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 30 March 2013

Mark Cropper, Chairman, commented:

"The recovery of TFP and Converting in the past year was very pleasing and is expected to be sustained as the current financial year progresses.

"I anticipate that we will make further gains in Speciality Papers' home market and non-European export markets in the coming year to offset reduced sales into continental Europe. Recent investments and the completion of the restructuring process are also expected to impact favourably on the profitability of Speciality Papers in the current financial year.

"During the course of the current year we intend to strengthen the sales and marketing capability of each of our businesses through selective recruitment in order to deliver the growth plans being formulated under Phil Wild's leadership."

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. 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.

CHAIRMAN'S REVIEW

I am pleased to report that Technical Fibre Products ("TFP") and James Cropper Converting ("Converting") rebounded strongly from the previous year, that Group turnover continued to grow and that importantly the Group's profitability improved significantly on the previous period.

After allowing for major project expenditure, profit before tax was £2,052,000 compared to £843,000 in 2011/12 (prior to the IAS 19 pension adjustment).

Profit after the IAS 19 pension adjustment but before tax was £1,819,000 compared to £971,000 in 2011/12.

Major project expenditure expensed against profit was £555,000. Other non-recurring costs borne at Group level totalled £228,000 and mainly related to executive transition costs.

Group turnover for the financial year was £79,241,000, up 1% on last year with UK sales up 4% and export sales down 1%. Across the Group, sales into the USA were up 24%, whilst sales into continental Europe were down 12%. Exports represented 49% of turnover. The profitability and competitiveness of our TFP and Converting businesses was aided by the strengthening of the US dollar against Sterling during this period. However the US dollar / Sterling movement led to an increase in raw material costs for James Cropper Speciality Papers.

During the course of the year the Group completed a restructuring process which reduced the size of the Group's UK workforce by 8%, resulting in cost savings of approximately £1.0 million on an annualised basis from 2013/14 onwards. The resultant increase in productivity will improve the Group's competitive position. The capacity and capability of the Group's three businesses are unaffected by this process. During the year the Group continued its policy of continuing to invest in capital equipment, with the focus during the period being on improved cost and environmental efficiency.

Diluted Earnings per Share after the adjustment for IAS 19 curtailment was 16.5 pence compared to 9.5 pence in the previous year.

Dividend

The Board has decided to maintain the final dividend at 5.7 pence per share making a total dividend for the financial year of 7.9 pence (7.9 pence in 2011/12).

Technical Fibre Products ("TFP")

TFP reported an operating profit for the year of £1,450,000 compared to £629,000 in 2011/12, with turnover up by 6% on the previous year at £12,599,000.

TFP grew strongly in the Aerospace and Defence sectors during the year. Sales in these sectors represented 20% and 18% of total sales respectively. Sales to the USA were up by 17% and 16% in Sterling and US dollar terms respectively. Sales to the USA accounted for 55% of TFP's turnover, compared with 50% in the previous year. Sales outside of the USA were down by 6%.

As the first step in consolidating our US facilities, the Cincinnati facility was closed in April 2012. It will take until Autumn 2013 for the facility at Schenectady to attain accreditation to a number of important customer programmes which consume materials sourced from the Stratford facility. Once accreditation has been achieved the Stratford facility will also be closed. An initial investment of US$3 million at the Schenectady facility has been authorised. This will include the installation of two fibre plating lines.

James Cropper Speciality Papers ("Speciality Papers")

Speciality Papers reported an operating profit for the year of £697,000 compared to £1,430,000 in 2011/12.

Turnover fell by £1,892,000 to £57,699,000, a 3% decline. The economic uncertainty, which led to the loss of confidence amongst customers in many export paper markets in 2011 shows no immediate sign of lifting. However we have succeeded in winning business in new areas of the UK market which has helped to fill the capacity gap. Overall volume was down 2%, with UK volumes up by 3% whilst export volumes were down by 10%.

The cost of Northern Bleached Softwood Kraft ("NBSK") wood-pulp opened 2012 at US$840/tonne and fell to US$770/tonne at 30 June 2012 before rising to US$830/tonne by the end of the financial year. In late May 2013, the price had risen to US$855/tonne.

During the year Speciality Papers commissioned its Reclaimed Fibre facility at a cost of £5.0m. The plant uses innovative technology to extract fibre from specific paper-based consumer products 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 mitigate the impact of pulp price volatility.

The overall cost of consumption of natural gas was £4.4 million compared to £3.9 million in the prior year, up 13%.

James Cropper Converting ("Converting")

Converting reported an operating profit for the year of £982,000 compared to £192,000 in 2011/12.

Turnover was up 25% to £13,707,000 with volume up by 25%. Sales denominated in US$ increased by 26% and 23% in Sterling and US dollar terms respectively. Over the course of the financial year sales in US dollars accounted for 30% of Converting's turnover which was in line with the previous year. Sales of mount board and digital printing grades into the USA grew by 24% and 40% respectively as a consequence of a build-up in customer launch stocks. Mount board sales outside the USA, mainly into the UK market, grew by 8%. Display board sales were up 52%.

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 grew by 6.3% over the period however their liabilities increased by 9.1%. The IAS19 valuations of these schemes as at 30 March 2013 revealed a combined deficit of £10,353,000, compared with £7,698,000 at the previous year end, an increase of £2,655,000. The primary reason for the increase in the schemes' liabilities is the discount rate of 4.65% used at March 2013 compared to 4.95% at March 2012, reflecting the decline in corporate bond yields over this period.

As from 1 April 2011 active members' benefits have been reduced such that future increases in pensionable salaries are restricted to RPI up to a maximum of 2% per annum. The next "on-going" valuations, which set the funding rates, take place with effect from 1 April 2013. This will initiate a further review of the benefits provided by these schemes once the results are known.

Cash and borrowings

Capital expenditure during the year was £4.1 million (£5.9 million in 2011/12). At 30 March 2013, gross drawn down loans totalled £11.5 million, with £2.2 million held as cash at bank. In addition the Group had un-drawn overdraft facilities of £3.3 million, US$1.0 million and €1.0 million. Gearing at the financial year end, after deduction of the IAS 19 pension deficit, was 46%. Working capital will remain under tight control.

Outlook

The recovery of TFP and Converting in the past year was very pleasing and is expected to be sustained as the current financial year progresses.

I anticipate that we will make further gains in Speciality Papers' home market and non-European export markets in the coming year to offset reduced sales into continental Europe. Recent investments and the completion of the restructuring process are also expected to impact favourably on the profitability of Speciality Papers in the current financial year.

During the course of the current year we intend to strengthen the sales and marketing capability of each of our businesses through selective recruitment in order to deliver the growth plans being formulated under Phil Wild's leadership.

Mark Cropper

Chairman

 James Cropper plc

Group Statement of Comprehensive Income

Statement of Financial Position

Statement of Cash Flows

For the period ended 30 March 2013 (2012: for the period ended 31 March 2012)

Statement of Changes in Equity - Group

Statement of Changes in Equity - Company

 Notes: 

1. Basic profits per share have been calculated on the profit after taxation of £1,445,000 (2012: £837,000) divided by the weighted average number of Ordinary shares in issue during the period of 8,618,766 (2012: 8,473,102).

2. The dividend will, if approved, be paid on 9 August 2013 to all shareholders on the Register on 12 July 2013.

3. The financial information set out above does not constitute the statutory accounts for the years ended 30 March 2013. Statutory accounts for 2012 have been delivered to the Registrar of Companies and those for 2013 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 2013 will be posted to shareholders on 8 July 2013. 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 31 July 2013 at the Bryce Institute, Burneside, Kendal, Cumbria.