap.

The cost of Northern Bleached Softwood Kraft ("NBSK") pulp opened at US$840/tonne and fell to US$770/tonne at the close of the period but is now on a rising trend.

Energy costs were in line with the same period last year and are now also on a rising trend.

James Cropper Converting ("Converting")

Converting traded ahead of the first half of last year. Sales were up 21% primarily due to a recovery in sales into the lower margin Sign & Display sector.

People

Our plans to reduce the size of the Group's UK workforce by 8% during the course of 2012 are on-track. Once completed these plans will result in cost savings of approximately £1.0 million on an annualised basis from 2013/14 onwards, with savings of approximately £0.3 million in 2012/13. A full provision relating to redundancy costs of £0.8 million was recognised in the previous financial year.

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

During the first half bond yields fell significantly to the extent that the overall liabilities of the Group's two defined benefit pension schemes increased by 4.8%. Over the six months the asset value of the schemes declined by 0.3%. As a result the schemes' combined deficit, net of deferred tax, rose by £3,163,000 to £9,013,000 since the previous year end. Since 1 April 2011 future increases in pensionable pay have been capped at a maximum of 2% per annum. The next "on-going" valuation, which sets the funding rate, will take place as at 1 April 2013. This will initiate a further review of these schemes.

Investment

We continue to progress our programme of investment to enhance our capacities and capabilities and to improve energy and raw material efficiencies. Total expenditure in the full year is anticipated to be in the region of £3.5 million.

As announced on 23 October 2012 the Government has selected the Group's proposed steam raising plant for support from the Regional Growth Fund ("RGF"). The RGF grant is conditional upon the Group's proposal satisfying the Government's due diligence process and compliance with EU State Aid rules. If this process is successful a grant of up to £3.1 million would contribute to the capital investment of approximately £7.0 million at the Group's site in Kendal, Cumbria. Assuming that the due diligence process has been satisfied and that the project is approved by the Board it is anticipated that the steam raising plant would be operational by late 2014. If the project were to proceed no expenditure is anticipated in the current financial year. When operational, the steam raising plant would significantly reduce the Group's energy costs, CO2 emissions and rising environmental taxes. It is estimated that the savings for the Group would exceed £1.0 million per annum by 2015. The plant would consume a mixture of solid recovered fuel produced from municipal waste and the Group's own paper-making effluent residues.

Cash and borrowings

At 29 September 2012 gross drawn down loans and leases totalled £11.5 million, with £3.0 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.

Gearing at the half year end, after deduction of the IAS 19 pension deficit, was 45% (before 30%).

Working capital continued to remain under tight control. In the second half gearing will ease upward as a consequence of increased expenditure on major revenue and capital projects.

Outlook

The recovery of TFP and Converting in the first six months is very pleasing and is expected to be sustained in the second half.

I anticipate that we will make further gains in Speciality Papers' home market in the second half to offset reduced sales into continental Europe. Recent investments and the completion of the restructuring process will also impact favourably on the profitability of Speciality Papers from the beginning of the next financial year.

The Government's conditional decision to provide support from the Regional Growth Fund for our proposed steam raising plant is great news for the Group. Subject to the Government's due diligence criteria being satisfied, an agreed grant offer of £3.1 million is expected early in the new financial year. The plant once operational would reduce our energy related costs by an estimated £1.0 million per annum and our CO2 emissions by at least 10%.

Despite the troubled economic climate it is very clear to me that I can be confident that there are many opportunities to build upon our global strengths and thus make James Cropper PLC a more profitable enterprise in the future. The Board expects the Company's full year trading results to be in line with market expectations.

Mark Cropper

Chairman

13 November 2012

Notes to the Unaudited Interim Results

1 Basis of the preparation of IFRS financial information

a) These interim results have been prepared in accordance with the historical cost convention, as modified by the revaluation of land and buildings, and derivative financial instruments, and in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union (with the exception of IAS 34, Interim Financial Reporting) and International Financial Reporting Interpretations Committee ("IFRIC") interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

All references to:

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

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

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

2. "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"

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

4. "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.

b) The Group's policy is to maintain the ability to continue as a going concern, in order to provide returns to the shareholder and benefits to other stakeholders. Accordingly the going concern basis has been adopted in preparing these interim results.

2 Interim Statement

a) The summarised results for the half-year to 29 September 2012, which have not been audited or reviewed, have been prepared in accordance with the accounting policies adopted in the accounts for the 52 week year ended 31 March 2012.

b) The financial information set out above does not constitute statutory accounts within the meaning of the Companies Act 2006. The figures for the 52 week year ended 31 March 2012 are an extract of the full accounts for that year, which have been filed with the Registrar of Companies and on which the auditors gave an unqualified opinion.

c) A copy of the interim statement is available on our website (www.cropper.com).

3 Earnings per share

Basic and diluted earnings per share for the half year to 29 September 2012 have been calculated by dividing the profits attributable to ordinary shareholders by 8,475,667 (2011: 8,472,368) ordinary shares, being the weighted average number of ordinary shares during the period.

4 Dividend

A net interim dividend of 2.2p per Ordinary Share (2011: 2.2p per share) is proposed and will be paid on 11 January 2013 to holders on the register at the close of business on 14 December 2012. The dividend relating to the 52 week year to 31 March 2012 was made up of an interim payment of £183,000 (2.2p per share) and a final dividend payment of £477,000 (5.7p per share). The dividend is payable in cash only.

5 Pensions

IAS 19 regards a sponsoring company and its pension schemes as a single accounting entity rather than two or more separate legal entities. The actuarial valuation is the starting point for the creation of the IAS 19 accounting entity. The valuation determines the net position of a pension scheme, i.e. the difference between its assets and liabilities. The net position, surplus or deficit, is brought onto the sponsoring company's Balance Sheet such that Reserves are immediately adjusted by the net position reduced by deferred tax. This obviously results in either an increase or decrease in the net asset value of the sponsoring company. At subsequent period-ends the movement in value from the previous valuation is expressed in the following component parts:

Income Statement

Operating costs

Current service charge, being the cost of benefits earned in the current period shown net of employees' contributions.

·; Past service costs, being the costs of benefit improvements.

·; Curtailment and settlement costs.

Finance costs, being the net of

·; Expected return on pension scheme assets.

·; Interest cost on the accrued pension scheme liabilities.

Actuarial gains and losses arising from variances against previous actuarial assumptions. The above items are offset by actual contributions paid by the employer in the period. IAS19 deficits are shown below at the corresponding Balance Sheet dates.

It should be noted that the assumptions underlying the IAS 19 valuation are based on financial conditions at the Balance Sheet date. As market values of the scheme assets and the discount factors applied to the scheme liabilities will fluctuate, this method of valuation will often lead to large variations in the "pension balance" from period to period. Pension liabilities are discounted at the current rate of return on an AA rated quality corporate bond of equivalent currency and term. The actual contributions paid by the Group to its two final salary schemes are determined by the actuaries' "on-going" valuation.