Final Results
4imprint Group PLC
20 March 2002
Press Release 20 March 2002
4imprint Group plc
Preliminary Results for the year ended 29 December 2001
4imprint Group plc, the leading global distributor of imprinted promotional
products, today reports its Preliminary Results for the year ended 29 December
2001.
Highlights
• Turnover from continuing operations up 6.7% from £88.0 million to
£94.0 million
• Profits on continuing activities before amortisation and exceptionals down
from £4.8m to £2.4m, in line with the October announcement
• Final dividend of 1.25p per share (12.20p)
• Core businesses remain cash generative
Operational highlights
• Restructuring completed - exceptional charge of £1.5 million
• UK and US corporate programmes show continued sales growth
• Expanding customer base from AIA franchise owner network
• Direct marketing order volumes increased in both the US and the UK
Commenting on the Results, Dick Nelson, Chief Executive of 4imprint Group plc,
said:
'In the toughest market conditions experienced for a number of years, the Group
maintained turnover in its existing businesses whilst integrating AIA, the
US-based franchise network acquired in December 2000. The Group's flexibility
in service delivery and ability to serve a wide range of business sectors means
that, whilst affected by general market conditions, there is no undue reliance
upon any one channel, sector or client.
'Sales are continuing to increase despite weak market conditions on both sides
of the Atlantic. This is driven by new contract wins in both the Corporate
Programmes and Premium divisions. Additionally with over 450 active franchise
owners now in the AIA network, the Group is well positioned to rebound in 2002,
assuming there is no major deterioration in either the UK or US economies.'
- Ends -
www.4imprint.com www.4imprint.co.uk
For further information, please contact:
4imprint Group plc
Dick Nelson, CEO Tel: +44 (0) 7788 145 193
Email: dnelson@4imprint.com (today only)
Issued by:
Bankside Consultants Limited
Julian Bosdet / Henry Harrison-Topham Tel: +44 (0) 20 7444 4141
Email: henry.ht@bankside.com
Chairman's Statement
2001 has seen the second and final phase of the transformation of our Group from
its origins in the UK printing industry to become a leading international
distributor of promotional merchandise. With the entire Group now focused on
this market, we have been working on the development of our infrastructure and
technical systems, together with the integration of previous acquisitions. All
of this will provide our clients with the best possible service using a
competitive cost base, giving the Group the opportunity of strong growth in
profits.
During 2001, we have succeeded in maintaining sales on a like for like basis and
added the first year contribution from AIA, acquired on 30 December 2000. This
has been achieved against a worsening economic background for the Group and its
customers. We have a strong base of IT and telecommunications clients whose
markets are suffering serious pressures after many years of rapid growth and we
also serve several major airlines, all of which have been under severe economic
strain. Only now are we beginning to show some recovery from the reductions in
their business with the Group since last Autumn.
This situation has resulted in lower profits than we had planned for the year,
albeit in line with our October statement. However, our financial position
remains strong and we have no net borrowings. We believe strongly that our
broad customer base in both manufacturing and service companies is a valuable
asset, which will position us to take maximum advantage of growth and recovery
opportunities.
We propose a final dividend of 1.25 pence per share, giving a total of 2.25
pence per share for the year (18.65 pence per share total in 2000). This is in
accordance with the policy set out last year, which is to maintain a dividend
cover of around three times, based upon profit before exceptional items and
goodwill amortisation and after provision for a normalised tax rate.
During the year we have made two important changes to our Board. Richard
Harrison has retired after 10 years as Finance Director and 17 years with the
Group. Martin Varley was a founder of Broadway Incentives, which has been one
of the core divisions of our UK operations. Martin spent 8 years with the Group
following our acquisition of his company, and since 2000 he held a Board
position as Managing Director, Europe. Martin has now moved on to new
challenges in another field. I would like to thank both Richard and Martin for
their significant contributions to the Group. The Group has recognised a total
charge of £0.3 million to satisfy fully the contractual agreements between the
Group and Richard and Martin.
We welcome Craig Slater to the Board as Finance Director. We congratulate both
Nigel Brabbins, on his promotion to head our European Operations and Kevin
Lyons-Tarr, as Chief Operating Officer at Oshkosh, who has ten years' experience
with the Company.
2001 has not been an easy year. However, we have a clear and focused positive
strategy, a strong 'blue chip' customer base now utilising our leading edge
administrative technologies and a team of committed and extremely capable
executives. Accordingly, the Board looks to the future with optimism and
confidence.
Rodger Booth
Chairman
Chief Executive's Review
Introduction
In the toughest market conditions experienced for a number of years the Group
maintained turnover in its existing businesses whilst integrating AIA, the
US-based franchise network acquired in December 2000. As a result, Group
turnover from continuing operations increased by 6.7%, from £88.0 million to
£94.0 million.
The Group's flexibility in service delivery and ability to serve a wide range of
business sectors means that, whilst affected by general market conditions, there
is no undue reliance upon any one channel, sector or client. In particular, the
business was able to mitigate the impact of more severe conditions in the IT,
telecommunications and airline industries during 2001. Nevertheless, net
margins were affected by the downturn and by the costs of the development
initiatives outlined below. This resulted in profit before tax, amortisation
and exceptional items on continuing activities of £2.4 million - in line with
the trading statement issued in October 2001 - compared to £4.8 million in 2000.
Significant progress was achieved on a number of operational initiatives,
including the AIA integration and the establishment of business channels in the
US. In order to achieve the objectives set for the AIA integration, the Group
has invested in the further development of its operating system OASIS, the
migration of certain jobs into our major US business facilities in Oshkosh and
the establishment of additional services to assist franchise owners in further
growth. In conjunction with the AIA development, the premium and corporate
programme channels have also been established in Oshkosh.
In the UK, the final stages of the restructuring announced last year were put in
place. The main element of this was the closure in December of the Woking
facility, which is expected to produce an immediate benefit of £0.5 million per
annum. This compares with the expected cost of £1.5 million, which is shown as
an exceptional item in the 2001 accounts. Alongside goodwill amortisation of
£1.0 million this leads to a Group result of breakeven, compared to a loss of
£45.1 million in 2000.
The Group remains cash generative. However, 2001 was characterised by a
significant cash outflow, as a result of:
• the payment of £10.5 million for AIA
• capital expenditure of £4.7 million largely spent on expanding the facilities
in Oshkosh in order to house the AIA back office functions that will be
consolidated there and the further development of the OASIS operating
system, and
• £3.8 million in dividends under the old Bemrose dividend policy, which, as
indicated in last year's report, will not be continued.
Corporate Programmes
Our corporate programme channel designs, sources, manufacturers, warehouses and
distributes promotional products for over 80 major clients worldwide such as
Audi, British Airways, BT, Gillette, Hitachi Data Systems, IBM, ING, JCB,
Microsoft, Northrop Grumman, Union Pacific and UNISYS.
In UK corporate programmes there was sales growth both from existing customers
and from several significant new contracts won during the year. This was
despite spending cuts by some clients, particularly those in travel and
technology. The wins included some high profile names such as Nissan Europe,
Abbey National, DaimlerChrysler UK, Natwest and Ericsson, and these strengthen
and broaden the customer base in this business. However, some of these
accounts were added late in the year and, as a result, should yield benefits in
2002.
The US strategy of using the AIA franchise owner network to find corporate
programme opportunities continues to produce results. Through the use of
web-based catalogues and our OASIS operating system, a competitive, and high
quality service is offered to all corporate, programme clients, resulting in an
expanding customer base. The Group has secured over a dozen new wins since the
middle of last year when the initiative was launched. Hitachi Data Systems,
Brunswick, JCB (now served in both the UK and the US), ING and Union Pacific
join the growing list of valued clients. Significant resources have been added
throughout the year to support the development of this channel, and revenue from
these recent wins will gradually increase in the coming months as these
programmes launch and grow.
Direct Marketing
Our direct marketing channel posts well over 10 million catalogues and other
mailings annually and serves over 150,000 customers worldwide.
Dot.com start-ups that had entered our industry found themselves in some
difficulty. Accordingly, our initial US mailing plans for 2001, put forward in
the autumn of 2000, called for a 30% increase in prospect catalogues being
mailed. Unfortunately the recession dampened response rates and, though we cut
back our mailings in the second half, the additional cost of aggressive
prospecting in the first half impacted earnings in this division.
The main impact of the recessionary market was to reduce average order size, but
increased order volumes in both the US and the UK, the latter from a small base,
offset this. Direct marketing orders coming in over the Internet now account
for 25% of the intake in the UK and remain at 18% in the US.
Premiums
Our premium channel designs, sources and arranges offshore manufacturing of
large one-off imprinted product orders most often used by larger companies in
consumer promotions.
Though this channel will see a slight lift from the upcoming World Cup, it
continues to reduce cyclical dependence on the bi-annual sporting events that
have dominated its top line in the past. With a renewed emphasis on net profit
and cost control, the business produced improved net results from a reduced
turnover. The Group has won contracts with a number of new clients, including
the BBC, Gillette and Diageo; as well as becoming joint official premium
promotion licensee for the Manchester 2002 Commonwealth Games. Our ongoing
contracts to provide amenity kits for several major airlines should provide
access to the steady improvement expected and already being seen in this sector.
Our route to market in the US premium business via the AIA franchise owner
network is the same as with corporate programmes. Both Corporate Programmes
and infrastructure development have been our first priority and work on Premium
sales is at an early stage. Lead times for major orders are longer but the
initial response has been extremely positive.
Partner Services
Our Partner Services channel's charter is to leverage our bespoke enterprise
operating systems and industry-leading supply chain management processes into
other channels of distribution.
AIA maintained strong growth, adding 130 new franchise owners in 2001, growing
its recurring service fees by 35%, from System Wide Billings up 18% to US$110
million. When the acquisition of AIA was announced in December 2000, many
prospective joiners took a wait-and-see attitude. As the strength of our newly
combined resources has become better known, this caution has largely disappeared
and we have been able to attract better experienced industry operators many of
whom bring with them significant existing business.
Franchise owners are progressively introduced to our highly efficient OASIS IT
system. This is a major project that we aim to complete by the end of 2002.
This will enable them to process transactions quicker and with greater accuracy,
freeing them to spend more time selling.
Outlook
Sales are continuing to increase despite weak market conditions in both the UK
and US. This is driven by new contract wins in both the Corporate Programmes
and Premium divisions. Additionally with over 450 active franchise owners now
in the AIA network, the Group is well positioned to rebound in 2002, assuming
there is no major deterioration in either the UK or US economies.
Dick Nelson
Chief Executive Officer
Consolidated Profit & Loss Account
For the year ended 29 December 2001
Exceptionals Unaudited Exceptionals Audited
& goodwill & goodwill
amortisation Total amortisation Total
2001 2001 2001 2000 2000 2000
Note £'000 £'000 £'000 £'000 £'000 £'000
Turnover - continuing 93,973 - 93,973 88,032 - 88,032
- discontinued - - - 28,646 - 28,646
2 93,973 - 93,973 116,678 - 116,678
Change in stocks of finished goods (496) - (496) 7,632 - 7,632
Operating expenses excluding goodwill (91,507) - (91,507) (123,940) - (123,940)
amortisation
Goodwill amortisation - (954) (954) - (277) (277)
Operating profit/(loss) - continuing 1,970 (954) 1,016 4,089 (277) 3,812
- discontinued - - - (3,719) - (3,719)
2 1,970 (954) 1,016 370 (277) 93
Exceptional item : loss
on sale of
businesses and fundamental 3 - (1,525) (1,525) - (45,884) (45,884)
reorganisation
Interest 474 - 474 704 - 704
Profit/(loss) before - continuing 2,444 (2,479) (35) 4,793 (1,666) 3,127
taxation
- discontinued - - - (3,719) (44,495) (48,214)
2,444 (2,479) (35) 1,074 (46,161) (45,087)
Taxation 4 (42) - (42) (275) - (275)
Profit/(loss) after 2,402 (2,479) (77) 799 (46,161) (45,362)
taxation
Dividends : Ordinary & 5 (646) - (646) (5,350) - (5,350)
preference
Transfer to/(from) 1,756 (2,479) (723) (4,551) (46,161) (50,712)
reserves
Earnings per share
Basic 6 (0.27)p (160.84)p
Diluted 6 (0.27)p (160.83)p
Dividend per ordinary 2.25p 18.65p
share:
Reconciliation of Movement in Shareholders' Funds
For the year ended 29 December 2001
Unaudited Audited
2001 2000
£'000 £'000
Loss for the financial period (77) (45,362)
Dividends (646) (5,350)
(723) (50,712)
Other recognised gains and losses relating to the period 593 (374)
Shares issued in the period - 1,727
Redemption of preference share capital - (208)
Goodwill reinstated on disposal of subsidiaries - 31,590
Net movement in shareholders' funds (130) (17,977)
Opening shareholders' funds 45,845 63,822
Closing shareholders' funds 45,715 45,845
Consolidated Balance Sheet
At 29 December 2001 2001 2000
Unaudited Audited
£'000 £'000 £'000 £'000
Fixed assets
Tangible 7,363 4,742
Goodwill 17,633 17,325
Investments 9 76
25,005 22,143
Current assets
Stocks 5,295 5,732
Debtors 43,736 46,640
Cash 25,360 28,110
74,391 80,482
Current liabilities
Loans & overdrafts 22,064 8,106
Trade creditors 12,572 15,101
Corporation tax 5,134 4,947
Finance leases - 7
Other creditors 4,382 17,690
Dividends 365 3,501
(44,517) (49,352)
Net current assets 29,874 31,130
Total assets less current liabilities 54,879 53,273
Creditors due after more than one year
Other 5,178 5,221
(5,178) (5,221)
Provisions for liabilities and charges (3,986) (2,207)
NET ASSETS 45,715 45,845
Capital and reserves
Ordinary share capital 11,044 11,044
Share premium 37,630 37,630
Capital redemption reserve 208 208
Revaluation reserve 43 49
Profit & loss account (3,210) (3,086)
SHAREHOLDERS' FUNDS 45,715 45,845
NET CASH 3,296 19,997
Consolidated Cashflow
For the year ended 29 December 2001
Unaudited Audited
Note 2001 2000
£'000 £'000
Cash inflow from operating activities 7 2,872 183
Returns on investments and servicing of finance 402 772
Taxation (314) (797)
Capital expenditure (4,654) (4,745)
Acquisitions (10,468) (1,863)
Disposals (747) 37,672
Equity dividends paid (3,782) (5,272)
Cash (outflow)/inflow before the use of liquid resources and financing (16,691) 25,950
Financing
Issue of shares 67 1,689
Increase/(repayment) of loans 13,053 (2,700)
Capital element of finance lease rental payments (7) (179)
13,113 (1,190)
(Decrease)/increase in cash in the period (3,578) 24,760
Cash (outflow)/inflow from movement in debt and finance leasing (13,046) 2,879
Change in net debt resulting from cashflows (16,624) 27,639
Debt acquired with subsidiaries - (7,139)
Finance leases disposed of with subsidiaries - 31
Translation difference (77) 70
Cash (outflow)/inflow in the period (16,701) 20,601
Opening net cash/(debt) 19,997 (604)
Closing net cash 3,296 19,997
Notes to the Financial Statements
1 Basis of preparation
This preliminary announcement for the year ended 29 December 2001 has not been
audited and does not constitute statutory accounts within the meaning of S240 of
the Companies Act 1985. The financial information has been prepared on the basis
of the accounting policies set out in the Group's Annual Report & Accounts for
the year ended 30 December 2000. These accounts carry an unqualified auditor's
report, and have been delivered to the Registrar of Companies. The comparative
results for the year ended 30 December 2000 are abridged, and as such do not
represent statutory accounts. The full Annual Report & Accounts for the year
ended 29 December 2001 will be posted to shareholders shortly and, after
adoption at the Annual General Meeting, delivered to the Registrar of Companies.
2 Segmental Analysis 2001 2000
Sales Operating profit Sales Operating profit
£'000 £'000 £'000 £'000
ORIGIN
United Kingdom 49,980 1,063 51,821 2,007
Goodwill amortisation (277) (277)
49,980 786 51,821 1,730
United States 43,993 907 36,211 2,082
Goodwill amortisation (677)
43,993 230 36,211 2,082
Businesses disposed of 28,646 (3,719)
TOTAL 93,973 1,016 116,678 93
PRODUCT
Promotional Marketing 93,973 1,970 88,032 4,089
Goodwill amortisation (954) (277)
1,016 88,032 3,812
Businesses disposed of 28,646 (3,719)
TOTAL 93,973 1,016 116,678 93
3 Exceptional Item 2001 2000
£'000 £'000
Loss on disposal of Bemrose Security Printing and Henry Booth Group (20,029)
Loss on disposal of other subsidiaries (24,466)
Costs of fundamental reorganisation (1,525) (1,389)
(1,525) (45,884)
The exceptional costs in 2001 represents the completion of the
fundamental reorganisation and relates to the closure costs of the Woking
operation together with an associated onerous lease provision.
4 Taxation 2001 2000
£'000 £'000
United Kingdom (571) (1,331)
Overseas 613 1,606
42 275
5 Dividends on ordinary shares 2001 2000
p p
Interim dividend (paid 12 November 2001) 1.00 6.45
Final dividend 1.25 12.20
2.25 18.65
The final dividend per ordinary share in respect of 2001 of 1.25p will be paid
on 30th May 2002 to shareholders on the Register at close of business on
3rd May 2002.
6 Earnings Per Share
The Earnings Per Share for the year is based on the loss after tax of £77,000
(2000 : Loss - £45,366,000) and weighted average shares in issue of 28,713,000
(2000 : 28,205,000).
The Diluted Earnings Per Share for the year is based on the same profit and loss
figures as above, but takes into account the dilutive effect of share options
outstanding. The weighted average number of shares in issue for Diluted Earnings
Per Share purposes are 28,713,000 (2000 : 28,207,000).
7 Reconciliation of operating profit to operating cashflows
Unaudited Audited
2001 2000
£'000 £'000
Operating profit 1,016 93
Depreciation charge 1,922 3,537
Amortisation of goodwill 954 277
Loss/(profit) on sale of tangible fixed assets 113 (33)
Release of deferred profit on sale and leaseback (35) (150)
Pension prepayment movement - 75
Exceptional reorganisation costs paid (190) (1,256)
Decrease/(increase) in stocks 443 (6,350)
Decrease in debtors 5,224 11,617
Decrease in creditors (6,474) (7,230)
Expenditure against provisions (101) (397)
2,872 183
8 Retirement benefits
As required by the transitional provisions of FRS17, Retirement Benefits, the
Group has calculated the net asset position of the defined benefit pension
scheme as at 29 December 2001, and has concluded that the liabilities of the
scheme were £3.4 million greater than its assets representing a deficit of 4.7%
compared to the scheme assets. The Board is currently reviewing the options
available to the Group.
END
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