Prelim Results for the year ended 30 March 2013

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

 

Full year to	30 March	31 March
	2013	2012
	£m	£m
·      Turnover	79.2	78.2
·      EBITDA (before IAS19 pension adjustment)	5.4	3.9
·      Group profit before tax (before IAS19 pension adjustment) - note 1	2.1	0.8
·      Group profit before tax (after IAS19 pension adjustment) - note 1	1.8	1.0
·      Total Shareholders' Equity - note 2	20.3	22.0
·      Earnings per share - diluted	16.5 pence	9.5 pence
·      Dividend per share declared	7.9 pence	7.9 pence
·      Gearing (after IAS 19 pension deficit)	46%	30%
Notes
1.     FY 31 March 2012 - After redundancy provision of £0.8m
2.     FY 30 March 2013 - Net IAS 19 pension deficit increased by £2.1m to £8.0m as a consequence of fall in bond yields
Highlights - FY 30 March 2013
·      Group turnover up 1% on last year with UK sales up 4% and export sales down 1%; sales into the USA were up 24% whilst sales into continental Europe were down 12%.
·      TFP: Turnover up 6%; Operating profit £1.5m (£0.6m in FY 2011/12)
·      Speciality Papers: Turnover down 3%; Operating profit £0.7m (£1.4m in FY 2011/12)
·      Converting: Turnover up 25%; Operating profit £1.0m (£0.2m in FY 2011/12)
·      Strategic investment in capability of TFP and Speciality Papers o  Capital investment - £4.1m o  Expensed against revenue - £0.6m
·      Restructuring of UK workforce completed in FY 2012/13 - full redundancy provision of £0.8m charged in FY 2011/12; expect annual savings of £1.0m from FY 2013/14 onward
·      Phil Wild appointed CEO

 

 

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."

 

 

 

James Cropper plc	Westhouse Securities Limited
John Denman, Group Finance Director	Richard Baty, Paul Gillam
Tel: 01539 722002	Tel: 0207 601 6100
www.cropper.com

 

 

 

 

Summary of Results	2013	2012
	£000s	£000s
Group turnover	79,241	78,223
Trading profit before interest	2,535	1,207
Depreciation	2,818	2,675
EBITDA (before IAS 19 pension adjustment)	5,353	3,882
Trading activities
Technical Fibre Products	1,450	629
Speciality Papers	697	1,430
Converting	982	192
Other Group expenses	(228)	(158)
	2,901	2,093
Director and employee bonuses	(366)	(86)
Redundancy provision	-	(800)
Trading profit before interest	2,535	1,207
Net interest	(483)	(364)
Trading profit before tax	2,052	843
(After future service pension contributions paid)
Net IAS 19 pension adjustments to
Operating profit	(426)	(539)
Net interest	193	667
Net pension adjustment before tax	(233)	128
Overall Group after pension adjustments
Operating profit	2,109	1,468
Redundancy provision	-	(800)
Profit before interest	2,109	668
Net interest	(290)	303
Profit before tax	1,819	971
Earnings per Share - diluted	16.5p	9.5p
Continuing operations after IAS 19
Dividends per Share	7.9p	7.9p
Balance Sheet Summary £'000
Non-pension assets - excluding cash	48,426	46,278
Non-pension liabilities - excluding borrowings	(10,831)	(11,956)
	37,595	34,322
Net IAS 19 pension deficit (after deferred tax)	(7,972)	(5,850)
	29,623	28,472
Net borrowings	(9,286)	(6,505)
Equity shareholders' funds	20,337	21,967
Gearing %  - before IAS 19 deficit	33%	23%
Gearing %  - after IAS 19 deficit	46%	30%
Capital Expenditure £'000	4,072	5,934

 

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

 

		52 week period to		52 week period to
		30 March 2013		31 March 2012
		£'000		£'000
Continuing operations
Revenue		79,241		78,223
Other income		225		187
Changes in inventories of finished goods and work in progress		(535)		648
Raw materials and consumables used		(33,754)		(35,433)
Energy costs		(5,217)		(4,616)
Employee benefit costs		(20,296)		(20,679)
Depreciation and amortisation		(2,818)		(2,675)
Other expenses		(14,737)		(14,987)
Operating Profit		2,109		668
Interest payable and similar charges		(492)		(369)
Interest receivable and similar income		202		672
Profit before taxation		1,819		971
Tax expense		(374)		(134)
Profit for the period		1,445		837
Other comprehensive income
Foreign currency translation		(17)		4
Retirement benefit liabilities - actuarial (losses) / gains		(3,382)		(7,418)
Deferred tax on actuarial losses / (gains) on retirement benefit liabilities		533		1,483
Income tax on other comprehensive income		176		292
Total comprehensive income for the period attributable to equity holders of the Company		(1,245)		(4,802)
Earnings  per share - basic		16.8p		9.9p
Earnings  per share -diluted		16.5p		9.5p
Dividend declared in the period - pence per share		7.9p		7.9p

 

 

 

 

Statement of Financial Position

 

 

	Group	Group		Company	Company
	As at	As at		As at	As at
	31 March 2013	31 March 2012		31 March 2013	31 March 2012
	£'000	£'000		£'000	£'000
Assets
Intangible assets	515	943		293	723
Property, plant and equipment	21,219	19,748		3,167	2,875
Investments in subsidiary undertakings	-	-		7,350	7,350
Deferred tax assets	-	-		2,007	1,437
Total non- current assets	21,734	20,691		12,817	12,385
Inventories	11,848	12,361		-	-
Trade and other receivables	14,844	13,198		28,216	30,945
Cash and cash equivalents	2,249	5,438		1,209	3,608
Current tax assets	-	28		-	-
Total current assets	28,941	31,025		29,425	34,553
Total assets	50,675	51,716		42,242	46,938
Liabilities
Trade and other payables	8,138	9,328		11,138	14,445
Other financial liabilities	32	30		32	30
Loans and borrowings	4,013	2,069		1,418	1,773
Current tax liabilities	216	-		54	54
Total current liabilities	12,399	11,427		12,642	16,302
Long-term borrowings	7,522	9,874		3,001	6,600
Retirement benefit liabilities	10,353	7,698		10,353	7,698
Deferred tax liabilities	64	750		-	-
Total non-current liabilities	17,939	18,322		13,354	14,298
Total liabilities	30,338	29,749		25,996	30,600
Equity
Share capital	2,217	2,119		2,217	2,119
Share premium	814	575		814	575
Translation reserve	256	273		-	-
Reserve for own shares	(102)	(226)		-	-
Retained earnings	17,152	19,226		13,215	13,644
Total shareholders' equity	20,337	21,967		16,246	16,338
Total equity and liabilities	50,675	51,716		42,242	46,938

 

 

 

 

Statement of Cash Flows

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

 

 

		Group	Group		Company	Company
		2013	2012		2013	2012
		£'000	£'000		£'000	£'000
Cash flows from operating activities
Net profit  / (loss)		1,445	837		3,091	(746)
Adjustments for:
Tax		374	134		138	283
Depreciation and amortisation		2,818	2,675		529	521
Net IAS 19 pension adjustments within SCI		233	(128)		233	(128)
Past service pension deficit payments		(960)	(996)		(960)	(996)
Foreign exchange differences		(55)	196		-	85
Loss / (profit) on disposal of property, plant and equipment		12	(2)		-	-
Net bank interest income & expense		483	364		(1,352)	(589)
Share based payments		67	145		67	145
Dividends received from Subsidiary Companies		-	-		(3,000)	(400)
Impairment of Intercompany loan		-	-		-	208
Changes in working capital:
Decrease / (increase) in inventories		519	(406)		-	-
(Increase) / decrease  in trade and other receivables		(1,546)	1,181		611	2,359
(Decrease) / increase in trade and other payables		(972)	(657)		(3,040)	2,605
Interest received		9	5		1,504	767
Interest paid		(506)	(355)		(165)	(164)
Tax paid		(107)	(965)		-	-
Net cash generated from / (used by) operating activities		1,814	2,028		(2,344)	3,950
Cash flows from investing activities
Purchase of intangible assets		(157)	(14)		(123)	-
Purchases of property, plant and equipment		(3,915)	(5,920)		(525)	(963)
Proceeds from sale of property, plant and equipment		9	6		-	-
Dividends received		-	-		3,000	400
Net cash (used in) / generated from investing activities		(4,063)	(5,928)		2,352	(563)
Cash flows from financing activities
Proceeds from issue of ordinary shares		337	3		337	3
Proceeds from issue of new loans		5,844	7,609		1,564	5,625
Repayment of borrowings		(6,385)	(1,636)		(5,518)	(1,560)
Issue / (repayment) of inter-company loans		-	-		1,880	(6,099)
Purchase of LTIP investments		(112)	(131)		-	-
Dividends paid to shareholders		(677)	(657)		(677)	(657)
Net cash (used in) / generated from financing activities		(993)	5,188		(2,414)	(2,688)
Net (decrease) / increase in cash and cash equivalents		(3,242)	1,288		(2,406)	699
Effect of exchange rate fluctuations on cash held		53	(132)		7	(92)
Net (decrease) / increase in cash and cash equivalents		(3,189)	1,156		(2,399)	607
Cash and cash equivalents at the start of the period		5,438	4,282		3,608	3,001
Cash and cash equivalents at the end of the period		2,249	5,438		1,209	3,608
Cash and cash equivalents consists of:
Cash at bank and in hand		2,249	5,438		1,209	3,608

 

 

  

 

Statement of Changes in Equity - Group

 

 

 

All figures in £'000	Share capital	Share premium	Translation reserve	Own Shares	Retained earnings	Total
At 2 April 2011	2,118	573	269	(222)	24,671	27,409
Profit for the period	-	-	-	-	837	837
Exchange differences	-	-	4	-	-	4
Actuarial gains on retirement benefit liabilities (net of deferred tax)	-	-	-	-	(5,935)	(5,935)
Other comprehensive income tax	-	-	-	-	292	292
Total other comprehensive income	-	-	4	-	(5,643)	(5,639)
Dividends paid	-	-	-	-	(657)	(657)
Share based payment charge	-	-	-	-	145	145
Proceeds from issue of ordinary shares	1	2	-	-	-	3
Distribution of own shares	-	-	-	127	(127)	-
Consideration paid for own shares	-	-	-	(131)	-	(131)
Total contributions by and distributions to owners of the Group	1	2	-	(4)	(639)	(640)
At 31 March 2012	2,119	575	273	(226)	19,226	21,967
Profit for the period	-	-	-	-	1,445	1,445
Exchange differences	-	-	(17)	-	-	(17)
Actuarial gains on retirement benefit liabilities (net of deferred tax)	-	-	-	-	(2,849)	(2,849)
Other comprehensive income tax	-	-	-	-	176	176
Total other comprehensive income	-	-	(17)	-	(2,673)	(2,690)
Dividends paid	-	-	-	-	(677)	(677)
Share based payment charge	-	-	-		67	67
Proceeds from issue of ordinary shares	98	239	-	-	-	337
Distribution of own shares	-	-	-	236	(236)	-
Consideration paid for own shares	-	-	-	(112)	-	(112)
Total contributions by and distributions to owners of the Group	98	239	-	124	(846)	(385)
At 30 March 2013	2,217	814	256	(102)	17,152	20,337

 

 

Statement of Changes in Equity - Company

 

All figures in £'000	Share capital	Share premium	Retained earnings	Total
At 2 April 2011	2,118	573	20,672	23,363
Profit for the period	-	-	(746)	(746)
Actuarial gains on retirement benefit liabilities (net of deferred tax)	-	-	(5,935)	(5,935)
Other comprehensive income tax	-	-	292	292
Total other comprehensive income	-	-	(5,643)	(5,643)
Dividends paid	-	-	(657)	(657)
Share based payment charge	-	-	145	145
Proceeds from issue of ordinary shares	1	2	-	3
Distribution of own shares	-	-	(127)	(127)
Total contributions by and distributions to owners of the Group	1	2	(639)	(636)
At 31 March 2012	2,119	575	13,644	16,338
Profit for the period	-	-	3,090	3,090
Actuarial gains on retirement benefit liabilities (net of deferred tax)	-	-	(2,849)	(2,849)
Other comprehensive income tax	-	-	176	176
Total other comprehensive income	-	-	(2,673)	(2,673)
Dividends paid	-	-	(677)	(677)
Share based payment charge	-	-	67	67
Proceeds from issue of ordinary shares	98	239	-	337
Distribution of own shares	-	-	(236)	(236)
Total contributions by and distributions to owners of the Group	98	239	(846)	(509)
At 30 March 2013	2,217	814	13,215	16,246

 

 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.