Cropper (J) Regulatory News (CRPR)

RNS Number : 9937N

Cropper(James) PLC

22 June 2010

 

James Cropper PLC

 

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

Preliminary Audited Results for the year ended 27 March 2010

 

	Full year to	Full year to
	27 March	28 March
	2010	2009	Change
	£ms	£ms	%
Turnover	76.2	74.8	+2
Group profit before tax
Prior to net IFRS pension adjustment	3.3	1.1
After net IFRS pension adjustment	2.4	0.9
Earnings/(losses) per share -diluted	21.1p	(1.0p)
Dividend per share	7.5p	5.1p	+47
Gearing (net of cash) %
Prior to net IFRS pension deficit	0	17
After net IFRS pension deficit	0	22

 

·; James Cropper Speciality Papers ("Speciality Papers")

Turnover increased by £3.1 million to £52.9 million, up 6%

Operating Profit was £3.4 million against a Loss of £0.3 million in the previous year

·; Technical Fibre Products ("TFP")

Turnover fell by £1.7 million to £10.0 million, down 14%

Operating profit down £0.8 million to £1.3 million

·; Mark Cropper to succeed James Cropper as Chairman in July 2010.

 

James Cropper, Chairman, said:

 

"Speciality Papers traded strongly in the financial year continuing the recovery that began in the second half of the previous financial year".

 

"I am confident that our marketing led growth plans will progress during the coming year. However the upward movement in pulp prices will impact on the profitability of Speciality Papers in the short term. Price increases are currently being agreed with customers although there will be a time lag as regards implementation".

 

"The value of TFP's order book has increased significantly over the level of six months ago indicating that the impact of the recession on down stream customers is easing. As a consequence I anticipate that TFP's sales to the aerospace, defence, security and consumer electronics sectors will build strongly in the next 12 months".

 

"I am very encouraged by the way the Group has managed to weather the vagaries of the recession. Although the outlook for the global economy remains unclear, I am confident, given our plans, that my successor as Chairman has a strong foundation upon which to build".

 

Enquiries:	Brewin Dolphin
John Denman, Group Finance Director	Andrew Kitchingman
James Cropper PLC	Tel: 0845 270 8613
Tel: 01539 722002	Matthew Cheetham
www.cropper.com	Tel: 0845 213 4825

 

Summary of Results	2010	2009	2008	2007	2006
Profit and Loss Summary £'000
Group turnover £'000	76,230	74,803	72,744	69,085	64,201
Trading profit before interest	3,568	1,556	2,365	2,976	860
Depreciation	3,138	3,179	3,280	3,315	3,715
EBITDA (before IAS 19 pension adjustment)	6,706	4,735	5,645	6,291	4,575
Trading activities
Technical Fibre Products	1,327	2,099	1,426	2,053	777
Speciality Papers	3,437	(310)	1,281	1,435	(247)
Converting	446	406	548	460	62
The Paper Mill Shop	(446)	(388)	(358)	(358)	241
Other Group expenses	(321)	(19)	(147)	(86)	-
	4,443	1,788	2,750	3,504	833
Director and employee bonuses	(875)	(232)	(324)	(433)	-
Trading operating profit	3,568	1,556	2,426	3,071	833
Profit on sale of trade investment	-	-	-	-	116
Joint venture	-	-	(61)	(95)	(89)
Trading profit before interest	3,568	1,556	2,365	2,976	860
Net interest	(271)	(448)	(402)	(438)	(511)
Trading profit before tax	3,297	1,108	1,963	2,538	349
(After future service pension contributions paid)
Net IAS 19 pension adjustments to
Operating profit	(255)	(476)	(610)	(610)	(364)
Net interest	(626)	226	227	179	(114)
Net IAS 19 pension adjustment before tax	(881)	(250)	(383)	(431)	(478)
Overall Group after pension adjustments
Operating profit	3,313	1,080	1,816	2,461	469
Profit on sale of trade investment	-	-	-	-	116
Joint venture	-	-	(61)	(95)	(89)
Profit before interest	3,313	1,080	1,755	2,366	496
Net interest	(897)	(222)	(175)	(259)	(625)
Profit/(Loss) before Tax	2,416	858	1,580	2,107	(129)
Balance Sheet Summary £'000
Non-pension assets - excluding cash	43,852	43,753	45,616	45,758	46,668
Non-pension liabilities - excluding borrowings	(15,800)	(12,592)	(12,640)	(13,505)	(11,993)
	28,052	31,161	32,976	32,253	34,675
Net IAS 19 pension deficit (after deferred tax)	(10,210)	(6,535)	(1,299)	(4,306)	(7,221)
	17,842	24,626	31,677	27,947	27,454
Net borrowings	(31)	(4,452)	(6,016)	(5,294)	(8,595)
Equity shareholders' funds	17,811	20,174	25,661	22,653	18,859
Capital Expenditure £'000	1,228	1,333	2,337	2,756	2,889

 

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" refers to the net impact on profit of the pension schemes' operating costs and finance costs.

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

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

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

 

CHAIRMAN'S REVIEW

 

I am delighted to report that the Group recorded a profit before tax of £2,416,000 for the year compared to £858,000 in the previous year. This was after the IAS 19 net pension charge of £881,000. Prior to the IAS 19 net pension charge the profit was £3,297,000 compared to £1,108,000 in 2008/09.

 

James Cropper Speciality Papers ("Speciality Papers")traded strongly in the financial year continuing the recovery that began in the second half of the previous financial year.

 

By contrast, as I indicated in my Interim statement of 17th November 2009, sales by Technical Fibre Products ("TFP") were down considerably on the previous year with the consequential impact on TFP's profitability.

 

Group turnover for the financial year was up 2% to £76,230,000.

Dividends

In view of the Group's strong performance in the year the Board has decided to increase the final dividend from 4.0 pence to 5.3 pence per share making a total dividend for the full year of 7.5 pence compared to 5.1 pence in 2008/09.

 

James Cropper Speciality Papers ("Speciality Papers")

Speciality Papers reported an operating profit of £3,437,000 against an operating loss of £310,000 in the previous year.

 

Turnover grew by £3,110,000 to £52,934,000, a 6% increase. Overall volume was up 4%, with UK and export volumes growing by 2% and 7% respectively. The average selling price increased by 2%.

 

The price of pulp has been extremely volatile in the past two years. Following the dramatic fall in the price of pulp in 2008/09, Northern Bleached Softwood Kraft ("NBSK") pulp opened the 2009/10 financial year at US$580/tonne. However, since then, the price has been on a rising trend, driven by supply constraints and continuing demand from China. Supply in the run up to the financial year end was badly affected by the impact of the Chilean earthquake. Chile's four pulp mills, which jointly produced 8% of global pulp supply, have been out of action since this natural disaster struck . By the end of the full year the price of NBSK was US$880/tonne, level with its previous peak in mid-2008, and an increase of US$300/tonne on the year, up 52%. Further increases took the price to US$950 by May 2010. Market forecasters believe that the price of pulp is approaching a plateau and that the price will start to fall in the second half of the current year. The strengthening of £Sterling against the US$ during the year dampened the impact of the increasing price of pulp to some extent.

 

Ready supply during the year resulted in relatively benign natural gas prices, with the overall cost of consumption in the year being £2.3 million compared to £4.3 million in the prior year.

 

Technical Fibre Products ("TFP")

TFP's operating profit for the year was £1,327,000 compared to £2,099,000 in 2008/09, with turnover falling overall by 14% on the previous year to £9,989,000 as a consequence of recessionary pressures on customers' inventories and markets. Sales were down in all sectors with the exception of fire protection which showed strong growth.

 

Sales into the North American market fell by 17% in US$ terms. At the average exchange rate for the year, sales to the North American market represented approximately 52% of TFP's turnover in £Sterling terms. Sales to "Rest of the World" were down by 20% in £Sterling terms.

 

James Cropper Converting ("Converting")

Converting's operating profit was £446,000 compared to £406,000 in the previous year. Turnover increased by 1% to £11,130,000, with volume down by 8% resulting from recessionary pressures. Sales into the North American market remained static in US$ terms and at the average exchange rate for the year represented approximately 24% of JCC's turnover in £Sterling terms. New sales of high value added grades contributed to the operating profit.

 

The Paper Mill Shop ("TPMS")

Turnover was £5,516,000, a decrease of £158,000 on the previous year, down 3%. Three under performing outlets closed in the latter part of the year reducing the number of trading outlets to twenty one by the year end. The consequential fall in turnover was partially offset by internet sales, which grew considerably during the year. The operating loss increased by £58,000 to £446,000 over the year. However with only modest investment in capital expenditure cash out flow was restricted to £35,000 as a consequence of a fall in working capital of £317,000 and a depreciation charge of £171,000.

 

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. Dramatic changes in financial markets over the year had a substantial impact on the IAS 19 valuation at the period end. Although asset values increased significantly during the period this was not great enough to offset the impact of the fall in bond rates which caused liabilities to increase by 36.3%. As a consequence of these changes the gross IAS19 deficit increased by £5,104,000 over the year to £14,180,000. The net charge against profit in the year was £881,000 compared with £250,000 for the year to 28th March 2009. These results once again demonstrate the volatility introduced to company results by this accounting standard.

 

Cash and borrowings

The combination of improved profit performance, tight control over working capital and modest capital over the year led to negligible net borrowings at the year end. At 27th March 2010 gross drawn down loans totalled £5.1 million, with £5.1 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 financial year end, after deduction of the IAS 19 pension deficit, was nil%.

 

Outlook

I am confident that our marketing led growth plans will progress during the coming year. However the upward movement in pulp prices will impact on the profitability of Speciality Papers in the short term. Price increases are currently being agreed with customers although there will be a time lag as regards implementation.

 

The value of TFP's order book has increased significantly over the level of six months ago indicating that the impact of the recession on down stream customers is easing. As a consequence I anticipate that TFP's sales to the aerospace, defence, security and consumer electronics sectors will build strongly in the next 12 months.

 

During the current financial year there will be further closures of under-performing TPMS outlets. At the same time the in-store offering will also change placing more emphasis on sales of paper, thus increasing the overall margin at store level. We expect that these two factors, supplemented by further growth of internet sales, will reduce the loss of TPMS in the coming year.

 

Borrowing will increase from its current low level as a consequence of increased capital expenditure. Investment will continue to be focused on enhancing our capabilities and on energy and operating efficiencies in our manufacturing subsidiaries.

 

I am very encouraged by the way the Group has managed to weather the vagaries of the recession. Although the outlook for the global economy remains unclear, I am confident, given our plans, that my successor as Chairman has a strong foundation upon which to build.

 

 

 

James Cropper

 

Chairman

Audited Statement of Comprehensive Income for the period ended 27 March 2010 (2009:period ended 28 March 2009)

 

 

 

 

 

 

			2010		2009
			£,000		£,000
Continuing operations
Revenue			76,230		74,803
Other income			208		277
Changes in inventories of finished goods and work in progress			160		272
Raw materials and consumables used			(32,338)		(33,895)
Energy costs			(3,111)		(5,199)
Employee benefit costs			(19,909)		(18,211)
Depreciation and amortisation			(3,138)		(3,179)
Other expenses			(14,789)		(13,788)
Operating profit			3,313		1,080
Interest expense			(910)		(493)
Interest income			13		271
Profit before tax			2,416		858
Tax expense			(608)		(945)
Profit/(loss) for the period			1,808		(87)
Other comprehensive income
Foreign currency translation			(267)		546
Retirement benefit liabilities - actuarial losses			(4,849)		(7,734)
Deferred tax on actuarial losses on retirement benefit liabilities			1,358		2,166
Total comprehensive income for the period attributable to equity  holders of the Company			(1,950)		(5,109)
Earnings/(losses) per share, based on profit/loss for the year after tax and expressed in pence per share
-Basic			21.3p		(1.0p)
-Diluted			21.1p		(1.0p)
Dividends per share expressed in pence per share
-2010 interim dividend paid			2.2p		1.1p
-2010 final dividend proposed			5.3p		4.0p

 

 

 

 

 

 

Audited Statement of Financial Position as at 27 March 2010

(2009: as at 28 March 2009)

			Group			Company
		2010	2009		2010	2009
		£'000	£'000		£'000	£'000
						Restated
Assets
Intangible assets		2,096	2,012		1,879	1,713
Property, plant and equipment		16,863	18,483		2,258	2,228
Investments in subsidiary undertakings		-	-		7,350	7,350
Deferred tax assets		189	-		3,462	2,541
Total non-current assets		19,148	20,495		14,949	13,832
Current assets
Inventories		10,195	10,422		-	-
Trade and other receivables		14,509	12,836		33,739	31,132
Cash and cash equivalents		5,050	2,636		3,420	2,054
Current tax assets		-	-		42	7
Total current assets		29,754	25,894		37,201	33,193
Total assets		48,902	46,389		52,150	47,025
Liabilities
Trade and other payables		11,081	7,662		18,338	12,815
Loans and borrowings		3,195	2,134		1,525	2,134
Current tax liabilities		749	801		-	-
Total current liabilities		15,025	10,597		19,863	14,949
Long-term borrowings		1,886	4,954		1,886	3,189
Retirement benefit liabilities		14,180	9,076		14,180	9,076
Deferred tax liabilities		-	1,588		-	548
Total non-current liabilities		16,066	15,618		16,066	12,813
Total liabilities		31,091	26,215		35,929	27,762
Equity
Ordinary share capital		2,118	2,118		2,118	2,118
Share premium		573	573		573	573
Translation reserve		265	532		-	-
Retained earnings		14,855	16,951		13,530	16,572
Total shareholders' equity		17,811	20,174		16,221	19,263
Total equity and liabilities		48,902	46,389		52,150	47,025

 

The 2009 Company figures have been restated such that inter company funding balances, that were previously included within borrowings, are included within receivables / payables. There is no impact to net assets, nor is there any impact to figures previously disclosed for periods prior to 2009. Audited Statement of Cash Flows for the period ended 27 March 2010

(2009:period ended 28 March 2009)

			Group			Company
		2010	2009		2010	2009
						Restated
		£'000	£'000		£'000	£'000
Cash flows from operating activities
Net profit/(loss)		1,808	(87)		872	2,407
Adjustments for:
Tax		608	945		(104)	248
Depreciation		3,138	3,179		505	430
Net IAS 19 pension adjustments within Statement of Comprehensive Income		881	250		881	250
Past service pension deficit payments		(626)	(712)		(626)	(712)
Foreign exchange (gain)/loss on currency borrowings		(96)	506		-	-
Profit on disposal of property, plant and equipment		28	9		-	-
Net bank interest income & expense		270	448		(849)	(1,348)
Share based payments		102	147		102	147
Dividends received from Subsidiary Companies		-	-		(2,700)	(2,500)
Changes in working capital:
Decrease/(increase) in inventories		227	(782)		-	-
(Increase)/decrease in trade and other receivables		(1,673)	1,382		(1,608)	(2,209)
Increase/(decrease) in trade and other payables		2,832	(832)		6,011	10,051
Interest received		14	45		1,042	1,582
Interest paid		(136)	(514)		(42)	(247)
Tax paid		(1,089)	(406)		(1,128)	(406)
Net cash generated from/(used by) operating activities		6,288	3,578		2,356	7,693
Cash flows from investing activities
Purchase of intangible assets		(15)	(262)		(15)	(262)
Purchases of property, plant and equipment		(1,213)	(1,071)		(239)	(91)
Proceeds from sale of property, plant and equipment		2	5		-	-
Dividends received		-	-		2,700	2,500
Net cash (used in)/generated from investing activities		(1,226)	(1,328)		2,446	2,147
Cash flows from financing activities
Proceeds from issue of new loans		329	1,392		329	1,392
Repayment of borrowings		(2,240)	(2,744)		(2,240)	(2,744)
(Repayment)/issue of inter-company loans		-	-		(1,000)	(2,092)
Dividends paid to shareholders		(515)	(525)		(525)	(525)
Net cash (used in)/ generated from financing activities		(2,426)	(1,877)		(3,436)	(3,969)
Net increase/(decrease) in cash and cash equivalents		2,636	373		1,366	5,871
Effects of exchange gains on revaluation of net assets held in USA		(222)	346		-	-
Net increase/(decrease) in cash and cash equivalents		2,414	719		1,366	5,871
Cash and cash equivalents at the start of the period		2,636	1,917		2,054	(3,817)
Cash and cash equivalents at the end of the period		5,050	2,636		3,420	2,054
Cash and cash equivalents consists of:
Cash at bank and in hand		5,050	2,636		3,420	2,054

 

 

Audited Statement of Changes in Equity for the period ended 27 March 2010

 

					Group			Company
				2010	2009		2010	2009
				£'000	£'000		£'000	£'000
Opening shareholders' funds				20,174	25,661		19,263	22,803
Profit/(loss) for the period				1,808	(87)		872	2,406
Exchange differences				(267)	546		-	-
Actuarial losses on retirement				(3,491)	(5,568)		(3,491)	(5,568)
Share-based payments				102	147		102	147
Dividends paid				(515)	(525)		(525)	(525)
Closing shareholders' funds				17,811	20,174		16,221	19,263

 

The movement in shareholders funds solely relates to retained earnings, other than the £267,000 of exchange differences taken directly to the translation reserve.

 

Preliminary Results for the year ended 27 March 2010

 

 

1. Basic profits per share have been calculated on the profit after taxation of £1,808,000 (2009: loss £87,000) divided by the weighted average number of Ordinary shares in issue during the period of 8,472,368 (2009: 8,472,368).

 

2. The dividend will, if approved, be paid on 13 August 2010 to all shareholders on the Register on 23 July 2010.

 

3. The financial information set out above does not constitute the statutory accounts for the years ended 27 March 2010. Statutory accounts for 2009 have been delivered to the Registrar of Companies and those for 2010 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 498 (2) or (3) of the Companies Act 2006.

 

4. The Annual Report and Accounts for 2010 will be posted to shareholders on 7 July 2010. 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 28 July 2010 at the Bryce Institute, Burneside, Kendal, Cumbria.

 

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