Year end and COVID 19 trading update, Cropper(James) PLC, 2020-05-01
1 May 2020
James Cropper plc
(“James Cropper” or the “Company”)
Year end and COVID 19 trading update
Further to its announcement of 24th March, James Cropper is pleased to provide an update on the expected outturn for the year to 28th March 2020 just ended and on our expectations for trading during the current year.
Year ended 28 March 2020
As a result of delivering on the growth strategies within each division, the Group produced a strong performance last year with positive growth in both revenue and profits. Market penetration and expansion has been achieved across the divisions. Adjusted pre-tax profits (excluding IAS 19 impact) are expected to be well ahead of market expectations for that period and in excess of £6m.
During the current COVID 19 pandemic, the Company’s priorities are the health and well-being of all employees globally, supporting our customers and managing our cash resources.
Whilst the Company was on track to continue growing, the impact from COVID 19 will have a negative effect on product demand in each of our divisions:
· Technical Fibre Products is likely to see a downturn as a result of a decline in the aerospace market; however, growth is continuing in clean technology markets such as fuel cell and wind energy. As a result, we expect demand will not be so significantly affected.
· James Cropper Paper is likely to be the most affected of our divisions in the short term, as end markets have been directly impacted by the global lockdown. As a niche speciality provider, we expect demand and growth to return to normal levels after markets settle post-pandemic.
· Despite the impact from COVID-19, we expect Colourform to grow year-on-year, however not to the levels anticipated initially.
Given the high levels of uncertainty, we are not reasonably able to forecast the impact on our operations and financial performance for the current fiscal year. The environment is subject to rapid change. Nevertheless, at present we are expecting that the course of the financial year will be as follows: the first quarter to June 2020 to incur a large negative impact and it will be loss making. During this period, the Company is making use of the Government’s Coronavirus Job Retention Scheme to furlough more than 50% of staff in the UK operations. In the next two quarters, to December 2020, we expect still to see a negative effect and to continue to be loss-making, albeit with some recovery evident. For the final quarter to March 2021, we expect progressive recovery towards a more normalised situation and the Company anticipates being back into profitability. We continue to monitor new information as it becomes available and progress our planning accordingly.
Cash resources and future capex
The business is now, we believe, in an 18-24 month recovery period. The Company expects a hit to cash during 2020-2021over the period of the COVID-19 pandemic and as we return to more normal trading conditions. We have acted promptly to conserve cash and to implement immediate savings to shore up reserves, including announcing that the Board has decided not to pay a final dividend in respect of the year ending 28 March 2020. The Company presently has liquidity of over £12 million including cash and available overdraft facilities which, when taking into account the cash management actions being implemented, is expected to be sufficient to weather the COVID-19 crisis and the return to more normal trading conditions.
The Board, nevertheless, is also considering the funding of its capital expenditure plans post the COVID-19 crisis, which support the future growth of the business. Accordingly, it is in the early stages of discussions with its bank debt providers on potential future facilities.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED IN ARTICLE 7 OF THE MARKET ABUSE REGULATION NO. 596/2014 (“MAR”). UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN
James Cropper PLC (AIM: CRPR)
Phil Wild, CEO
Isabelle Maddock, CFO
Tel: +44 (0) 1539 722002
Robert Finlay, Henry Willcocks
Anita Ghanekar, John More
Tel: + 44 (0) 207 408 4090
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