Final Results
Cropper(James) PLC
21 June 2005
Issued by Citigate Dewe Rogerson Limited, Birmingham
Date: Tuesday 21 June 2005
Embargoed: 7.30am
James Cropper PLC
Preliminary Results
for the year ended 2nd April 2005
2005 2004
Turnover £64.6m £58.0m +11%
Group profit before tax £1.8m £0.8m +126%
Earnings per share 13.8p 7.6p +82%
Dividend
Final 6.3p 5.9p +6.8%
Total 8.2p 7.8p +5.1%
Gearing 27% 27%
All Divisions traded profitably
Energy costs up £0.6m, 28%
Operating profit in Technical Fibre Products ('TFP') down 4% to £0.5m
Total US sales up 33%
Metal-coated carbon fibre materials accounted for 39% of US sales
Margins on US sales dampened by weaker US$
Continued progress on fuel cell component development
Operating profit in Paper up 301% to £1.7m
Sales by Speciality Papers up 11%
Seven new Paper Mill Shop outlets opened during the year
Operating profit in Converting down 23% to £0.3m
Margins on US sales dampened by weaker US$
UK display board market very competitive
Trade investment written down by £0.2m
'I am pleased to report that the recovery of the Group continued in the second
half of the financial year with all Divisions trading profitably. This has
resulted in a profit before tax of £1,771,000 for the full year compared to
£785,000 in the previous year. The improvement was sales led with Group turnover
increasing 11% to £64.6 million against £58.0 million last year'.
'In view of the Group's improved performance in the past financial year, the
Board is proposing a final dividend payment of 6.3p, making a total dividend for
the full year of 8.2p compared to 7.8p in 2004, an overall increase of 5.1%'.
'Energy costs are expected to rise further during the course of 2005. Pulp costs
are currently on a rising trend, particularly those relating to hardwoods. These
factors are likely to depress profitability of James Cropper Speciality Papers
in the current financial year to below the levels achieved in the past year'.
'The Paper Mill Shop will continue to expand the number of outlets during the
course of the next twelve months building upon its success to date'.
'Given the Group's sound financial position and its portfolio of related niche
businesses, I am confident that despite the short-term challenges we can develop
and exploit future opportunities in our areas of expertise at home and abroad'.
James Cropper, Chairman
Enquiries:
Alun Lewis, Chief Executive
John Denman, Group Finance Director Katie Dale
James Cropper PLC Citigate Dewe Rogerson
01539 722002 Today: 0207 282 8000
Mobile: 07770 788624
Thereafter: 0121 455 8370
JAMES CROPPER PLC
Preliminary Results
for the year ended 2nd April 2005
STATEMENT BY THE CHAIRMAN, MR JAMES CROPPER
I am pleased to report that the recovery of the Group continued in the second
half of the financial year with all Divisions trading profitably. This has
resulted in a profit before tax of £1,771,000 for the full year compared to
£785,000 in the previous year. The improvement was sales led with Group turnover
increasing 11% to £64.6 million against £58.0 million last year.
The improvement in profitability was achieved against the background of
significant increases in the cost of crude oil, natural gas and wholesale
electricity. In my Interim Statement of November 2004 I indicated that the
unprecedented rise in the cost of natural gas would inevitably dampen the
Group's profitability in the second half, particularly that of James Cropper
Speciality Papers. This statement was based upon forward market projections at
the time, suggesting that the cost in the second half of the financial year
would be substantially higher than that in the first half. Although the cost of
natural gas continued to rise during the second half, that projection proved to
be overly cautious. However, it should be noted that the cost of energy
consumption increased over the previous year by £587,000 to £2,696,000, up 28%.
The cost of natural gas is projected to rise further during the course of 2005.
The charge against profit in the year relating to the combined past service
pension deficits of the Group's two final salary schemes was £672,000. This
reflects the full year charge based upon the accounting standard SSAP 24. The
charge in the previous period was £336,000.
Although US$ sales grew in all Divisions over the year, profitability from both
Technical Fibre Products ('TFP') and James Cropper Converting continue to be
adversely affected by the weak US$.
Since 1989 the Group has held a 35% holding in Pacofa, a converting company
located in northern France. Over recent years the performance of this business
has been disappointing and, therefore, the Directors have decided to take the
prudent step of writing down the cost of the investment by £200,000 to reflect
more closely its current recoverable value.
Dividend
In view of the Group's improved performance in the past financial year, the
Board is proposing a final dividend payment of 6.3p, making a total dividend for
the full year of 8.2p compared to 7.8p in 2004, an overall increase of 5.1%.
Paper Division
The Division's operating profit increased from £415,000 to £1,663,000 over the
year.
Sales by James Cropper Speciality Papers increased by 11% during the financial
year. Activity in the packaging, business and industrial paper sectors was up,
reflecting growth in the UK, the USA and China.
The price of pulp fluctuated during the course of the year. Northern Softwood
Bleached Kraft ('NSBK') pulp, the market benchmark, opened the year at US$640
per tonne and rose to US$680 by the end of the first quarter. Then over the
second quarter it fell to US$590, before resuming an upward trend in the second
half year to end at US$645. A similar pattern emerged for € priced hardwoods.
The weakness of the US$ mitigated the impact of these increases. The € was
relatively stable against £Sterling throughout the year.
The Paper Mill Shop business continued to grow during the year with seven new
outlets opening across the UK taking the total number of stores to eighteen. In
order to manage the expansion of this business, warehousing and distribution
activities were relocated to a larger facility.
Converting Division
Converting Division's turnover grew by 1%, with volume up 15%. However,
operating profit declined from £394,000 to £302,000. The Division continued to
maintain its position as the leading UK manufacturer of display board. The
demand for mount board continues to be positive but the weakness of the US$
eroded margins on sales into the USA. The development of digital imaging
products progressed during the year leading to the launch of a full range of
papers and boards in the second half. This new range is marketed to the trade in
parallel to the general public, the latter through a dedicated website,
www.papermilldirect.com. The development and launch costs relating to the
digital imaging range affected overall profitability of the Division.
Technical Fibre Products
Operating profit for the year was £457,000 against £474,000 with turnover up 3%
on the previous year. At the current exchange rate, sales to the US market
represented approximately 40% of TFP's turnover in £Sterling terms. The decline
in the value of the US$ over the two years disguises progress in the US market
where US$ sales were 33% higher in the past financial year compared with the
previous period.
The growth in the US market was largely attributable to composite materials
containing metal-coated carbon fibres. As reported last year, niche
opportunities for highly conductive metal-coated carbon fibre materials have
grown steadily in recent years. Applications include the use of these materials
in electronic, medical and flexible heating devices. The majority of these
fibres are now supplied by Electro Fiber Technologies LLC ('EFT'), the joint
venture company in which TFP has a 50% share. The primary objective of EFT is to
provide TFP with control of quality and security of supply in order to service
these technically demanding applications. EFT incurred a loss in line with that
of the previous year.
Early in the year the Department of Trade and Industry awarded funds to assist
Research & Development by TFP, Johnson Matthey and other UK companies to ensure
that the UK becomes a world centre for fuel cell technology. This was followed
by the Board's decision to construct a dedicated Research & Development facility
to support new product and market development. I am pleased to report that this
facility, which incorporates a state of the art pilot line, has now been
commissioned.
Outlook
In recent years the Group has had to absorb increases in overheads that were
largely outside its control. These have included increases in energy, pension
contributions, National Insurance contributions, insurance premiums, effluent
treatment charges and the cost of regulatory compliance. The growth in Group
turnover is therefore very encouraging and reflects our efforts to develop new
products, markets and new routes to markets. TFP's sales in the US market
continue to grow and early indications suggest that our plans to grow sales in
James Cropper Speciality Papers are being achieved. Growth in the USA and other
non-European export markets is an important element of our overall strategy. To
mitigate the impact of the weak US$ on our improving US$ revenues we continue to
optimise our internal currency hedging strategy in order to lower exposure.
Increasing energy costs, driven by major distortions in the European natural gas
market and international events, are affecting all manufacturing based
industries. Energy costs are expected to rise further during the course of 2005.
Pulp costs are currently on a rising trend, particularly those relating to
hardwoods. These factors are likely to depress profitability of James Cropper
Speciality Papers in the current financial year to below the levels achieved in
the past year.
The Paper Mill Shop will continue to expand the number of outlets during the
course of the next twelve months building upon its success to date.
Given the Group's sound financial position and its portfolio of related niche
businesses, I am confident that despite the short-term challenges we can develop
and exploit future opportunities in our areas of expertise at home and abroad.
James Cropper PLC
Preliminary Results
Group Profit and Loss Account
for the 53 weeks ended 2nd April 2005
53 weeks ended 52 weeks ended
2nd April 2005 27th March 2004
(as restated - see Note 1)
2005 2004
£'000 £'000 £'000 £'000 £'000 £'000
--------------------------------------------------------------
Turnover (including share
of Joint Venture) 64,616 58,015
Less share of Joint Venture (48) (5)
---------------------------------------------------------------
Turnover - continuing
operations 64,568 58,010
Change in stocks of
finished goods and work in
progress 1 699
Own work capitalised 422 357
Other operating income 235 152
--------------------------------------------------------------
65,226 59,218
--------------------------------------------------------------
Raw materials and
consumables (27,500) (25,547)
Energy (2,696) (30,196) (2,109) (27,656)
------- ------
Other external charges (12,351) (11,495)
Staff costs (17,001) (15,717)
Depreciation (3,256) (3,067)
-------------------------------------------------------------
(62,804) (57,935)
-------------------------------------------------------------
Group operating profit -
continuing operations 2,422 1,283
Share of operating loss in
Joint Venture (114) (93)
--------------------------------------------------------------
Total operating profit
Group and share of Joint
Venture 2,308 1,190
Other interest receivable
and similar income 136 59
Amounts written off
investments (200) (50)
Interest payable and
similar charges (473) (414)
--------------------------------------------------------------
Profit on ordinary
activities before taxation 1,771 785
Tax on profit on ordinary
activities (616) (154)
--------------------------------------------------------------
Profit on ordinary
activities after taxation 1,155 631
Dividends paid and
proposed:
Interim paid 1.9p (2004 1.9p) (159) (159)
Proposed final 6.3p (2004 5.9p) (527) (493)
-------------------------------------------------------------
(686) (652)
-------------------------------------------------------------
Amount set aside to/(from)
reserves 469 (21)
-------------------------------------------------------------
Earnings per Ordinary Share
of 25p
Basic 13.8p 7.6p
Diluted 13.8p 7.6p
James Cropper PLC
Preliminary Results
Balance Sheets
as at 2nd April 2005
Group Company
2005 2004 2005 2004
£'000 £'000 £'000 £'000
Fixed assets
Tangible assets 25,808 25,836 2,546 2,519
Trade investments 195 395 195 395
Investment in Subsidiary
Companies - - 7,350 7,350
Investments in Joint
Venture
Share of gross assets 109 129 - -
Share of gross liabilities (26) (11) - -
--------------------------------------------------
26,086 26,349 10,091 10,264
--------------------------------------------------
Current assets
Stocks 7,663 7,166 - -
Debtors 13,237 12,507 26,841 31,319
Cash at bank and in hand 938 1,240 857 74
--------------------------------------------------
21,838 20,913 27,698 31,393
--------------------------------------------------
Creditors (amounts falling
due within one year) (9,368) (9,409) (5,527) (9,416)
--------------------------------------------------
Net current assets 12,470 11,504 22,171 21,977
--------------------------------------------------
Total assets less current
liabilities 38,556 37,853 32,262 32,241
Creditors (amounts falling
due after more than one year) (6,548) (6,589) (6,548) (6,589)
Deferred taxation (4,470) (4,189) (736) (445)
--------------------------------------------------
27,538 27,075 24,978 25,207
--------------------------------------------------
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 100 138 23 32
Profit and loss account 24,894 24,393 22,411 22,631
--------------------------------------------------
Equity shareholders' funds 27,538 27,075 24,978 25,207
--------------------------------------------------
James Cropper PLC
Preliminary Results
Statement of Group Total Recognised Gains and Losses
for the 53 weeks ended 2nd April 2005
53 weeks ended 52 weeks ended
2nd April 2005 27th March 2004
---------------------------------
---------------------------------
Profit for the year 1,155 631
Currency translation differences on foreign
currency investment (6) (23)
---------------------------------
Total recognised gains and losses relating
to the year 1,149 608
---------------------------------
Note of Group Historical Cost Profits and Losses
for the 53 weeks ended 2nd April 2005
53 weeks ended 52 weeks ended
2nd April 2005 27th March 2004
---------------------------------
Reported profit on ordinary activities
before taxation 1,771 785
Difference between historical cost
depreciation charge and the actual
depreciation charge for the year calculated
on the revalued amounts 38 39
--------------------------------
Historical cost profit on ordinary
activities before taxation 1,809 824
---=----------------------------
Historical cost profit for the year after
taxation and dividends 507 18
--------------------------------
Reconciliation of Movements in Group Shareholders' Funds
for the 53 weeks ended 2nd April 2005
Group Company
53 weeks 52 weeks 53 weeks 52 weeks
ended ended ended ended
2nd April 27th March 2nd April 27th March
2005 2004 2005 2004
£'000 £'000 £'000 £'000
-------------------------------------------
Opening
shareholders'
funds 27,075 27,119 25,207 26,095
Profit/(loss)
for the year 1,155 631 457 (236)
Dividends (686) (652) (686) (652)
Other
recognised
gains and
losses
relating to
the year (6) (23) - -
---------------------------------------------
Closing
shareholders'
funds 27,538 27,075 24,978 25,207
---------------------------------------------
James Cropper PLC
Preliminary Results
Group Cash Flow Statement
for the 53 weeks ended 2nd April 2005
2005 2004
£'000 £'000 £'000 £'000
------------------------------------------------
Cash flow from operating 3,963 3,557
activities
Returns on investments and
servicing of finance
Interest received 125 46
Interest paid (490) (394)
------- -------
(365) (348)
Taxation received/(paid) 385 (316)
Capital expenditure
Purchase of tangible fixed (3,228) (3,101)
assets
Asset disposal proceeds 5 (3,223) 2 (3,099)
------- -------
Acquisitions
Investment in Joint Venture (85) (68)
Equity dividends paid (652) (627)
------ -------
Net cash inflow/(outflow)
before 23 (901)
financing
Financing
New debt due beyond a year 1,600 4,000
Repayment of bank loans (1,949) (1,461)
------- -------
(349) 2,539
------ -------
(Decrease)/increase in cash
in the (326) 1,638
year ------ -------
James Cropper PLC
Preliminary Results
For the year ended 2nd April 2005
1. The 2004 turnover figures of the Paper and Converting Divisions
have been restated to reflect the inclusion of delivery costs invoiced to
customers. These delivery costs had previously been netted off against the cost
of transport in the other external charges section of the Profit and Loss
Account. The restatement for 2004 increases turnover and other external charges
by £1,445,000 and represents a consistent accounting treatment across the Group.
2. Basic earning per share have been calculated on the profit after
taxation of £1,155,000 (2004 £631,000) divided by the weighted average number of
Ordinary shares in issue during the period of 8,359,114 (2004 8,359,114).
3. The dividend will, if approved, be paid on 12th August 2005 to
all shareholders on the Register on 22nd July 2005.
4. The financial information set out above does not constitute the
statutory accounts for the years ended 2nd April 2005 and 27th March 2004.
Statutory accounts for 2004 have been delivered to the Registrar of Companies
and those for 2005 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 2005 will be posted to
shareholders on 11th July 2005 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 Wednesday, 3rd August 2005 at the Bryce Institute, Burneside, Kendal,
Cumbria
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