REG - Cropper(James) PLC - Full Year Results
24/08/2023 07:00
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RNS Number : 2692K Cropper(James) PLC 24 August 2023
24 August 2023
James Cropper plc
('James Cropper', the 'Company' or the 'Group')
Full Year Results
Transformational Year with Good Progress Achieved
James Cropper plc (AIM: CRPR), a global market leader in advanced materials,
luxury packaging and paper products, today announces its results for the year
ended 1 April 2023.
Headlines:
Financial
· Strong recovery in a transformational year, with a 24% increase in
revenue to £129.7m (2022: £104.9m) driven by high demand and retained
contracts
· Despite the significant inflationary cost headwinds, adjusted
operating profit increased 4% to £4.8m (APM1*) (2022: £4.6m)
· £3.2m adjusted profit before tax, 21% lower (2022: £4.0m) (APM2**)
due to an increase in net finance costs
· Exceptional costs of £1.1m which reflects outperformance at TFP
Hydrogen and consequent reassessment of the value of contingent consideration
(2022: £0.4m)
· Profit before tax of £1.3m, 53% lower (2022: £2.8m) due to an
increase in net finance costs and exceptional costs
· Net debt of £16.6m up 35% (2022: £12.3m)
· Earnings per share 5.4p down 62% (2022: 14.2p)
· Full year dividend proposal 6.0p per share in line with expectations
(2022: 10.0p)
*APM1 "Adjusted operating profit" refers to operating profit before interest
and prior to the impact of IAS 19
and exceptional items
**APM2 "Adjusted profit before tax" refers to profit before tax prior to the
impact of IAS 19 and exceptional items
Operational
· Strong global pipeline in Future Energy sector
· TFP Hydrogen exceeded our expectations
· Well advanced in the transformation of the Paper division post year
end
· Significantly tighter scope around decarbonisation project: 40% lower
capital investment requirement
· Ongoing energy saving actions contributed to 8% annualised reduction
in site fuel consumption
· Strengthened the Board and Executive leadership team
· Strengthened broader organisational leadership to drive strategy
Outlook
· Future Energy and Luxury Packaging to deliver high market growth and
value, respectively
· Integration of Colourform with Paper to drive a unique and compelling
Luxury Packaging proposition
· Consolidation across the organisation and estate to reduce costs and
improve efficiency
· Streamlined Paper Product offer to drive margin improvements and
productivity
· Continued technological leaders in recycled content and responsible
sourcing
· Strengthen our sector leadership in carbon reduction
· Sharper focus with better clarity and assessment of our climate risks
· Strong leadership team to reposition James Cropper
· Drive brand value, recognition and preference in each market focused
segment
Commenting on the full year results, James Cropper CEO Steve Adams said:
"We achieved a good performance for the year with 24% revenue growth in spite
of unprecedented market headwinds. In FY2023, significant progress was made
in repositioning James Cropper to capitalise on growth opportunities within
its core and emerging end-markets, such as the fast-growing renewable energy
and decarbonisation markets which are in need of novel high-performance
materials and sustainable fibres.
We will aim to drive increased value for our shareholders through accelerated
growth in each of our market focused segments; Creative Papers, Luxury
Packaging, Technical Fibres and Future Energy by leveraging our potential as
one Company under the James Cropper name.
I am excited by the many opportunities and have confidence in our strategy to
accelerate growth and in our exceptional team worldwide to make a real
difference. The foundations are in place to create a greater global presence
for James Cropper, by repositioning ourselves to better serve our existing and
target customers."
Enquiries:
James Cropper plc
Rosina Merrett
Mob: +44 (0) 7500 083559
rosina.merrett@cropper.com
Shore Capital - NOMAD and Broker
Robert Finlay, Henry Willcocks, Lucy Bowden
Tel: +44 (0) 207601 6100
Buchanan Communications - Financial PR
Chris Lane, Charles Ryland, Jamie Hooper, Verity Parker
jamescropper@buchanancomms.co.uk (mailto:jamescropper@buchanancomms.co.uk)
Tel: +44 (0) 207 466 5000
Notes for editors:
James Cropper is a market leader in advanced materials and paper products. Led
by the Cropper family for six generations, the business has an international
workforce and an operational reach in over 50 countries.
Established in 1845, the Group manufactures paper, packaging and advanced
materials incorporating pioneering non-wovens and electrochemical coatings.
James Cropper is a specialist provider of niche solutions tailored to a unique
customer specification, ranging from substrates and components in hydrogen
electrolysis and fuel cells to bespoke colours and textures in paper and
moulded fibre packaging designed to replace single use plastics.
The Group operates across multiple markets from luxury retail to renewable
energy. It is renowned globally for service, capability, pioneering and multi
award-winning commitment to the highest standards of sustainability.
James Cropper's goal is to be operationally carbon neutral by 2030 and to
reduce carbon through its entire supply chain to net zero by 2050.
Chairman's Letter
Dear Shareholders
As I look back over the last year what stands out is less the circumstances,
which were challenging as ever in some quarters, but more the broad range of
positive actions we have taken to reposition the Company over this period.
These actions have strengthened our foundations for sustained growth in every
corner.
I must thank all our customers for their support in the year. Even then, at
times it was challenging to keep up with the inflationary environment.
The resulting impact was lessened by outperformance in Technical Fibre
Products and its Hydrogen business unit. Overall, however, significant credit
is due to our workforce who addressed the unfolding situation with exceptional
urgency and dedication.
Adapting to circumstance always leads to change and accordingly within the
year we have comprehensively reviewed our growth plans and the foundations
required to ensure we maximise opportunities and minimise risks as these roll
forwards.
This has enabled us to bring to life our strategy in realigning the business
to be centred around our customers.
Our products and markets will remain broadly the same, but we will start the
journey to reposition ourselves operating as one Company. To move from three
separate divisions (James Cropper Paper, Technical Fibre Products and
Colourform™) into four market-facing segments, all unified under the Group
name, James Cropper:
· Creative Papers
· Luxury Packaging
· Technical Fibres
· Future Energy
My greatest desire for James Cropper is that while we remain proud of our
great heritage, we always feel young, and achieve this balance by seamlessly
combining generations of know-how with a relentless appetite for renewal.
The reorganisation truly encapsulates this blend from our historic roots in
papermaking to cutting edge materials and components in renewable energy.
Importantly, across this range it is no longer accurate to refer to us as a
paper-mill or paper business, as has been the norm since our outset in 1845.
Today, James Cropper is successfully transitioning to an advanced materials
and paper products group across everything it does, committed to pioneering
innovation in traditional markets alongside breakthrough areas.
We are determined to stay modern and relevant, which will lead us to spend
more over the coming years as we invest in our processes and systems. This
will enable smarter access to data, leaner working practices and cost savings.
In the same vein, we will also look to invest further in innovation to meet
the anticipated demands of future markets and customers, whether technical,
environmental or economic.
We have ambitious plans to decarbonise the Group's operations, the first phase
will be to cut natural gas use by 25% by 2025, keeping us on track to achieve
net zero across our entire supply chain by 2050. This includes novel
approaches to heat generation that we hope can blaze the way for other energy
intensive manufacturers.
We are also investing to enhance our position in hydrogen electrolysis, fuel
cells, carbon capture and other fast-growing markets. The growth potential is
significant, but we will only earn a share through step changes in performance
and cost reduction. This will involve both technology advances and operational
investments. For example, we have recently commissioned a hydrogen component
line in the United States, taking production closer to a large share of our
customer base whilst at the same time cutting freight and duty costs.
Our paper and packaging partnerships within luxury and premium retail sectors
remain strong, whether designing new tailor-made papers or Colourform™
products or offering customers more sustainable options and recycled fibres.
On this note, we are proud to have been involved in the recent creation of the
first-ever 100% plastic-free remembrance poppy for the British Legion, whom we
have proudly partnered with since 1978.
We have also launched our FibreBlend Upcycled Technology programme, offering a
choice of different recovered fibre categories. This builds on our
award-winning CupCycling proposition which gives used coffee cups a second
life as a valuable fibre source for high quality paper. At present, over 75%
of our custom-made paper products contain a blended fibre source. Our plans in
this area include developing a unique technique to separate cotton, recyclable
into paper, from artificial fibres.
Dividend
In financial terms, the Group reported a profit before tax of £1.3m for the
period ended 1 April 2023. This was down by 53% versus the prior period with
the Group revenue rising by 24% split between Paper (+25%), Colourform™
(+29%) and Technical Fibre Products (+19%).
In line with expectations, the Board is proposing a final dividend of 4.0
pence per share, making a total dividend for the year of 6.0 pence per share.
Board changes
This year has seen several changes to our leadership team. In August 2022,
Steve Adams was appointed CEO, following the departure of Phil Wild.
Since the year end, we have also seen the departure of Isabelle Maddock, our
CFO, who resigned in June 2023. I would like to personally thank both Phil and
Isabelle for their dedicated service to James Cropper.
Transitioning to a brighter future
As ever, James Cropper continues to earn its future by building a diversified
business across multiple markets and geographies and by adapting with pace,
when required. I am very conscious that this has included the hard choice to
restructure our Paper division from four machines to three with associated
headcount reductions.
The decision was not taken lightly but has been essential to address years of
headwinds and margin pressures and create a more resilient, profitable
business.
Overall, we are blessed with a talented team and a range of materials and
products that have never been more relevant in a world that rapidly needs to
learn to live in greater balance with nature. Common to all our activities is
the opportunity to accelerate the transition to greener economies and
societies, and grow a vibrant group around this. I am hopeful these actions
will position us better than ever to truly deliver on this.
Everyone in the Company is playing a part in this journey and I would like to
thank all who work for us and with us for their continued commitment to James
Cropper.
Mark Cropper
Chairman
23 August 2023
Chief Executive Officer's Review
I am delighted to report our financial results in my first year as CEO.
Despite a year of unprecedented economic turbulence and market volatility
with high energy and raw material costs still being prevalent, we have
continued to show resilience.
All parts of our business responded with conviction and pace to implement
actions to offset as much of the cost headwinds as possible. The Group also
experienced strong demand and retained contracts throughout the period across
all divisions, with 24% revenue growth in the year to 1 April 2023, which is
ahead of previous market expectations.
I wish to express my sincerest thanks to all our customers for their continued
loyalty and support and to our employees who have remained focused on
delivering the best outcome possible.
Over this last year, we have made significant progress in our journey to
reposition James Cropper to an advanced materials and paper products group.
We have defined and introduced our six strategic priorities, building a solid
foundation to drive a strategy for accelerated growth.
Our customer base is changing and we are putting the right measures in place
to improve both the customer and employee experience and to truly deliver on
our purpose of 'pioneering materials to safeguard our future'.
We have strengthened our commercial leadership teams to expand in markets that
we currently already operate in, whilst being constantly curious to explore
new opportunities. We are also in the process of further strengthening our
Executive Leadership team with the skills and knowledge to support our
ambitious growth plans.
The fast-growing renewable energy and decarbonisation markets are creating an
ever-greater need for novel and high-performance materials, while sustainable
fibres, and low, or zero, carbon processing are driving growth within paper
and packaging.
After 12 months of planning, I am also pleased to share that the installation
of our new energy-efficient boiler has taken place. This will dramatically
improve our energy efficiency and resilience as we drive forward with our net
zero carbon ambition.
These energy saving investments in upgrades to our paper machines, along with
a small decrease in gross paper production over the last 12 months, have
contributed to an 8% annualised reduction in site fuel consumption and
we are on track to build our Low Carbon Energy Centre with the necessary
planning application attained and grant application awarded.
A strategy for accelerated growth:
1. Profitable growth through new customer acquisition:
Opportunities to expand in new and existing markets
2. World class execution: Investment in global systems
and functions
3. Technology and Innovation: Centre for Innovation will
include decarbonisation and waste fibres as well as exploring new ideas
4. Leaders in sustainability: Recognising our
responsibility to reduce and ultimately eliminate our emissions
5. Inspiring our people: Building a culture of trust,
cooperation and involvement
6. Build the brand: Presenting a more meaningful and
relevant face to our increasingly global customer base
Financial Review
Revenue and adjusted operating profit
Group revenue for the financial period is £129.7m, up 24% on the prior period
(2022: £104.9m) driven by organic volume growth, price increases and the
energy surcharge applied to counter energy and raw material cost increases.
Revenue for the Paper division increased by 25% in the period to £88.2m
generating an adjusted operating loss of £2.8m, compared to £2.3m in the
prior period.
Revenue for the TFP division increased by 19% in the period to £37.2m
generating an adjusted operating profit of £9.2m, compared to £8.7m in the
prior period.
Revenue for Colourform™ grew by 29% in the period to £4.3m, generating an
adjusted operating loss of £1.1m, compared to £0.8m in the prior period.
Summary table of results
2023 2022 Change
£'000 £'000 %
Group Revenue 129,664 104,922 24%
Adjusted EBITDA APM4 9,045 8,636 5%
Profit summary
Paper Products (2,847) (2,338) 22%
Technical Fibre Products (TFP) 9,244 8,684 6%
Colourform(TM) (1,057) (754) 40%
Other Group expenses (573) (1,007) -43%
Adjusted operating profit APM1 4,767 4,585 4%
Fair value movement on derivatives (330) - 0%
Net finance costs (excluding exceptional items and IAS 19 impact) (1,242) (540) 130%
Adjusted profit before tax APM2 3,195 4,045 -21%
Exceptional costs (986) (354) 179%
Exceptional finance costs (109) - 0%
Adjusted profit before tax after exceptional items APM3 2,100 3,691 -43%
Net IAS 19 pension adjustments
Net current service charge required (442) (547) -19%
Net interest (345) (367) -6%
Net IAS 19 pension impact (787) (914) -14%
Profit before tax 1,313 2,777 -53%
The Group monitors adjusted EBITDA as it provides a measure of the cash
generating ability of the Group that is comparable year-on-year. Despite
demand increasing, inflationary pressures on raw materials, distribution and
energy costs have dampened margins, with an adjusted EBITDA increasing by 5%
on the prior year.
Energy costs proved a significant headwind and the unprecedented price rises
saw costs increase 104% year-on-year, from £7.4m in FY2022 to £15.2m in
FY2023.
Similarly, with inflationary pressures in the pulp, recycled pulp, chemicals
and dyes markets, material costs increased 23% year-on-year. During the
year, the Group also paid a one-off cost of living payment to employees
totalling £0.6m in recognition of the escalating costs that employees were
facing.
Depreciation and amortisation charges increased by 6% year-on-year, mainly due
to the timings of capital investment programmes.
Divisional highlights
While operating under the Group's combined Purpose and Values, currently each
business division acts independently, focusing on niche markets and growth
areas:
Technical Fibre Products
Within Technical Fibre Products demand remains strong with contracts returning
to pre-Covid levels in aerospace, defence and the industrial sectors.
TFP Hydrogen continues to exceed our expectations and our new coating line
within our Schenectady, New York hub, became operational, building on our
successful UK Hydrogen plant in Launceston and bringing capability even closer
to our US customers.
This significant investment will provide a more attractive offer to our
existing and potential customers across North America, as well as providing a
blueprint for future James Cropper hydrogen coating lines worldwide,
supporting the electrolyser manufacturing hubs being established globally as
the technology adoption accelerates.
James Cropper Paper
Within the Paper division, demand in many of our traditional volume areas such
as files and folders, commercial print and stationery papers has declined as
those sectors continued to move away from paper to digital or they prove to no
longer be economically viable. We are taking this opportunity to right-size
our business, streamlining our portfolio and service offer to be much more
aligned on high value partnerships. In particular, we are focussing our offer
on luxury packaging and premium creative papers where our customers really
value our innovation, expertise and quality.
This year the Embossing Centre of Excellence was opened. The installation of
an embosser varnisher includes smart eye production technology for
precision-made textured paper.
This multi-million pound investment will allow James Cropper to meet growing
demand for surface aesthetics in luxury packaging and creative papers, as well
as best in class service for bespoke textural effects alongside the
development of individual colour.
Colourform™
Colourform™ continues to disrupt the luxury packaging market, maintaining a
strong pipeline of sales with 29% revenue growth throughout the year. This
was driven by innovative new market launches in the luxury drinks
and cosmetics sectors.
We celebrated being the overall category winners for the Dieline award as well
as receiving both the Yellow and Wood pencil D&AD awards. Receiving
international acclaim for our creativity and sustainability in a way that no
other product in the global packaging market has ever been able to achieve.
Overall, while margins are relatively strong, profits were nevertheless
impacted by inflationary pressures in raw materials and energy prices. Moving
forward, the division is expected to drive ongoing revenue growth in
profitable long-term packaging rebrands, coupled with an improved focus on
operational performance to increase margins and manage costs. The
integration of Colourform™ into James Cropper Luxury Packaging will create
greater synergies, build better efficiencies in our operating model as well as
increase relevance and scale in key markets.
Expenses and profit
Other expenses have increased from £20,960k in 2022 to £25,471k in the year
to 1 April 2023. The business has experienced widespread cost inflation across
an array of overhead expenditure, with distribution costs and consultancy
expenses increasing materially.
In the first half of the year the Paper division suffered considerable machine
downtime, which resulted in a significant increase in repairs and maintenance
expenditure in the year.
TFP Hydrogen continued to perform above management expectations in the year to
April 2023. Business outlook continues to improve and at the year end this
required the value of the contingent consideration on the business acquisition
to be reassessed. An exceptional cost of £1,095k (2022: £354k) has been
posted to the Statement of Comprehensive Income in this regard.
Management considers this adjustment a positive indication on the future value
of the business and the profit that TFP Hydrogen will deliver.
With strong revenue growth, adjusted operating profit (see APM1 Alternative
Performance Measures) was £4,767k in the year, up 4% on prior period, despite
the challenging economic environment, which saw unprecedented raw material and
energy prices.
Net finance costs have increased by £702k in the year, as the Group has
continued to draw down on its external borrowing facilities and interest rates
have increased notably.
The Group has hedged the first £15m drawn down of the external financing
across UKEF and Commercial Facility at a rate of 1.5% plus margin, which
provides assurances and visibility over future interest payments and limits
exposure to increasing interest rates.
Adjusted profit before tax (see APM 2 Alternative Performance Measures) was
£3,195k in the year and ahead of market expectations, partly due to stronger
trading in TFP and the accounting adjustments of provisions relating to TFP.
After the impact of IAS 19 the Group reports a profit before tax of £1,313k,
a 53% decrease on prior year (2022: £2,777k).
The Group's profit after tax for the period is £516k (2022: £1,358k) which
calculates to earnings per share of 5.4p (2022: 14.2p).
Alternative performance measures
These accounts contain two main adjusting factors being the impact of IAS 19
pension adjustments which is separated out and exceptional items. These APM
measures are used internally to evaluate business performance and are used in
this report;
APM 1 "Adjusted operating profit"
Adjusted operating profit refers to operating profit before interest and prior
to the impact of IAS 19 and exceptional items.
APM2 "Adjusted profit before tax"
Adjusted profit before tax refers to profit before tax prior to the impact of
IAS 19 and exceptional items.
APM3 "Adjusted profit before tax after exceptional items"
Adjusted profit before tax refers to profit before tax prior to the impact of
IAS 19.
APM4 "Adjusted EBITDA"
EBITDA is a common term that refers to operating profit before interest, tax,
depreciation and amortisation. Adjusted EBITDA is EBITDA prior to the impact
of IAS 19 and exceptional items. The impact of IAS 19 and exceptional items
are presented in the summary tables of results.
IAS 19 pension adjustment is separated out from operating profit measures as
the impact of IAS 19 varies from one reporting period to another which makes
year-on-year comparison of performance challenging. Over the last 12 years,
the average impact is a charge to profit before tax of £1,052k. This year the
charge is £787k (2022: charge of £914k).
Currency
US$ €
Opening Rate v. £ 1.3165 1.1998
Closing Rate v. £ 1.2333 1.1370
£ weakened against currency (%) (6.32%) (5.23%)
This table compares the opening and closing exchange rates for the financial
period. Sterling weakened against the Dollar and Euro over the year. 59% of
the Group's revenue is earned from customers outside of the UK (2022: 61%)
bringing in Dollars and Euros to the Group. Euros are used to purchase Euro
priced pulp and raw materials and Dollar receipts are used to fund the
purchase of Dollar priced pulp, creating a natural hedge across the Group.
Potential exposure to any foreign currency surpluses, or deficits, are dealt
with via foreign currency trades using forward selling or forward purchasing
contracts. Currency movements had a 3% impact on revenue increasing revenues
by £3,884k for the period.
Statement of financial position (SFP)
Non-pension assets have increased largely due to capital expenditure, an
increase in trade debtors and the recognition of the interest rate cap in
other financial assets.
Capital investment in the period was £5,779k (2022: £6,761k). Investments
are driven largely to enable growth in the form of increasing capacity,
improving capability or generating cost savings.
We have concluded the build of additional embossing varnishing capability in
the Paper division and new energy technologies have been introduced in Paper
to facilitate the path towards the Group's net zero goals.
The Group experienced a greater level of revenue in the period compared to the
prior period, and, inevitably with this, an increase within trade and other
receivables of £2,857k and inventory of £711k.
After deferred tax the Net IAS 19 deficit has increased by £2,258k to
£12,105k (2022: £9,847k), the reasons for which are detailed in the Pension
Report in the 2023 Annual Report.
As a result of these movements on the pension scheme deficits, shareholders'
funds show an overall decrease of £2,449k to £32,065k.
2023 2022
SFP Restated*
£'000 £'000
Non-pension assets 86,754 81,568
- excluding cash
Non-pension liabilities (25,990) (24,913)
- excluding borrowings
60,764 56,655
Net IAS 19 pension deficit (after deferred tax) (12,105) (9,847)
48,659 46,808
Net debt (16,594) (12,294)
Equity shareholders' funds 32,065 34,514
Gearing % - before IAS 19 deficit 38% 28%
Gearing % - after IAS 19 deficit 52% 36%
Capital expenditure £'000 5,779 6,761
* see note 11 for details of the restatements.
2023 2022
Restated*
Cash Flow £'000 £'000
Net cash inflow from operating activities 5,550 4,029
Net cash outflow from investing activities (6,643) (6,598)
(1,093) (2,569)
Net cash inflow from financing activities 622 3,436
Net (decrease) / increase in cash and cash equivalents (471) 867
Effects of exchange rate fluctuations on cash held 400 118
Net (decrease) / increase in cash and cash equivalents (71) 985
Opening cash and cash equivalents 7,750 6,765
Closing cash and cash equivalents 7,679 7,750
* see note 11 for details of the restatements.
In the period the Group's net cash outflow was £71k (2022: inflow £985k).
The Group continued to invest in capital expenditure throughout the year in
order to facilitate future revenue growth by building capacity and capability.
There was also an increased demand for working capital following the improved
demand in the year.
Net debt
The Group incorporates £3,791k (2022: £3,949k) of right-of-use leases in its
2023 borrowings figure. The Group's banking arrangements monitor net debt
excluding IFRS 16.
On this basis net debt has increased over the year from £8,345k to £12,803k,
an increase of £4,458k. Net debt including right of use lease liabilities is
£16,594k, an increase of £4,300k on the prior period.
2023 2022
Net debt before RoU leases Restated*
£'000 £'000
Cash and cash equivalents 7,679 7,750
All borrowings excluding RoU leases (20,482) (16,095)
Net debt on an equivalent comparison basis (12,803) (8,345)
* see note 11 for details of the restatements.
Funding and facilities
The Group funds its operations and investments from operating cash flow and
from borrowings and leases.
The Group has a core banking facility in the UK and further loan support in
the US, along with some lease arrangements, all with high street banks. The
Group has a core £25m banking facility under UKEF's Export Development
Guarantee scheme which is aimed at enabling additional bank liquidity to
support exporters.
This finance arrangement is available for general corporate purposes and will
be used to support strategic growth and innovation, capital expenditure and
decarbonisation programmes. The facility has an availability period of a
further 2 years and an overall tenure of 8 years from inception, repayments
are on a straight line basis from years 4 to 8. The Group's key financial
covenants are EBITDA: net Interest 4x, and the Net Debt: EBITDA 3.5x. The
Group is in compliance with all its banking covenants at the period end.
Cash and cash equivalents decreased marginally from £7,750k to £7,679k in
the year. Long term borrowings (falling due after more than a year) increased
by £4,066k to £22,515k. Facilities comprise of unused overdraft facilities
of £3,500k plus the total unused credit facilities of £12,000k, this means a
total of £15,500k remains unutilised at the year-end date. Having taken
account of current borrowings to be paid within 12 months of the reporting
period the Group has £21,421k available to the Group beyond 12 months.
Funding 2023 2022
£'000 Restated*
£'000
Facilities 39,773 40,544
Less: Undrawn facilities (15,500) (20,500)
Total Borrowings 24,273 20,044
Less: Cash and cash equivalents (7,679) (7,750)
Net debt 16,594 12,294
Cash and cash equivalents 7,679 7,750
Undrawn facilities 15,500 20,500
Funds available at year end 23,179 28,250
Borrowings: repayable (1,758) (1,595)
within one year
Funds available at year end 21,421 26,655
* see note 11 for details of the restatements.
Inspiring our people
We recognise that it is the passionate, committed and talented people we
employ that will help us navigate through the business changes and
opportunities we have before us to deliver long term sustainable business
growth.
Our online employee opinion survey is in its second year and saw a marked
increase in employee participation as well as increased engagement.
Whilst this is pleasing to see, we will work even harder to deliver an
improved proposition for our employees with continued focus on upgrading our
policies, updating our working practices and reviewing our remuneration and
career opportunities for all.
We have concluded the first year of our LEAP leadership development programme
with 50 leaders - from first line leaders to Executive Committee members -
having benefited from the course. A further cohort of approximately 40
employees will be invited to participate in the coming year.
We have committed to invest in creating a great place to work and will
continue with our pledge across all our sites to improve the workplace
environment, providing more facilities and amenities for our employees.
Over the next three years it is our intention to invest in a multi-million
pound programme to update our IT systems and infrastructure. This will drive
significant efficiency and productivity improvements as well as improving
resilience. The investment will equip our teams to make smarter, data driven
decisions and improve our response times and agility in dealing with our
customers.
Looking forward with confidence
I am excited by the many opportunities we have in front of us as a Company but
certainly do not underestimate the external challenges that we continue to
face.
I have confidence in our strategy to accelerate growth and in our exceptional
team worldwide to make a real difference.
We will create a greater global presence for James Cropper, by repositioning
ourselves to better serve our existing and target customers.
We will also drive increased value for our shareholders through accelerated
growth in each of our market focused segments; Creative Papers, Luxury
Packaging, Technical Fibres and Future Energy by leveraging our potential as
one Company under the James Cropper name.
Building on our foundations, we aim to redefine ourselves and become - what we
believe - will be a different organisation with a very bright future.
Steve Adams
Chief Executive Officer
23 August 2023
James Cropper PLC
Group Statement of Comprehensive Income
53 week period to 52 week period to
1 April 2023 26 March 2022
Note £'000 £'000
Revenue 6 129,664 104,922
Provision for impairment reversal 134 184
Other income 650 744
Changes in inventories of finished goods and work in progress 817 385
Raw materials and consumables used (48,556) (39,577)
Energy costs (15,162) (7,428)
Employee benefit costs (34,459) (30,535)
Depreciation and amortisation (4,278) (4,051)
Other expenses (25,471) (20,960)
Operating Profit 9 3,339 3,684
Fair value movement on derivatives (330) -
Interest payable and similar charges (1,697) (924)
Interest receivable and similar income 1 17
Profit before taxation 9 1,313 2,777
Tax expense (797) (1,419)
Profit for the period 516 1,358
Earnings per share - basic and diluted 5.4p 14.2p
Other comprehensive income
Profit for the period 516 1,358
Items that are or may be reclassified to profit or loss
Exchange differences on translation of foreign operations 222 49
Pulp hedge fair value adjustment - (501)
Cash flow hedges - effective portion of changes in fair value 1,040 10
Cash flow hedges - cost of hedging (355) -
Foreign tax adjustment - (13)
Items that will never be reclassified to profit or loss
Retirement benefit liabilities - actuarial (losses) / gains (3,888) 4,777
Deferred tax on actuarial losses / (gains) on retirement benefit liabilities 972 (179)
Other comprehensive (expense) / income for the period (2,009) 4,143
Total comprehensive (expense) / income for the period attributable to equity (1,493) 5,501
holders of the Company
James Cropper PLC
Statement of Financial Position
Group as at Company as at
Group as at 26 March 2022 Company as at 26 March 2022
1 April 2023 Restated 1 April 2023 Restated
£'000 £'000 £'000
Note £'000
Assets
Goodwill 1,264 1,264 - -
Intangible assets 1,524 1,584 788 769
Property, plant and equipment 32,717 30,551 1,758 1,630
Right-of-use assets 6,765 7,358 402 343
Investments in subsidiary undertakings - - 7,350 7,350
Other financial assets 654 - 654 -
Deferred tax assets 4,198 3,534 4,118 3,459
Total non-current assets 47,122 44,291 15,070 13,551
Inventories 18,304 17,593 - -
Trade and other receivables 24,763 21,906 53,991 54,749
Provision for impairment (643) (777) - -
Other financial assets 428 - 428 -
Cash and cash equivalents 7,679 7,750 3,506 4,011
Corporation tax 815 1,838 582 968
Total current assets 51,346 48,310 58,507 59,728
Total assets 98,468 92,601 73,577 73,279
Liabilities
Trade and other payables 21,106 20,936 7,465 16,324
Other financial liabilities 58 6 58 6
Loans and borrowings 1,758 1,595 217 133
Total current liabilities 22,922 22,537 7,740 16,463
Long-term borrowings 22,515 18,449 13,019 7,904
Retirement benefit liabilities 8 16,140 13,130 16,140 13,130
Contingent consideration on business acquisition 1,423 578 - -
Deferred tax liabilities 3,403 3,393 112 123
Total non-current liabilities 43,481 35,550 29,271 21,157
Total liabilities 66,403 58,087 37,011 37,620
Equity
Share capital 2,389 2,389 2,389 2,389
Share premium 1,588 1,588 1,588 1,588
Translation reserve 775 553 - -
Reserve for own shares (1,407) (1,407) (1,407) (1,407)
Cash flow hedging reserve 1,040 - 1,092 -
Cost of hedging reserve (355) - (355) -
Retained earnings 28,035 31,391 33,259 33,089
Total shareholders' equity 32,065 34,514 36,566 35,659
Total equity and liabilities 98,468 92,601 73,577 73,279
The Parent Company reported a profit for the period ended 1 April 2023 of
£4,042k (2022: £4,554k).
James Cropper PLC
Statement of Cash Flows
For the period ended 1 April 2023 (2022: for the period ended 26 March 2022)
Group 2022
Group 2023 Restated
£'000 £'000
Cash flows from operating activities
Profit for the period 516 1,358
Adjustments for:
Tax expense 797 1,419
Depreciation and amortisation 4,278 4,051
Earn out adjustment on contingent consideration on business acquisition 986 -
Net IAS 19 pension adjustments within profit 442 914
Past service pension deficit payments (1,665) (1,443)
Foreign exchange differences (136) -
Profit on disposal of property, plant and equipment and intangible assets (589) -
Interest receivable and similar income (1) (17)
Interest payable and similar charges 1,697 926
Share based payments (59) (107)
Fair value movements on derivatives 330 -
Changes in working capital:
Increase in inventories (696) (2,103)
Increase in trade and other receivables (3,614) (5,942)
Increase in trade and other payables 2,396 5,945
Tax received 868 (972)
Net cash generated from operating activities 5,550 4,029
Cash flows from investing activities
Purchase of intangible assets (1,126) (56)
Purchase of property, plant and equipment (5,267) (6,142)
Deferred consideration on business acquisition paid - (400)
Contingent consideration on business acquisition paid (250) -
Net cash used in investing activities (6,643) (6,598)
Cash flows from financing activities
Proceeds from issue of new loans 5,050 9,191
Repayment of borrowings (288) (3,123)
Fees paid on raising finance - (278)
Repayment of lease liabilities (1,561) (1,170)
Interest received 1 17
Interest paid (858) (709)
Non-deliverable forward contract payment (330) -
Payments on interest rate cap (495) -
Purchase of own shares - (256)
Dividends paid to shareholders (897) (236)
Net cash generated from financing activities 622 3,436
Net (decrease) / increase in cash and cash equivalents (471) 867
Effects of exchange rate fluctuations on cash held 400 118
Net (decrease) / increase in cash and cash equivalents (71) 985
Cash and cash equivalents at the start of the period 7,750 6,765
Cash and cash equivalents at the end of the period 7,679 7,750
Cash and cash equivalents consists of:
Cash at bank and in hand 7,679 7,750
Cash and cash equivalents at the end of the period 7,679 7,750
James Cropper PLC
Statement of Changes in Equity - Group
Reserve for Own Cost of Hedging Cash flow Hedging
Translation Retained
Share Share
All figures in £'000 capital reserve Shares reserve reserve earnings Total
premium
At 27 March 2021 - As 504 (1,151) - 501 26,070 29,901
previously reported
2,389 1,588
Restatement - note 11 - - - - (300) (300)
- -
At 27 March 2021 - Restated 2,389 1,588 504 (1,151) - 501 25,770 29,601
Comprehensive income - - - - 1,358 1,358
- -
for the period
Total other comprehensive income - - 49 - - (501) 4,595 4,143
Dividends - - - - (236) (236)
paid
- -
Purchase of own shares - (256) - - - (256)
- -
Share based payment charge - - - - (96) (96)
- -
Total contributions by and - - - (256) - - (332) (588)
distributions to owners of the Group
At 26 March 2022 - Restated 2,389 1,588 553 (1,407) - - 31,391 34,514
Comprehensive income - - - - - - 516 516
for the period
Total other comprehensive income - - 222 - (355) 1,040 (2,916) (2,009)
Dividends paid - - - - - - (897) (897)
Share based payment charge - - - - - - (59) (59)
Total contributions by and - - - - - - (956) (956)
distributions to owners of the Group
At 1 April 2023 2,389 1,588 775 (1,407) (355) 1,040 28,035 32,065
James Cropper PLC
Statement of Changes in Equity - Company
Reserve Cost of Cash flow
All figures in £'000 Share capital Share premium for Own Shares Hedging reserve Hedging Retained earnings Total
reserve
At 27 March 2021 2,389 1,588 (1,151) - - 24,253 27,079
Comprehensive income for the period - - - - - 4,554 4,554
Total other comprehensive income - - - - - 4,614 4,614
Dividends paid - - - - - (236) (236)
Share based payment charge - - - - - (96) (96)
Purchase of own shares - - (256) - - - (256)
Total contributions by and distributions to owners of the Group - - (256) - - (332) (588)
At 26 March 2022 2,389 1,588 (1,407) - - 33,089 35,659
Comprehensive income for the period - - - - - 4,042 4,042
Total other comprehensive income - - - (355) 1,092 (2,916) (2,179)
Dividends paid - - - - - (897) (897)
Share based payment charge - - - - - (59) (59)
Total contributions by and distributions to owners of the Group - - - - - (956) (956)
At 1 April 2023 2,389 1,588 (1,407) (355) 1,092 33,259 36,566
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1 BASIS OF PREPARATION
James Cropper Plc (the Company) is a public limited company incorporated and
domiciled in the United Kingdom and listed on the Alternative Investment
Market (AIM). The condensed consolidated financial statements of the Company
for the 53 weeks ended 1 April 2023, comprise the Company and its subsidiaries
(together referred to as the Group).
Statement of compliance
The condensed consolidated financial statements have been prepared in
accordance with UK adopted international accounting standards and with those
parts of the Companies Act 2006 applicable to companies reporting under IFRS.
As required by the Disclosure and Transparency Rules of the Financial Services
Authority, the condensed consolidated set of financial statements have been
prepared applying the accounting policies and presentation that were applied
in the preparation of the Group's published consolidated financial statements
for the 53 week period ended 1 April 2023. They do not include all the
information required for full annual financial statements, and should be read
in conjunction with the consolidated financial statements of the Group for the
53 week period ended 1 April 2023.
The consolidated financial statements of the Group for the 53 week period
ended 1 April 2023 are available upon request from the Company's registered
office Burneside Mills, Kendal, Cumbria, LA9 6PZ or at www.jamescropper.com
(http://www.jamescropper.com) .
The financial information is presented in Sterling and all values are rounded
to the nearest thousand pounds (£'000) except where otherwise indicated.
Going concern
The Directors have performed a rigorous assessment of the financial forecasts
for the 2-year period ending 31 March 2025, including consideration of the
principal risks faced by the Group and the Company, as detailed in the 2023
Annual Report. Following this review the Directors are satisfied that the
Company and the Group have adequate resources to continue in operational
existence for the foreseeable future. Accordingly, they continue to adopt the
going concern basis in preparing the condensed consolidated financial
statements.
Significant accounting policies
The accounting policies applied by the Group in these condensed consolidated
financial statements are the same as those applied by the Group in its
consolidated financial statements as at and for the 53 week period ended 1
April 2023.
2 Accounting estimates and judgements
The preparation of the financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expenses. Actual results may differ from these estimates.
The significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty were the
same as those applied to the consolidated financial statements as at and for
the 53 week period ended 1 April 2023.
3 Risks and uncertainties
The principal risks and uncertainties which may have the largest impact on
performance are disclosed in the 2023 Annual Report and are namely:
Pandemic risk; fire; net zero emissions; pension; cyber risk; flood; water
abstraction; energy price volatility and pulp price volatility.
The Board considers that the principal risks and uncertainties set out in the
2023 Annual Report remain relevant for the current financial year.
4 Alternative performance measures
The Company uses alternative performance measures to allow users of the
financial statements to gain a clearer understanding of the underlying
performance of the business.
Profit before tax represents the Group's overall performance and financial
position, however it contains significant non-operational items relating to
IAS 19 that the Directors believe make year-on-year comparison of performance
challenging.
Measures used to evaluate business performance are 'Adjusted operating profit'
(operating profit excluding the impact of IAS 19 and exceptional costs), and
'Adjusted profit before tax' (profit before tax excluding the impact of IAS 19
and exceptional costs). The alternative performance measures are reconciled in
note 9.
5 Earnings per share
The calculation of basic earnings per share is based on earnings attributable
to ordinary shareholders divided by the weighted average number of shares in
issue during the year. The calculation of diluted earnings per share is based
on the basic earnings per share adjusted to assume conversion of all dilutive
options.
6 Segmental information
IFRS 8 Operating Segments requires that entities adopt the 'management
approach' to reporting the financial performance of its operating segments.
Management has determined the segments that are reported in a manner
consistent with the internal reporting provided to the chief operating
decision maker, identified as the Executive Committee that makes strategic
decisions. The committee considers the business principally via the four main
operating segments, principally based in the UK:
• James Cropper Paper Products (Paper): comprising James Cropper Speciality
Papers, a manufacturer of specialist paper and boards, and James Cropper
Converting , a converter of paper.
• James Cropper 3D Products (Colourform(TM)) - a manufacturer of moulded
fibre products.
• Technical Fibre Products (TFP) - a manufacturer of advanced materials.
• Group Services - comprises central functions providing services to the
subsidiary companies.
Revenue Adjusted operating profit / (loss)
2023 2023 2022
2022
£'000 £'000 £'000 £'000
Paper 88,151 70,350 (2,847) (2,338)
Colourform(TM) 4,326 3,363 (1,057) (754)
TFP 37,187 31,209 9,244 8,684
Group services and other - - (573) (1,007)
129,664 104,922 4,767 4,585
7 Dividend
An interim dividend of 2.0p per share was paid in the period. The Board is
proposing a final dividend of 4.0p per share, making a total declared dividend
for the period of 6.0p per share. (2022: 10.0p per ordinary share).
If approved by members at the Annual General Meeting, the final dividend will
be paid to all shareholders on the register on or before 20 October 2023.
8 Retirement benefit obligations
Movements during the period in the Group's defined benefit pension schemes are
set out below:
2023 2022
£'000 £'000
Net obligation brought forward (13,130) (18,436)
Expense recognised in the income statement (1,319) (1,570)
Contributions paid to the schemes 2,197 2,099
Actuarial (losses) and gains (3,888) 4,777
Net obligation carried forward (16,140) (13,130)
9 Alternative performance measures
2023 2022
£'000 £'000
Adjusted operating profit 4,767 4,585
Net IAS 19 pension adjustments:
current service costs (974) (1,203)
future service contributions paid 532 656
Exceptional Items:
Increase in earn out provisions (986) (354)
Operating profit 3,339 3,684
2023 2022
£'000 £'000
Adjusted profit before tax 3,195 4,045
Net IAS 19 pension adjustments:
current service costs (974) (1,203)
future service contributions 532 656
paid
finance costs (345) (367)
Exceptional items:
Increase in earn out provisions (1,095) (354)
Profit before tax 1,313 2,777
10 Related parties
There have been no significant changes in the nature of related party
transactions in the period ended April 2023 from that disclosed in the 2022
Annual report.
11 Prior period restatement
The comparatives detailed below have been restated. No adjustment impacts
prior year profit. Net assets have reduced by £300k.
Statement of Financial Position - Group
As previously reported Restatement Restated
All figures in £'000 2022 2022 2022
Trade and other receivables(1) 22,184 (278) 21,906
Long-term borrowings(1) 18,727 (278) 18,449
Deferred tax liability(2) 3,093 300 3,393
Retained earnings(2) 31,691 (300) 31,391
Statement of Financial Position - Company
As previously reported Restatement Restated
All figures in £'000 2022 2022 2022
Trade and other receivables(1) 55,027 (278) 54,749
Long-term borrowings(1) 8,182 (278) 7,904
Statement of Cashflows - Group
As previously reported Restatement Restated
All figures in £'000 2022 2022 2022
Increase in trade and other receivables(1) (6,220) 278 (5,942)
Increase in trade and other payables(3) 5,545 400 5,945
Net cash generated from operating activities 3,351 678 4,029
Purchase of property, plant and equipment(4) (6,705) 563 (6,142)
Deferred consideration on business acquisition paid(3) - (400) (400)
Net cash used in investing activities (6,761) 163 (6,598)
Proceeds from issue of new loans(4) 9,754 (563) 9,191
Fees paid on raising finance(1) - (278) (278)
Net cash used in financing activities 4,277 (841) 3,436
1 Fees paid on raising finance previously allocated to prepayments within
trade and other receivables have been reallocated against borrowings in the
statement of financial position and the related cash flow has been separately
disclosed under financing activities. There is no impact on net assets or cash
and cash equivalents.
2 The opening balance of the deferred tax liability for FY2022, has been
increased by £300k, following the finalisation of previous years computations
due to errors identified at the tax provisioning stage. This results in a
corresponding reduction in retained earnings.
3 The deferred consideration on business acquisition paid previously disclosed
within increase in trade and other payables has been separately disclosed
under investing activities to more appropriately reflect the nature of the
cash flow. There is no impact on net assets or cash and cash equivalents.
4 The cash flow relating to additions to property, plant and equipment
previously included additions to right-of-use assets which are financed via
lease and are therefore non-cash. The correction has resulted in a decrease in
purchase of property, plant and equipment and a decrease in proceeds from
issue of new loans.
Retirement benefit liabilities
The gross amount of the Works scheme fair value of assets has been increased
by £521k to account for the annuities held but not previously recognised. The
defined benefit obligation has been increased by the corresponding amount
resulting in a nil impact on the retirement benefit liabilities disclosed.
Group and Company
As previously reported Restatement Restated
All figures in £'000 2022 2022 2022
Fair value assets 109,388 521 109,909
Defined benefit obligation 121,130 521 121,651
Retirement benefit liabilities (11,742) - (11,742)
Effect of limit on recoverable surplus (1,388) - (1,388)
Retirement benefit liabilities (13,130) - (13,130)
Statement of Directors' responsibilities
The Directors confirm that these condensed consolidated financial statements
have been prepared in accordance with International Financial Reporting
Standards as adopted by the European Union and that the preliminary report
includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8,
namely:
(i) An indication of important events that have occurred
during the period and their impact on the condensed set of financial
statements, and a description of the principal risks and uncertainties for the
financial period; and
(ii) Material related party transactions in the period and
any material changes in the related party transactions described in the last
Annual Report.
The Directors of James Cropper Plc are detailed on our Group website
www.jamescropper.com (http://www.jamescropper.com)
Forward-looking statements
Sections of this financial report may contain forward-looking statements with
respect to the Group's plans and expectations relating to its future
performance, results, strategic initiatives, objectives and financial
position, including liquidity and capital resources. These forward-looking
statements are not guarantees of future performance. By their very nature, all
forward-looking statements involve risks and uncertainties because they relate
to events that may or may not occur in the future and are or may be beyond the
Group's control. Accordingly, the Group's actual results and financial
condition may differ materially from those expressed or implied in any
forward-looking statements. Forward-looking statements in this financial
report are current only as of the date on which such statements are made. The
Group undertakes no obligation to update any forward-looking statements, save
in respect of any requirement under applicable law or regulation. Nothing in
this announcement shall be construed as a profit forecast.
Annual General Meeting
The Annual General Meeting will be held on 26 September 2023. The notice of
Annual General Meeting will be mailed to shareholders on or around 4 September
2023 together with a copy of the 2023 Annual Report.
Content of this report
The financial information set out above does not constitute the Group's
statutory accounts for the 12 months ended 1 April 2023 or 26 March 2022 but
is derived from those accounts.
Statutory accounts for the 12 months ended 26 March 2022 have been delivered
to the Registrar of Companies. The auditor, BDO LLP, has reported on the 2022
accounts; the report (i) was unqualified, (ii) did not include a reference to
any matters to which the auditor drew attention by way of emphasis without
qualifying their report, and (iii) did not contain a statement under section
498 (2) or (3) of the Companies Act 2006.
The statutory accounts for the 12 month period ended 1 April 2023 will be
delivered to the Registrar of Companies following the Annual General Meeting.
The auditor, Grant Thornton UK LLP, has reported on these accounts; their
report (i) is unqualified, (ii) does not include a reference to any matters to
which the auditor drew attention by way of emphasis without qualifying their
report, and (iii) does not include a statement under either section 498 (2) or
(3) of the Companies act 2006.
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