Cropper (J) Regulatory News (CRPR)

21 Nov 2006 07:30

Cropper(James) PLC21 November 2006 Issued by Citigate Dewe Rogerson Ltd, BirminghamDate: Tuesday, 21 November 2006Embargoed: 7.30am James Cropper PLC 'Specialist Paper Makers' Interim Results for the Half year ended 30 September 2006 Half year to Half year to Full year to 30 September 1 October 1 April 2006 2005 2006 Turnover £33.0m £31.5m £64.2m Group profit/(loss) before tax £1.0m £0.5m £0.3mPrior to net IFRS pension adjustments £0.8m £0.2m (£0.1m)After net IFRS pension adjustments Earnings per share 6.4p 1.4p (1.2p) Dividend per share declared 1.9p 1.9p 4.1p Gearing 37% 45% 46% TFP turnover up 26% with profits well ahead.Speciality Papers profitable in first half.Full year gas costs anticipated being at last year's level. "Despite the recent weakening of the US$, growth at TFP has continued. Turnoverwas up 26%, with profits well ahead of the comparable period last year. Sales tothe US market were 42% up on the first half of the previous year in £Sterlingterms, with rest of the world sales also ahead by 14%". "TFP is expected to perform at levels consistent with the first half for theremainder of the financial year. TFP's conversion of its strong portfolio of newproduct developments into commercial opportunities, combined with a well-managedcost base, should continue to drive growth and sustain profitability". "Although Speciality Papers traded profitably in the first half, outlook remainsdifficult for the foreseeable future, given the uncertainties surroundingforward quoted energy prices and the upward trend in pulp costs. It shouldtherefore be anticipated, that the profitability of Speciality Papers willdeteriorate during the course of the second half-year. Despite these challengingmarket conditions, the business recovery plan continues to make good progress,with its emphasis on margin growth, improved operational efficiencies andreduced costs and wastage". "Given the encouraging developments in TFP and Speciality Papers during thefirst half, the Board is confident that our on-going plans should return theGroup to acceptable levels of profitability in the short to medium term". J A Cropper, Chairman FULL STATEMENT ATTACHEDEnquiries:Alun Lewis, Chief ExecutiveJohn Denman, Group Finance Director Katie DaleJames Cropper PLC Citigate Dewe RogersonToday: 020 7638 9571 (8.00am - 11.00am) Today: 020 7638 9571Thereafter: 01539 722002 Thereafter: 0121 455 8370www.cropper.com Mobile: 07770 788624 -2- ---------------------------------------------Summary of Results Half-year to Half-year to Full-year to 30 September 1 October 1 April 2006 2005 2006 Group turnover £'000 32,965 31,459 64,201 --------------------------------------------- Profit and Loss Summary £'000--------------------------------------------------------------------------------------Trading operating profit 1,270 733 833Profit on sale of trade investment - - 116 -----------------------------------------Trading operating profit 1,270 733 949Joint venture (23) (36) (89) -----------------------------------------Trading profit before interest 1,247 697 860Net interest (229) (224) (511) ----------------------------------------- Trading profit before tax 1,018 473 349 -----------------------------------------(After future service pension contributions paid)--------------------------------------------------------------------------------------Net pension adjustments toOperating profit (316) (242) (364)Net interest 56 (68) (114) ----------------------------------------- Net pension adjustment before tax (260) (310) (478) -------------------------------------------------------------------------------------------------------------------------------Overall Group after pension adjustmentsOperating profit 954 491 585Joint venture (23) (36) (89) -----------------------------------------Profit before interest 931 455 496Net interest (173) (292) (625) ----------------------------------------- Profit/(Loss) before tax 758 163 (129) ------------------------------------------------------------------------------------------------------------------------------- Earnings/(Losses) per Share 6.4p 1.4p (1.2p) Dividends per Share 1.9p 1.9p 4.1p ----------------------------------------- Balance Sheet Summary £'000Non-pension assets - excluding cash 46,388 47,675 46,825Non-pension liabilities -excluding borrowings (13,103) (11,921) (12,150) ----------------------------------------- 33,285 35,754 34,675Net pension liabilities (7,790) (6,372) (7,221) ----------------------------------------- 25,495 29,382 27,454Net borrowings (6,944) (9,114) (8,595) -----------------------------------------Equity shareholders' funds 18,551 20,268 18,859 ----------------------------------------- Gearing % 37 45 46 ----------------------------------------- Capital Expenditure £'000 920 1,318 2,889 ----------------------------------------- -3- James Cropper PLC Interim Results for the Half year ended 30 September 2006 STATEMENT BY THE CHAIRMAN, J A CROPPER The Group recorded a profit before tax of £758,000 for the period (£1,018,000prior to net IFRS pension adjustments). This compares with a profit before taxof £163,000 for the first half of the previous year (£473,000 prior to net IFRSpension adjustments). Group turnover was £33.0 million against £31.5 million forthe same period last year, an increase of 5%. The Board has declared that the interim dividend will be maintained at 1.9p pershare. Technical Fibre Products ("TFP")Despite the recent weakening of the US$, growth at TFP has continued. Turnoverwas up 26%, with profits well ahead of the comparable period last year. Sales tothe US market were 42% up on the first half of the previous year in £Sterlingterms, with rest of the world sales also ahead by 14%. Global growth ofengineered composite materials, combined with the resurgence of commercialaircraft new-builds and the development of new concept military aircraft havebeen prime drivers responsible for this growth. Much of the material supplied byTFP into the aerospace sector contains metal-coated carbon fibres. The majorityof these fibres are supplied by Electro Fiber Technologies LLC, the jointventure company in which TFP has a 50% share. Total sales of composite materialsto the US market were up 47%, with sales of fire protection material to the USAincreasing by 60% over the same period. James Cropper Speciality Papers ("Speciality Papers")Speciality Papers traded profitability in the first half, with overall salesincreasing by 1% over the same period last year. Although UK sales were up 6%,in contrast, sales into mainland Europe were disappointing, with total exportsales being down 7%. Further price rises are also in the process of being agreedwith customers. The average cost of natural gas in the first-half was 34 pence per therm, anincrease of 15% against the same period last year. Forward market projectionsfor the second half-year have reduced in recent months. If these projectionsmaterialise, combined with an anticipated fall in consumption, the annual costof gas for the full year will be held at the previous year's level. The wasteheat recovery unit fitted to our CHP plant became operational in October 2006.This investment is expected to reduce gas consumption by up to 5% per annum. Itis our intention to reduce energy consumption where possible through moreeconomical use together with other energy saving investments Northern Bleached Softwood Kraft pulp, the market benchmark, started the year atUS$645 per tonne and had risen to US$710 per tonne by the end of July 2006,remaining at this level until October 2006. The price moved to US$730 per tonnein November 2006, and it is expected that this price will be maintained for theforeseeable future. Should these predictions prove to be correct, then combinedwith the recent exchange rate changes in the US$ and Euro, the cost of pulp inthe current year would be some 6% higher than last year. The Paper Mill ShopThe depressed level of consumer spending across the majority of the retailsector continues to affect The Paper Mill Shop, which incurred a loss in thefirst-half of the current financial year. Although sales were up 3% on the sameperiod, this was against the background of additional store openings during thesecond-half of last year. No new store openings are anticipated in the remainderof the current financial year. Brand development will continue through thelaunch of an Internet offering in the second half-year. continued... -4- James Cropper Converting ("Converting")The performance of Converting has been encouraging, with turnover up 2% on thecomparable period. Despite this however, the weakening of the US$ over theperiod has increased margin pressure on mountboard sales to the USA. The investment and product rationalisation identified in the Annual Report &Accounts 2006 was completed on schedule by the half-year end. This developmentwill lead to significant improvements in capability, output and productivity,which should then result in increased profitability during the second half ofthe year. Pensions and International Accounting Standard 19 ("IAS 19")Actual future service pension contributions paid in the period by the Group toits two final salary schemes in accordance with the actuaries' recommendations,resulting from their latest "on-going" valuations, were £506,000. Under IAS 19the charge against profit in the six-month period was £766,000, a difference of£260,000 in excess of the future service contributions that were actuallyrequired. OutlookTFP is expected to perform at levels consistent with the first half for theremainder of the financial year. TFP's conversion of its strong portfolio of newproduct developments into commercial opportunities, combined with a well-managedcost base, should continue to drive growth and sustain profitability. Although Speciality Papers traded profitably in the first half, outlook remainsdifficult for the foreseeable future, given the uncertainties surroundingforward quoted energy prices and the upward trend in pulp costs. It shouldtherefore be anticipated, that the profitability of Speciality Papers willdeteriorate during the course of the second half-year. Despite these challengingmarket conditions, the business recovery plan continues to make good progress,with its emphasis on margin growth, improved operational efficiencies andreduced costs and wastage. As with all retailers, the pre-Christmas period is vital to The Paper Mill Shop.Given the prevailing trading climate it is expected that the subsidiary willincur a small loss in the full year. The impact of the recent weakening of the US$ and • against £Sterling isexpected to have a broadly neutral effect on the Group overall as a consequenceof our internal currency hedging policy. Cash outflow will increase in the second half of the financial year, as aconsequence of increased capital expenditure and higher pulp and energy costs.Cash management is under firm control. Investment over the next two years willbe prioritised on projects that will minimise energy costs, improve efficienciesand reduce our dependence on external waste water treatment. Given the encouraging developments in TFP and Speciality Papers during the firsthalf, the Board is confident that our on-going plans should return the Group toacceptable levels of profitability in the short to medium term. -5- James Cropper PLC Interim Results Consolidated Income Statement for the half-year to 30 September 2006Unaudited Half year to Half year to Full year to 30 September 2006 1 October 2005 1 April 2006 £'000 £'000 £'000--------------------------------------------------------------------------------Continuing operationsTurnover 32,965 31,459 64,201 --------------------------------------------Operating profit 954 491 585Interest payable andsimilar charges (386) (318) (888)Interest receivable andsimilar income 213 26 263Share of loss of jointventure (23) (36) (89) --------------------------------------------Profit/(loss) before tax 758 163 (129)Taxation (227) (49) 27 --------------------------------------------Profit/(loss) for theperiod attributable toequity holders of thecompany 531 114 (102) ============================================Earnings/(losses) pershare - basic & diluted 6.4p 1.4p (1.2p) --------------------------------------------Dividend declared in theperiod - pence per share 1.9p 1.9p 4.1p -------------------------------------------- -6- James Cropper PLC Interim Results Consolidated Balance Sheet as at 30 September 2006Unaudited Half year to Half year to Full year to 30 September 2006 1 October 2005 1 April 2006 £'000 £'000 £'000--------------------------------------------------------------------------------AssetsNon-current assetsIntangible assets 1,287 1,231 1,316Property, plant andequipment 23,080 24,257 23,763Financial assets- Trade investments - 195 -Investments in jointventures 95 90 77Deferred tax assets 3,339 2,731 3,095 --------------------------------------------- 27,801 28,504 28,251 ---------------------------------------------Current assetsInventories 8,313 8,224 8,267Trade and otherreceivables 13,611 13,676 13,399Financial assets- Derivative financialinstruments 2 2 2Cash and cash equivalents 3,266 311 1,762 --------------------------------------------- 25,192 22,213 23,430 ---------------------------------------------LiabilitiesCurrent liabilitiesTrade and other payables (8,594) (7,116) (7,727)Financial liabilities- Borrowings (2,384) (1,981) (2,244)- Derivative financialinstruments (3) (13) -Current tax liabilities (590) (643) (465) --------------------------------------------- (11,571) (9,753) (10,436) ---------------------------------------------Net current assets 13,621 12,460 12,994 ---------------------------------------------Non-current liabilitiesFinancial liabilities- Borrowings (7,826) (7,444) (8,113)Retirement benefitliabilities (11,129) (9,103) (10,315)Deferred tax liabilities (3,916) (4,149) (3,958) --------------------------------------------- (22,871) (20,696) (22,386) ---------------------------------------------Net assets 18,551 20,268 18,859 =============================================Shareholders' equityShare capital 2,090 2,090 2,090Share premium 454 454 454Other reserves 61 100 61Retained earnings 15,946 17,624 16,254 ---------------------------------------------Total shareholders' equity 18,551 20,268 18,859 ============================================= -7- James Cropper PLC Interim Results Consolidated Cash Flow Statement for the half-year to 30 September 2006Unaudited Half year to Half year to Full year to 30 September 1 October 1 April 2006 2005 2006 £'000 £'000 £'000---------------------------------------------------------------------------------Cash flows from operating activitiesProfit/(loss) before tax 758 163 (129)Interest income and expense 173 292 625Depreciation/amortisation 1,632 1,735 3,715Decrease/(increase) inworking capital 575 (676) 103Other non-cash movements- Share of loss of joint venture 23 36 89- Past service deficit payments (400) (438) (914)- Net IFRS pension adjustments 260 310 478- Profit on sale of trade investment - - (116)- Share-based payments 12 12 25 -----------------------------------------Cash generated from operations 3,033 1,434 3,876Interest received 224 46 262Interest paid (360) (359) (854)Tax (paid)/received (95) 3 (198) -----------------------------------------Net cash generated fromoperating activities 2,802 1,124 3,086 -----------------------------------------Cash flows from investing activitiesInvestment in joint venture (47) (43) (67)Purchase of intangible assets (73) (113) (206)Purchase of property,plant and equipment (847) (1,205) (2,683)Proceeds from sale oftrade investment - - 311 -----------------------------------------Net cash used in investing activities (967) (1,361) (2,645) -----------------------------------------Cash flows from financing activitiesNet proceeds from issue ofnew bank loan 1,000 2,000 4,000Finance lease capitalpayments - (64) (96)Repayment of bank loans (1,147) (807) (1,843)Dividends paid toshareholders (184) (527) (686) -----------------------------------------Net cash (usedin)/provided by financingactivities (331) 602 1,375 -----------------------------------------Net increase in cash andcash equivalents 1,504 365 1,816in the periodCash and cash equivalentsat the start of the period 1,762 (54) (54) -----------------------------------------Cash and cash equivalentsat the end of the period 3,266 311 1,762 -----------------------------------------Cash and cash equivalents consistsof: Cash at bank and in hand 3,266 311 1,762Overdrafts included in borrowings - - - ----------------------------------------- 3,266 311 1,762 ----------------------------------------- -8- James Cropper PLC Interim Results Consolidated Statement of Recognised Income and Expense for the half-year to 30September 2006Unaudited Half year to Half year to Full year to 30 September 1 October 1 April 2006 2005 2006 £'000 £'000 £'000--------------------------------------------------------------------------------Profit/(loss) for theperiod 531 114 (102)Currency translationdifferences on 1 - 16foreign currency investmentRetirement benefitliabilities - actuarial(losses)/gains (954) 1,476 (44)Deferred tax on actuariallosses/(gains) 286 (443) 13on retirement benefitliabilities -------------------------------------------Total recognised(expense)/income for theperiod (136) 1,147 (117) ------------------------------------------- Consolidated Statement of Changes in Equity for the half-year to 30 September2006Unaudited Half year to Half year to Full year to 30 September 1 October 1 April 2006 2005 2006 £'000 £'000 £'000--------------------------------------------------------------------------------Opening shareholders' funds 18,859 19,636 19,636Total recognised(expense)/income for theperiod (136) 1,147 (117)Share-based payments 12 12 26Dividends paid (184) (527) (686) --------------------------------------------Closing shareholders' funds 18,551 20,268 18,859 -------------------------------------------- -9- James Cropper PLC Interim Results Notes to the Unaudited Interim Results 1 Basis of the preparation of IFRS financial information These interim results have been prepared in accordance with the historical costconvention as modified by the revaluation of land and buildings and derivativefinancial instruments and in accordance with International Financial ReportingStandards ("IFRS") as adopted by the European Union (with the exception of IAS34, Interim Financial Reporting) and International Financial ReportingInterpretations Committee ("IFRIC") interpretations and with those parts of theCompanies Act 1985 applicable to companies reporting under IFRS. 2 Interim Statement a) The summarised results for the half-year to 30 September 2006, which have not been audited or reviewed, have been prepared in accordance with the accounting policies adopted in the accounts for the year ended 1 April 2006. b) The financial information set out above does not constitute statutory accounts within the meaning of the Companies Act 1985. The figures for the year to 1 April 2006 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 being sent to all shareholders and is available from the Company's registered office or from our website ( www.cropper.com). 3 Earnings per shareBasic and diluted earnings per share for the half year to 30 September 2006 havebeen calculated on the profit available for distribution and on 8,359,114 (2005:8,359,114) Ordinary Shares, being the weighted average number of shares in issueduring the period. None of the potential Ordinary Shares are dilutive. 4 DividendAn interim dividend of 1.9p per Ordinary Share (2005: 1.9p per share) isproposed and will be paid on 12 January 2007 to holders on the register at theclose of business on 22 December 2006. The dividend relating to the year to 1April 2006 was made up of an interim payment of £159,000 (1.9p per share) and afinal dividend of £184,000 (2.2p per share). 5 PensionsIAS 19 regards a sponsoring company and its pension schemes as a singleaccounting entity rather than two or more separate legal entities. The actuarialvaluation is the starting point for the creation of the IAS 19 accountingentity. The valuation determines the net position of a pension scheme, i.e. thedifference between its assets and liabilities. On the introduction of IAS 19 thenet position, surplus or deficit, is brought onto the sponsoring company'sBalance Sheet such that Reserves are immediately adjusted by the net positionreduced by deferred tax. This obviously results in either an increase ordecrease in the net asset value of the sponsoring company. Upon valuation atsubsequent year-ends the movement in value from the previous valuation isexpressed in the following component parts: -10- 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 Statement of Recognised Income and Expense------------------------------------------Actuarial gains and losses arising from variances against previous actuarialassumptions. The above items are offset by actual contributions paid by the employer in theperiod. IAS19 deficits are shown below at the corresponding Balance Sheet dates. -------------------------------------------------------------------------------- Half year to Half year to Full year to 30 September 1 October 1 April 2006 2005 2006 IAS19 DEFICIT £'000 £'000 £'000 Current Service Charge (822) (766) (1,392) Finance costs 56 (68) (114) Future service contributions paid 506 524 1,028 --------------------------------------------Net impact on Profit and Loss Account (260) (310) (478)Past service deficit contributions paid 400 438 914 Actuarial gains or losses (954) 1,476 (44)Opening deficit (10,315) (10,707) (10,707) --------------------------------------------Closing deficit (11,129) (9,103) (10,315) Deferred Taxation @ 30% 3,339 2,731 3,095 --------------------------------------------Net - Deficit (7,790) (6,372) (7,220) ---------------------------------------------------------------------------------------------------------------------------- It should be noted that the assumptions underlying the IAS 19 valuation arebased on financial conditions at the Balance Sheet date. As market values of thescheme assets and the discount factors applied to the scheme liabilities willfluctuate, this method of valuation will often lead to large variations in the"pension balance" from period to period. Pension liabilities are discounted atthe current rate of return on an AA rated quality corporate bond of equivalentcurrency and term. The actual contributions paid by the Group to its two finalsalary schemes are determined by the actuaries' "on-going" valuation. Theassumptions used by the actuaries for their IAS 19 valuations are moreconservative than those that they used with regard to their "on-going"valuations. An "on-going" valuation takes account of the projected growth in the pensionschemes' assets by asset type over the projected life of the scheme. Thecombined "on-going" deficits as at April 2005 were valued at £6,867,000 prior todeferred tax. Actual future service pension contributions paid in the period by the Group toits two final salary schemes in accordance with the actuaries' recommendations,resulting from their latest "on-going" valuations, were £506,000. Under IAS 19the charge against profit in the six-month period was £766,000, a difference of£260,000 in excess of the future service contributions that were actuallyrequired. This is shown in the table below. -11- -------------------------------------------------------------------------------- Half year to Half year to Full year to 30 September 1 October 1 April 2006 2005 2006 £'000 £'000 £'000 Profit before tax as reported 758 163 (129) Current Service Charge (822) (766) (1,392) Finance costs 56 (68) (114) ------------------------------------------------ (766) (834) (1,506) Future service contributions paid 506 524 1,028 ------------------------------------------------Net pension adjustment (260) (310) (478) ------------------------------------------------Trading profit before tax 1,018 473 349 -------------------------------------------------------------------------------------------------------------------------------- This information is provided by RNS The company news service from the London Stock Exchange