Final Results

Cropper(James) PLC
18 June 2001


Issued on behalf of James Cropper PLC
Date: Monday 18 June 2001     
 
James Cropper PLC 

Preliminary Results

for the year ended 31st March 2001 
 
                                                        2001           2000 
                                           
* (Loss)/Profit before tax                            (£0.8M)         £3.1M
  After exceptional staff costs of £0.4M in 2001
                    
* Earnings per share                                   (7.9p)         25.9p 
 
* Dividend
  Final                                                 4.5p           4.5p 
  Total                                                 6.3p           6.3p

* Gearing                                                34%            22%
  FRS 19 adopted in 2001
 
* Operating profit in Technical Fibre Products ('TFP') up by 158% to £0.5M 
 
* Operating profit in Converting up by 10% to £1.0M 
 
* Steady progress on fuel cell development with Johnson Matthey 
 
* Operating loss in Papermaking caused by rapid increase in raw material and
  energy costs and subdued demand 
 
* Papermaking recovery plan being progressed. The division has traded
  profitably in the first two months of the current financial year 
 
* Unchanged final dividend. Group is inherently strong with good performances
  from Converting and TFP along with the beginning of a recovery in Papermaking
 
'Although papermaking is a mature industry, we believe there is considerable
potential for growth in our niche markets. As well as working closely with
our existing customers Papermaking Division is exploring and developing new
markets and new product applications.'

'Technical Fibre Products made excellent progress during the past year.
Significant new business in composites and fire protection products has been
won in recent months. Our capital expenditure and development plans for TFP
are unaffected by the recent situation in Papermaking.' 

'The Group is financially in good shape with relatively low gearing,
substantial bank facilities in reserve and a strong cash flow. Two of its
three businesses are performing well and there is every confidence that there
will be a good recovery in the Papermaking Division over the coming year.' 

James Cropper, Chairman 
 
 
Enquiries: 
Alun Lewis, Chief Executive                Alan Cooke
John Denman, Group Finance Director        Citigate Dewe Rogerson 
James Cropper PLC                          Today: 020 7282 8000 (until 12.30pm)
Today: 020 7282 8000 (until 12.30pm)       Thereafter: 0121 455 8370
Thereafter: 01539 722002                   07767 771533

                                      -2-
 
 
JAMES CROPPER PLC 
Preliminary Results 
for the year ended 31st March 2001 
 
STATEMENT BY THE CHAIRMAN, MR JAMES CROPPER 
 
The Past Financial Year 
 
It is very disappointing to report a loss before taxation of £399,000, (before
exceptional staff costs of £380,000 relating to redundancies), compared to a
profit of £3,060,000 last year.
 
This is only the third year in 150 years in which a loss has been reported.
The loss was caused by exceptionally difficult trading conditions in the
Papermaking Division, particularly in the second half-year. The Board is taking
a series of actions to redress the situation in the Papermaking Division over
the coming year focusing mainly on overhead reductions, increased sales revenue
and improved efficiencies. The loss was mitigated by the continuing good
performance of the Converting Division and Technical Fibre Products.
 

Dividends

The Board has decided that despite the loss the final dividend should remain
unchanged at 4.5p making a maintained total dividend of 6.3p. With Converting
Division and Technical Fibre Products performing well and signs of a recovery
in the Papermaking Division, the Group is inherently strong.
 
Papermaking Division 
 
Over a number of years UK manufacturing in general has suffered from the
weakness of the Euro which has led to significant import penetration from Europe
into UK markets. This has resulted in reduced volumes and downward pressure on
selling prices, squeezing margins and profits for the majority of UK
manufacturers. The situation has been further aggravated in the UK papermaking
industry by the very rapid escalation in wood pulp and energy costs over the
past two years. The cost of northern softwood pulp rose from $480 per tonne in
early 1999 to $710 per tonne in July 2000 and remained at this level until
February this year. Even more dramatically the cost of gas has doubled in the
past 12 months with our annual gas bill rising from £1m to nearly £2m.
 
Although sales volume was down in the UK it was maintained at the previous
year's level in Continental Europe. Some price increases were possible but
overall subdued demand and low inflation prevented us passing on the full impact
of cost increases in pulp and energy to our customers. As a consequence
divisional turnover was lower than last year. More efficient running of the
paper machines offset the effect of these cost increases to some extent. The
combined effect of lower turnover and cost increases resulted in a fall in
operating profit from £2,574,000 last year to a loss of £1,725,000 this year.
 
A recovery plan has been put in place to restore Papermaking's profits to
previous levels. The plan is broadly based. Action on overheads inevitably means
there has been an impact on jobs and it is with great regret that we have had to
announce recently the loss of 20 jobs. Most of the job losses were managed on a
voluntary basis. There is considerable scope for efficiency improvements both in
raw material usage and working practices. These will be pursued with vigour. The
rapid increase in the cost of gas has brought energy consumption into focus.
Steps will be taken to reduce usage by a variety of means. The Division has
received considerable capital investment in recent years adding increased
capacity, capability and flexibility which will enable improved efficiencies and
product development opportunities to be harnessed. This phase of capital
expenditure has been completed and on-going investment will be at a much lower
level.
 
 
                                     -3-
 
 
Converting Division 
 
The upward trend in operating profit continues with a 10% increase from
£871,000 to £961,000. There has been a small increase in turnover and volume
with efficiency improvements continuing to deliver improvements in margins.
 
Future growth is expected from the recent investment in extending the Division's
coating and embossing capability, with a focus on products for the graphical and
luxury packaging markets.
 
Technical Fibre Products 
 
It is particularly pleasing that my statement last year that this subsidiary
should grow strongly over the next few years has been supported by a substantial
increase in operating profit from £195,000 to £504,000. Turnover has increased
by 16% with a steady growth throughout the year and margins benefiting from the
higher volumes. The fortunes of this subsidiary has been underpinned by the
agreement we signed in May last year with Johnson Matthey, a world leader in
catalytic systems and components for fuel cells, relating to the development and
supply of material to be incorporated into fuel cell products. This
collaboration is progressing well.
 
We have also made good progress during the year in securing significant new
business with major suppliers to the transportation, medical, chemical, fire
protection and construction industries. In particular there has been growth in
the USA for lightweight, high performance materials for aerospace applications
arising from our investment two years ago to extend our capability.
 
Outlook 
 
Some relief is in prospect as the cost of pulp has now fallen below $600/tonne.
This and our actions to improve efficiencies and reduce costs will turn the
Papermaking business around. I am pleased to report that this division has
traded profitably in the first two months of the new year. Although papermaking
is a mature industry, we believe there is considerable potential for growth in
our niche markets. As well as working closely with our existing customers
Papermaking Division is exploring and developing new markets and new product
applications.
 
Converting Division continues to perform well in its key market areas of Display
Board and picture Mounting Board.
 
Technical Fibre Products made excellent progress during the past year.
Significant new business in composites and fire protection products has been
won in recent months. Our capital expenditure and development plans for TFP
are unaffected by the recent situation in Papermaking.
 
The Group is financially in good shape with relatively low gearing, substantial
bank facilities in reserve and a strong cash flow. Two of its three businesses
are performing well and there is every confidence that there will be a good
recovery in the Papermaking Division over the coming year.
 
James Cropper, Chairman

                                     -4-
 
 
JAMES CROPPER PLC 
Preliminary Results 
for the year ended 31st March 2001 
 
 
Group Profit and Loss Account 
for the 52 weeks ended 31st March 2001 
 

                                                                              
                                                                              
                               2001                             2000          
                                                         (as restated - See   
                                                              Note 1)         
                                                                              
                       £'000       £'000       £'000        £'000       £'000 
  Turnover -                                  54,242                   53,365 
  continuing                                                                  
  operations                                                                  
  Change in                                                                   
  stocks of                                      173                      741 
  finished                                                                    
  goods and work                                                              
  in progress                                                                 
  Own work                                       378                      328 
  capitalised                                                                 
  Other                                          397                      154 
  operating                                                                   
  income                                                                      
                                              55,190                   54,588 
  Raw materials                 (30,217)                 (26,613)             
  and                                                                         
  consumables                                                                 
  Other external                 (7,656)                  (7,652)             
  charges                                                                     
  Staff costs -     (13,552)                             (13,479)             
  normal               (380)    (13,932)                        -             
  - exceptional                                                               
  Depreciation                   (3,645)                  (3,204)             
                                            (55,450)                 (50,948) 
  Operating                                    (260)                    3,640 
  (loss)/ profit                                                              
  - continuing                                                                
  operations                                                                  
  Profit on sale                                   -                        3 
  of freehold                                                                 
  houses                                                                      
  Income from                                     30                       23 
  fixed asset                                                                 
  investments                                                                 
  Interest                                        35                       37 
  receivable and                                                              
  similar income                                                              
  Interest                                     (584)                    (643) 
  payable and                                                                 
  similar                                                                     
  charges                                                                     
  (Loss)/Profit                                                               
  on ordinary                                  (779)                    3,060 
  activities                                                                  
  before                                                                      
  taxation                                                                    
  Tax on profit                                  121                    (895) 
  on ordinary                                                                 
  activities                                                                  
  (Loss)/profit                                                               
  on ordinary                                  (658)                    2,165 
  activities                                                                  
  after taxation                                                              
                                                                              
  Dividends paid                                                              
  and proposed:                                                               
  Interim 1.8 p                                                               
  (2000 1.8p)                      (150)                    (150)             
  Proposed final                                                              
  4.5 p                                                                       
  (1999 4.5p)                      (377)                    (377)             
                                               (527)                    (527) 
  Amount set                                 (1,185)                    1,638 
  aside                                                                       
  (from)/to                                                                   
  reserves                                                                    
  Earnings per                                                                
  Ordinary Share                                                              
  of 25p                                                                      
  Basic                                       (7.9p)                    25.9p 
  Diluted                                     (7.9p)                    25.9p 


                                        -5-
 
 
JAMES CROPPER PLC 
Preliminary Results 
for the year ended 31st March 2001 
 
 
Balance Sheets 
As at 31st March 2001 
 

                                                                              
                                                                              
                             Group                         Company            
                      2001               2000       2001                 2000 
                                          (as                             (as
                                     restated                        restated 
                                        - see                           - see
                                      Note 1)                         Note 1) 
                                                                              
                     £'000              £'000      £'000                £'000 
  Fixed assets                                                                
   Tangible assets  27,927             27,174     25,892               24,946 
   Investments         738                738        738                  738 
                                                                                
                    28,665             27,912     26,630               25,684 

  Current assets                                                              
       Stocks        6,223              5,898      5,379                5,250 
       Debtors      12,888             12,187     12,392               11,653 
   Cash at bank          2                 32        308                1,010 
   and in hand                                                                 
                                                                 
                    19,113             18,117     18,079               17,913 
                                                                              
  Creditors                                                                   
  (amounts         (12,340)           (11,563)   (10,049)              (9,713) 
  falling due                                                                 
  within one                                                                  
  year)                                                                       
  Net current        6,773              6,554      8,030                8,200 
  assets                                                                      

  Total assets      35,438             34,466     34,660               33,884 
  less current                                                                
  liabilities                                                                 
                                                                              
  Creditors                                                                   
  (amounts          (5,188)            (3,188)    (5,188)              (3,188) 
  falling due                                                                 
  after more                                                                  
  than one year)                                                        
      
  Deferred Taxation (3,949)            (3,792)    (3,781)              (3,605) 
                                                             
                    26,301             27,486     25,691               27,091 
  
  Capital and reserves                                                          
         
   Called up         2,090              2,090      2,090                2,090 
   equity share                                                                
   capital                                                                     
   Share premium       454                454        454                  454 
   account                                                                     
   Revaluation         292                329        292                  329 
   reserve                                                                   
   Profit and loss  23,465             24,613     22,855               24,218 
   account                                                                     

  Equity            26,301             27,486     25,691               27,091 
  shareholders' funds                                                           
           
                                       -6-
 
 
JAMES CROPPER PLC 
Preliminary Results 
for the year ended 31st March 2001 
 
 
Group Cash Flow Statement 
For the 52 weeks ended 31st March 2001 
 

                                                                              
                                                                              
                               2001                          2000             
                                                                              
                    £'000              £'000         £'000              £'000 
  Cash flow from                          3,333                         5,184 
  operating                                                                   
  activities                                                                  
  Returns on                                                                  
  investments and                                                             
  servicing of                                                                
  finance                                                                     
  Interest received      35                            37                    
  Interest paid        (356)                         (340)                    
  Interest element                                                              
  of finance lease        
  rental payments           (266)                         (322)                 
                                                         
  Dividends               19              (568)         13              (612) 
  received                                                                    
  Taxation                                (670)                         (924) 
  Capital                                                                     
  expenditure                                                                 
  Purchase           (4,400)                       (2,146)                    
  of tangible                                                                 
  fixed assets                                                                
  Asset                    3            (4,397)        147            (1,999) 
  disposal                                                                    
  proceeds                                                                    
  Equity                                                                      
  dividends paid                          (527)                         (493) 
                                         ______                         _____ 
  Net cash                              (2,829)                         1,156 
  (outflow)/inflow                                                            
  before                                                                      
  financing                                                                   
  Financing                                                                   
  New debt             4,000                             -                    
  due beyond a                                                                
  year                                                                        
  Repayment            (661)                       (2,399)                    
  of bank loans                                                               
  Capital                                                                
  element of           (880)              2,459      (790)            (3,189) 
  finance lease                                                               
  payments                                                               
                                                                              
  Decrease in                             (370)                       (2,033) 
  cash in the                                                                 
  year                                                                        
-7-
 
 
James Cropper PLC 
Preliminary Results 
For the year ended 31st March 2001 
 
 
1.     With effect from this year, the Group has changed its accounting
policy on 'deferred tax' in line with FRS19, a new accounting standard that
the Group has chosen to adopt early. FRS19 introduces a form of full
provision for accounting for deferred tax, called the incremental liability
approach, which replaces the partial provision approach previously followed
under SSAP15. As a consequence a prior year adjustment to the deferred tax
provision at 1st April 2000 has increased the deferred tax provision by
£2,849,000 with a corresponding reduction in the Profit and Loss Account
Reserve. The prior year tax charge decreased by £93,000 as a result of
adopting the new policy. There is no effect on the current year tax charge.
 
2.     Basic earnings per share have been calculated on the loss after
taxation of £658,000 (2000: Profit of £2,165,000) divided by the weighted
average number of Ordinary shares in issue during the period of 8,359,114
(2000: 8,359,114).
 
3.     The dividend will, if approved, be paid on 10th August 2001 to all
shareholders on the Register on 20th July 2001.
 
4.     The financial information set out above does not constitute the
statutory accounts for the years ended 31st March 2001 and 2000. Statutory
accounts for 2000 have been delivered to the Registrar of Companies and those
for 2001 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.
 
5.     The annual report and accounts for 2001 will be posted to shareholders
on 6th July 2001 and will also be available on request from the Company's
registered office, Burneside Mills, Kendal, Cumbria LA9 6PZ.
 
6.     The Annual General Meeting of the Company will be held at 10.30am on
Thursday, 2nd August 2001 at the Bryce Institute, Burneside, Kendal, Cumbria.