James Cropper PLC, the advanced materials and paper products group, is pleased to issue a positive trading update for the 52 weeks to 27 March 2021.
As reported in the half year results to 26 September 2020, the first half of the year had been particularly challenging due to the significant impact of the Covid-19 pandemic. The Group responded quickly to the challenges taking swift action to protect staff, reduce costs, optimise cash flow and protect liquidity. All divisions of the Group were affected to varying degrees by the pandemic. Since the half year, trading has improved, and the restructuring program is now complete.
In January 2021, the TFP division acquired PV3 Technologies Limited, a company specialising in the development and manufacture of electrochemical materials used in the creation of hydrogen. The acquisition is the latest step in TFP's growth plans, providing the opportunity to further enhance TFP's market position in the hydrogen economy. Following the suspension of all major capital expenditure in H1 due to the pandemic, work on installing the additional production line has now recommenced and is expected to be complete in summer of 2021.
Colourform's rate of growth has been impacted by a pandemic related downturn within the beauty and spirit sectors. Nonetheless, it is expected that revenues will be up on the previous year.
The Paper division endured the biggest impact from the pandemic as a result of global lockdowns affecting demand for luxury packaging, education and event collateral. In the first half, revenues were 45% down, compared to the comparable period last year, with the reduced demand leading to periods of inefficient or no production. Revenues in H2 have improved but expected to be 20% down compared to the comparable period last year.
The Company acted promptly at the start of the pandemic to conserve cash and implement immediate savings. It has good headroom against all its banking covenants and is in a strong financial position with liquidity of over £18 million from cash, overdraft and other available facilities including a £4m loan from the Coronavirus Large Business Interruption Loan Scheme. This is expected to be sufficient for the Company to return to more normal trading conditions, to invest and to emerge from the pandemic stronger.
Due to the improving trading performance and continued operational focus the Board expects the results for the year ending 27 March 2021 to be improved from previous expectations. The profit for the year ending 27 March 2021, before exceptional costs, is expected to be above £3.5m on sales of around £77m. This is an improvement from previous market expectations and includes around £2.9m of the Coronavirus Job Retention Scheme and Paycheck Protection Program government schemes.
This announcement contains information that would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.