COVID 19 update

24 March 2020

James Cropper plc

("James Cropper" or the "Company")

COVID 19 update

Given the rapidly changing developments regarding COVID 19, James Cropper issues this update.  

Our approach to COVID 19

Our guiding principles on how we are responding to COVID 19 are to:

·      protect the health and wellbeing of our employees and their families;

·      support our customers; and

·      reduce costs and conserve cash to increase our financial resilience

Following the governments' lockdown announcement on 23^rd March, James Cropper continues to manufacture in all of its locations globally. We have, however, enabled as many people as possible to work from home.  We will continue to follow developments closely and will take further action as appropriate.

Financial priorities

As the situation has continued to develop with increasing uncertainty over its impact and duration, our priorities have been to understand better the potential impact on the Company's financial position by stress testing a range of scenarios and to take prompt action to preserve the Company's liquidity.  These measures have included, but are not limited to, putting capital expenditure on hold, a hiring freeze and reducing discretionary spend.  To provide maximum flexibility, the Company has fully drawn down on its available bank facilities and expects to have approximately £10 million in liquid cash resources at the year end, 28^th March 2020.

Current trading

To date we have not experienced a downturn in demand as a result of COVID 19 and, in respect of the year ending 28 March 2020, we expect to meet market expectations.  However, as central governments take further action to contain and delay the spread of the virus, we expect that demand for packaging materials will reduce overall and this would affect our Packaging and Colourform divisions, albeit we foresee an increase in demand for packaging relating to the online retail segment.  As regards our TFP division, our current focus is on solving logistical challenges imposed by reducing global airfreight capacity. TFP products are specified into customer programmes, therefore sales are aligned to these markets such as aerospace. These programmes typically have long lives and relatively stable production rates but are controlled by end manufacturers managing sometimes complex supply chains.

Dividends

Given the rising level of uncertainty as to how the situation will develop, alongside the other measures we are taking to preserve the Company's cash position, the Board has decided that it would not be prudent to pay a final dividend in respect of the year ending 28 March 2020.  We will review the position as regards future dividends later in the year once the outlook becomes clearer.  We recognize that this is a significant decision, but the Board believes that it is an appropriate and prudent measure to take at this point as we seek to preserve the Company's financial position through these most uncertain times.

Outlook

While the challenges facing our business are unprecedented, our primary concern remains the welfare of our employees, their families and the local communities in which we work.

We have a strong and diversified business and we are taking immediate measures to contain our costs and conserve cash to build resilience.

However, given the continued uncertainty, we do not believe it is possible to retain the Company's 2021 guidance. We will continue to monitor the situation closely and provide further updates as necessary.

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