Final Results

Cropper(James) PLC 8 June 2004 James Cropper PLC Preliminary Results for the year ended 27th March 2004 2004 2003 • Profit before tax £0.8m £1.9m -58.0% • Earnings per share 7.6p 15.1p -50.0% • Dividend Final 5.9p 5.6p +5.3% Total 7.8p 7.5p +4.0% • Gearing 27% 24% • Operating profit in Technical Fibre Products ('TFP') down 27% to £0.5m • Margins on US sales dampened by weaker US$ • SARS affected sales in South East Asia • Sales of fire retardant products to the USA up by 40% • Investment in US based 50/50 JV Electro Fiber Technologies ('EFT') to manufacture metal-coated carbon fibres • Continued progress on fuel cell component development • Operating profit in Paper down 62% to £0.4m • Raw material costs adversely affected by stronger Euro • SARS affected sales in South East Asia • Sales into Europe depressed • Four new Paper Mill Shop Outlets opened during the year • Operating profit in Converting down 28% to £0.4m • Margins on US sales dampened by weaker US$ • UK display board market very competitive • All Divisions affected by a significant increase in overhead costs driven by external factors 'I am pleased to report that Group Profit before Taxation recovered in the second half from £95,000 at the half year to £785,000 for the full year'. 'The Board has decided to maintain its policy of progressive dividend increases with a 4.0% overall increase on last year with a final dividend of 5.9p making the total dividend 7.8p compared to 7.5p in 2003. This is to reflect the improved operating conditions in the second half year and the Group's longer-term growth plans'. 'The investment in EFT secures supply of metal-coated carbon fibre materials and could lead to significant sales potential in the future'. 'I am confident that each Division's long-term strategy will be achieved and that the Group as a whole will rise to the inevitable challenges that lay ahead and continue to reward shareholders through progressive increases in dividends'. James Cropper, Chairman Enquiries: Alun Lewis, Chief Executive Alan Cooke John Denman, Group Finance Director Citigate Dewe Rogerson James Cropper PLC Telephone: 0121 455 8370 Telephone: 01539 722002 Mobile: 07767 771533 JAMES CROPPER PLC Preliminary Results for the year ended 27th March 2004 STATEMENT BY THE CHAIRMAN, MR JAMES CROPPER The Past Financial Year I am pleased to report that Group Profit before Taxation recovered in the second half from £95,000 at the half year to £785,000 for the full year. This compares with £1,867,000 for the previous year. I mentioned in my Interim Statement that the Paper Division has been affected by difficult trading conditions in the first half. Although the situation in this Division remains challenging there was sign of some recovery in the second half as a result of increased volumes. I also commented on several cost increases that were largely outside the Group's control such as National Insurance, insurance premiums, effluent treatment charges and regulatory compliance, which affected all Divisions. In addition the weakness of the US$ affected margins on export sales by the Converting and Technical Fibre Products Divisions. Although the weak US$ benefited the Paper Division this was more than offset by the increase in costs of raw materials denominated in Euros as this currency strengthened. Action has been taken to redress the balance in currency flows across the Group. Additionally increased pension contributions arising from the results of the recent actuarial valuations of the Group's two final salary schemes have been charged against profit in the second half-year. Inevitably given all these factors there has been a reduction in the profits reported by each Division compared to the previous year. Dividends The Board has decided to maintain its policy of progressive dividend increases with a 4.0% overall increase on last year with a final dividend of 5.9p making the total dividend 7.8p compared to 7.5p in 2003. This is to reflect the improved operating conditions in the second half year and the Group's longer-term growth plans. Paper The Division's operating profit reduced from £1,085,000 to £415,000. It has been a year of contrasts for James Cropper Speciality Papers with subdued economic activity leading to the paper machines running below full capacity in the first half whilst in the second half volumes increased. Management's focus on growing turnover has been rewarded with some attractive new business that bodes well for the future. Sales into China were less than expected due to planned exhibitions being cancelled or postponed because of the SARS epidemic. Progress has been made in the USA market through the appointment of a new agent. We remain confident that these two markets hold considerable potential. The price of Northern Softwood Bleached Kraft pulp, the market benchmark, reached US$560 per tonne in the first quarter, then fell to US$520 in the second quarter, before resuming an upward trend in the last quarter towards US$600. However the weakness of the US$ mitigated the impact of these increases. Although the Euro strengthened during the year a weaker market for Euro priced hardwood pulps counteracted the strength of the currency. The cost of those dyes and other chemicals priced in Euros increased considerable as the value of the currency rose. The Paper Mill Shop retail business grew strongly with four new outlets opening in the year bringing the total number of shops at the year-end to eleven. This growth, together with that of James Cropper Speciality Papers in the second half led to an increase in turnover of 6.8% for the Division as a whole. Converting Operating profit declined from £551,000 to £394,000. Turnover was down 3.7%, with volume up 5.9%. The Division maintained its position as the leading UK manufacturer of display board recapturing market share against fierce competition but as the expense of margins. The demand for mount board continues to be positive but the weakness of the US$ has eroded margins on sales into the USA. Good progress has been made in implementing cost reduction measures. Technical Fibre Products ('TFP') Operating profit for the year was £474,000 against a record £646,000 last year. Turnover was down by 4.9%. With over 40% of its business in the USA it was inevitable that TFP's turnover and margins would be adversely affected by the weak US$. In addition sales into South East Asia were depressed by the SARS epidemic. In the fourth quarter there was a recovery in sales, particularly in the USA. TFP has completed qualification programmes with eight major US door manufacturers. As a result TFP's fire retardant products are now placed in a very strong position with the US construction industry as the Federal International Building Code places more stringent control on the industry. Sales of fire retardant materials into the USA grew by over 40% during the last year. TFP has strengthened its market position by moving upstream to manufacture highly conductive metal-coated carbon fibres through a 50/50 joint venture with Thermion Systems International Inc, a customer based in the USA. The joint venture company, known as Electro Fibre Technologies LLC ('EFT'), has acquired an exclusive license and rights to sub-license patented technology from another USA company. The first objective of EFT is to provide TFP with security of supply of metal-coated carbon fibre materials. A plant sized to service both the JV partners' needs in the near term was commissioned towards the end of the year. The Group's share of start up costs was £93,000 during the period. Applications for these materials include use in electronic, medical and flexible heating devices. There is also significant emerging potential with regard to electromagnetic interference shielding and communication signal management systems. TFP's fuel cell component programme with Johnson Matthey continues to deliver improved development materials to meet new and changing specifications emerging from this exciting technology. Pensions The latest triennial actuarial valuations of the Group's two final salary pensions schemes were completed during the year. The valuations have revealed a combined deficit of £9,024,000 as at 31 March 2003. The deficits reflect changes in the Actuaries' assumptions regarding longevity and the continuation of low inflation, interest rates and investment yields. It is planned to eliminate the deficits over a maximum period of 17 years. Payments to the pension schemes commenced in the year. These are subject to Corporation Tax relief. Both schemes have been closed to new membership for a number of years. Existing members contributions will be increased over the next two years. Outlook The thrust of James Cropper Speciality Paper's efforts will continue to be founded on growing turnover both in the UK and export markets combined with efficiency savings. Pulp prices are currently on an upward trend although the cost is mitigated by the weak US$. It is questionable whether the rate of increase will be sustainable through the rest of the year. The recent escalation in the price of crude oil and natural gas will have a significant impact on energy costs in the current year. The Paper Mill Shop has already opened two new outlets in the current financial year and is looking at further suitable sites. We anticipate opening up to four outlets each year for the foreseeable future. Converting will concentrate on increasing mountboard volume and maintaining its position in the display board market and reducing costs to restore its profitability to its former level over the next few years. The business focus of TFP will be to develop strong leadership positions and growth in composite, fire protection and fuel cell markets. With the passing of the SARS epidemic, sales into South East Asia are anticipated to grow beyond previous levels. The investment in EFT secures supply of metal-coated carbon fibre materials and could lead to significant sales potential in the future. I am confident that each Division's long-term strategy will be achieved and that the Group as a whole will rise to the inevitable challenges that lie ahead and continue to reward shareholders through progressive increases in dividends. James Cropper Chairman James Cropper PLC Preliminary Results Group Profit and Loss Account for the 52 weeks ended 27th March 2004 52 weeks ended 52 weeks ended 27th March 2004 29th March 2003 £'000 £'000 £'000 £'000 ------------- ------------- Turnover (including share of Joint Venture) 56,570 55,010 Less share of Joint Venture (5) - ------------- ------------- Turnover - continuing operations 56,565 55,010 Change in stocks of finished goods and work in progress 699 155 Own work capitalised 357 407 Other operating income 152 272 ------------- ------------- 57,773 55,844 ------------- ------------- Raw materials and consumables (27,656) (26,332) Other external charges (10,050) (9,002) Staff costs (15,717) (14,779) Depreciation (3,067) (3,449) ------------- ------------- (56,490) (53,562) ------------- ------------- Group operating profit - continuing operations 1,283 2,282 Share of operating loss in Joint Ventures (93) (23) ------------- ------------- Total operating profit: Group and share of Joint Ventures 1,190 2,259 Income from fixed asset investments - 16 Other interest receivable and similar income 59 100 Amounts written off investments (50) - Interest payable and similar charges (414) (508) ------------- ------------- Profit on ordinary activities before taxation 785 1,867 Tax on profit on ordinary activities (154) (603) ------------- ------------- Profit on ordinary activities after taxation 631 1,264 Dividends paid and proposed: Interim paid 1.9p (2003 1.9p) (159) (159) Proposed final 5.9p (2003 5.6p) (493) (468) ------------- ------------- (652) (627) ------------- ------------- Amount set aside (from)/to reserves (21) 637 ------------- ------------- Earnings per Ordinary Share of 25p Basic 7.6p 15.1p Diluted 7.6p 15.1p James Cropper PLC Preliminary Results Balance Sheets as at 27th March 2004 Group Company As at As at As at As at 27th 29th 27th 29th March March March March 2004 2003 2004 2003 £'000 £'000 £'000 £'000 Fixed assets Tangible assets 25,836 25,826 2,519 23,706 Trade investments 395 445 395 445 Investment in Subsidiary Companies - - 7,350 - Investments in Joint Venture Share of gross assets 129 167 - - Share of gross liabilities (11) - - - ------- -------- -------- ------- 26,349 26,438 10,264 24,151 ------- -------- -------- ------- Current assets Stocks 7,166 5,798 - 4,956 Debtors 12,507 11,785 31,319 11,014 Cash at bank and in hand 1,240 6 74 1,226 ------- -------- -------- ------- 20,913 17,589 31,393 17,196 ------- -------- -------- ------- Creditors (amounts falling due within one year) (9,409) (8,099) (9,416) (6,671) ------- -------- -------- ------- Net current assets 11,504 9,490 21,977 10,525 ------- -------- -------- ------- Total assets less current liabilities 37,853 35,928 32,241 34,676 Creditors (amounts falling due after more than one year) (6,589) (4,654) (6,589) (4,654) Deferred taxation (4,189) (4,155) (445) (3,927) ------- -------- -------- ------- 27,075 27,119 25,207 26,095 ------- -------- -------- ------- Capital and reserves Called up equity share capital 2,090 2,090 2,090 2,090 Share premium account 454 454 454 454 Revaluation reserve 138 177 32 177 Profit and loss account 24,393 24,398 22,631 23,374 ------- -------- -------- ------- Equity shareholders' funds 27,075 27,119 25,207 26,095 ------- -------- -------- ------- Statement of Group Total Recognised Gains and Losses for the 52 weeks ended 27th March 2004 52 weeks ended 52 weeks ended 27th March 2004 29th March 2003 £'000 £'000 ----------- ----------- Profit for the year 631 1,264 Currency translation differences on foreign currency investment (23) - ----------- ----------- Total recognised gains and losses relating to the year 608 1,264 ----------- ----------- Note of Group Historical Cost Profits and Losses for the 52 weeks ended 27th March 2004 52 weeks 52 weeks ended ended 27th 29th March March 2004 2003 £'000 £'000 -------- -------- Reported profit on ordinary activities before taxation 785 1,867 Difference between historical cost depreciation charge and the actual depreciation charge for the year calculated on the revalued amounts 39 49 -------- -------- Historical cost profit on ordinary activities before taxation 824 1,916 -------- -------- Historical cost profit for the year after taxation and dividends 18 686 -------- -------- Reconciliation of Movements in Shareholders' Funds for the 52 weeks ended 27th March 2004 Group Company 52 weeks 52 weeks 52 weeks 52 weeks ended ended ended ended 27th 29th 27th 29th March March March March 2004 2003 2004 2003 £'000 £'000 £'000 £'000 ------- ------- ------- ------- Opening shareholders' funds 27,119 26,482 26,095 25,792 Profit/(loss) for the year 631 1,264 (236) 930 Dividends (652) (627) (652) (627) Other recognised gains and losses relating to the year (23) - - - ------- ------- ------- ------- Closing shareholders' funds 27,075 27,119 25,207 26,095 ------- ------- ------- ------- James Cropper PLC Preliminary Results Group Cash Flow Statement for the 52 weeks ended 27th March 2004 2004 2003 £'000 £'000 £'000 £'000 ------- ------- ------- ------- Cash flow from operating activities 3,557 4,903 Returns on investments and servicing of finance Interest received 46 100 Interest paid (394) (381) Interest element of finance lease rental payments - (158) Dividends received - (348) 16 (423) ------- ------- Taxation (316) (765) Capital expenditure Purchase of tangible fixed assets (3,101) (2,299) Asset disposal proceeds 2 (3,099) 6 (2,293) Acquisitions Investment in Joint Venture (68) (190) Equity dividends paid (627) (594) ------- ------- Net cash (outflow)/inflow before financing (901) 638 Financing New debt due beyond a year 4,000 1,500 Repayment of bank loans (1,461) (1,580) Capital element of finance lease payments - 2,539 (698) (778) ------- ------- ------- ------- Increase/(decrease)in cash in the year 1,638 (140) ------- ------- James Cropper PLC Preliminary Results For the year ended 27th March 2004 1. Basic earnings per share have been calculated on the profit after taxation of £631,000 (2003 £1,264,000) divided by the weighted average number of Ordinary shares in issue during the period of 8,359,114(2003 8,359,114). 2. The dividend will, if approved, be paid on 13th August 2004 to all shareholders on the Register on 23rd July 2004. 3. The Financial information set out above does not constitute the statutory accounts for the years ended 27th March 2004 and 29th March 2003. Statutory accounts for 2003 have been delivered to the Registrar of Companies and those for 2004 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 237 (2) or (3) of the Companies Act 1985. 4. The Annual Report and Accounts for 2004 will be posted to shareholders on 28th June 2004 and will also be available 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 10.30am on Wednesday, 21st July 2004 at the Bryce Institute, Burneside, Kendal, Cumbria. This information is provided by RNS The company news service from the London Stock Exchange

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