Half Yearly Report

RNS Number : 1122J
4imprint Group PLC
02 August 2012
 



                                                                                             2 August 2012

 

4imprint Group plc

Half year results for the period ended 30 June 2012

 

4imprint Group plc (the 'Group'), an international promotional products business, announces today its half year results for the period ended 30 June 2012

 

Financial highlights

 

·      Revenue up 17% at £88.36m (H1 2011: £75.84m)†

·      Underlying* operating profit up 21% at £3.39m (H1 2011: £2.80m)†

·      Underlying* profit before tax up 26% at £3.32m (H1 2011: £2.62m)†

·      Profit before tax up 50% at £2.46m (H1 2011: £1.64m)†

·      Net cash £11.39m, prior year end £5.46m

·      Underlying* basic earnings per share up 25% at 8.61p (H1 2011: 6.89p)†

·      Basic earnings per share, including the profit on disposal of Brand Addition, was 38.79p (H1 2011: 10.91p)

·      Dividend per share 5.25p, an increase of 5%

 

Operational highlights

 

·      4imprint Direct Marketing

·      Continued growth in market share

·      More than 274,000 orders received, 17% ahead of half year 2011

·      Underlying* operating profit up 12% at £3.95m (H1 2011: £3.52m)

 

·      SPS

·      8% revenue growth and underlying* operating profit £0.35m (H1 2011: £0.10m)

 

·      Brand Addition sale completed on 23 March 2012

 

·      £11.40m of sale proceeds deposited in a cash escrow account for pension scheme risk reduction

 

† Continuing operations

* Underlying is before share option charges, exceptional items and defined benefit pension charge

 

John Poulter, Chairman said:

"The first half of this year has been a period of substantial positive change for the Group. Brand Addition has been sold, enabling the Group to strengthen its balance sheet, to focus on the continued organic growth of 4imprint Direct Marketing and SPS and to reduce the risk of the pension deficit. 

 

We are well positioned to take advantage of the growth opportunities presented by 4imprint Direct Marketing's large and highly fragmented market and, notwithstanding any significant macroeconomic changes to the markets it serves, the Group remains on track for a continued good performance in the second half year."               

- Ends -

For further information, please contact:

 

4imprint Group plc

Tel. + 44 (0) 20 7299 7201

MHP Communications

Tel. + 44 (0) 20 3128 8100

 

John Poulter

Chairman

 

Gillian Davies

Group Finance Director

Reg Hoare

 

Katie Hunt

 

Chairman's statement

 

The first half of this year has been a period of substantial positive change for the Group. Brand Addition has been sold, enabling the Group to strengthen its balance sheet, to focus on the continued organic growth of 4imprint Direct Marketing and SPS and to reduce the risk of the pension deficit.

 

Strategy

The Board's strategy is to pursue further development and profitable organic growth of 4imprint Direct Marketing and to take appropriate steps to reduce the burden of the legacy defined benefit pension scheme.

 

Results summary

The Group delivered an encouraging performance from continuing operations in the first half of the year, with revenue* up 17% and underlying operating profit* up 21%. Both 4imprint Direct Marketing and SPS contributed to the increase. In addition, the Group completed the sale of Brand Addition for a consideration of £24m. That business has been reported as a discontinued activity.

 

Profit before tax* was up 50% at £2.46m. Underlying basic earnings per share* was up 25% at 8.61p and basic earnings per share, including the profit on disposal of Brand Addition, was 38.79p.

 

4imprint Direct Marketing (92% of revenue)

4imprint Direct Marketing continued to demonstrate the strength and momentum of its business model, with North American revenue in the first half of the year up 14% in US dollars as the business continued to gain market share. 4imprint Direct Marketing UK revenue increased by 15% in the first half of the year as a result of increased marketing activity.

Total Direct Marketing revenue was 17% ahead in sterling, consistent with the Group's organic growth strategy and underlying operating profit at £3.95m was 12% ahead.

 

SPS (8% of revenue)

Total revenue in SPS increased by 8% in the first half of the year despite a difficult economic background. This was due to increased focus on marketing, selling and customer service activities, together with modest investment in moulding and printing equipment to support the launch of new products. Underlying operating profit at £0.35m compared to £0.10m in the first half of 2011.

 

Cash

The Group had net cash at the half year of £11.39m, an increase of £5.93m from year end. Net cash generated from continuing operating activities was £4.88m in the first half. £11.40m of the Brand Addition proceeds were deposited into escrow to be used for risk reduction of the defined benefit pension scheme. 

 

Dividend

The Board has declared an interim dividend of 5.25p (H1 2011: 5.00p).

 

Board

Kevin Lyons-Tarr was appointed to the Board as an Executive Director and Steve Gray and John Warren were appointed to the Board as Non-Executive Directors on 11 June 2012. The Board reiterates its thanks to Ian Brindle and Nick Temple who retired as Non-Executive Directors on 30 June 2012.

 

Outlook

The Group continues to take advantage of the growth opportunities presented by 4imprint Direct Marketing's large and highly fragmented markets as well as continuing to drive the recovery of SPS.

 

Following the Group's encouraging first half performance, and notwithstanding any significant macroeconomic changes to the markets it serves, the Group remains on track for a continued good performance in the second half year.

 

 

John Poulter

Chairman

2 August 2012

* Continuing operations

Operating and financial review

 

Operating review - continuing operations

Revenue

Half year

2012

 

Half year

2011

restated†



£'000

£'000

Change

4imprint Direct Marketing

81,297

69,400

+17%

SPS

7,802

7,193

+8%

Inter-segment

(742)

(751)



88,357

75,842

+17%

 

 

 

Underlying operating profit

Half year

2012

 

Half year

2011

restated†



£'000

£'000

Change

4imprint Direct Marketing

3,954

3,521

+12%

SPS

354

103

+244%

Head office

(921)

(826)


Total

3,387

2,798

+21%

 

† restated to exclude discontinued operations.

 

Group revenue for the first half of the year was 17% ahead of H1 2011, 14% ahead at constant currency, with organic growth from both 4imprint Direct Marketing and SPS. Underlying operating profit increased by 21% (18% at constant currency).

 

4imprint Direct Marketing

4imprint Direct Marketing revenue increased by 17% over the first half of 2011. At constant currency, revenue increased by 14%. In both North America and the UK, the Direct Marketing business is growing faster than the overall market, expanding share in the highly fragmented markets it serves.

 

In North America, in the first half of 2012, new customer orders increased 11% over the same period last year and circa 66,000 new customers were acquired. The business continues to develop and refine an array of marketing techniques used in new customer acquisition, ranging from circulation increases of 'Specialty' print catalogues, a rapidly expanding online presence, search engine optimisation, e-mail marketing and social media all underpinned by database analytics.

 

Existing customer orders in the first half of 2012 were 22% up over the same period last year, indicative of customer retention rates that are slightly ahead of historical experience. These consistent retention rates are an important facet of the business model as the number of new customers acquired continues to increase.

 

In the UK, revenue increased 15% over the same period, despite an unhelpful economic environment. The growth was driven primarily through a modest increase in marketing investment, further optimisation of both on and offline marketing activities and emphasis on increasing the product range. Order counts for new customers and retained customers were both up over the first half of 2011.

 

Operating profit was 12% ahead of the same period in the prior year, 10% at constant currency. Gross margins have remained stable throughout the first half of 2012 and marketing costs have moved broadly in line with the increase in revenue.

 

 

 

SPS

SPS revenue increased by 8% over the first half of 2011, in a market place which remains competitive. The business continues to focus on improved customer service which is a prerequisite to achieving growth within a demanding marketplace. Marketing activities have been focused on opportunities for revenue growth across both product and customer segments. Continued investment in manufacturing capability has resulted in a number of new products being added to the portfolio. In addition, the business has further developed its printing capability and extended its range of bought-in products.

 

Underlying operating profit increased by £0.25m compared to first half of 2011 as a result of a stable gross margin and control over costs. Underlying operating profit before depreciation for the first half of 2012 at £0.66m, compared with £0.42m in the first half of 2011.

 

 

Financial review

 

Group results

Half year

2012

underlying*

Half year

2011

underlying*

restated†

Half year

2012

 

 

Half year

2011

restated†

 

Continuing operations

£'000

£'000

£'000

£'000

Revenue

88,357

75,842

88,357

75,842

Underlying operating profit

3,387

2,798

3,387

2,798

Share option charges



(340)

(152)

Exceptional items



-

(548)

Net interest payable

(72)

(177)

(72)

(177)

Net pension finance charge



(516)

(286)

Profit before tax

3,315

2,621

2,459

1,635

* underlying is before share option charges, exceptional items and defined benefit pension charge.

† restated to exclude discontinued operations.

 

Profit before tax

Underlying profit before tax from continuing operations was £3.32m compared to £2.62m in the first half of 2011, an increase of 26%. Net interest payable was £0.07m. Profit before tax from continuing operations was £2.46m compared to £1.64m in the first half of 2011, an increase of 50%.

 

Discontinued operations

On 23 March 2012 the Group completed the disposal of Brand Addition to H.I.G., a private equity investment firm. The aggregate consideration was £24m (subject to a normalised level of working capital and on a cash and debt free basis). £1.25m of the consideration is deferred for 12 months and is guaranteed under an irrevocable letter of credit from the Bank of Montreal.

 

In line with IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations', Brand Addition has been presented as a discontinued operation and half year 2011 results have been restated accordingly.

 

Revenue generated by Brand Addition in 2012 up to the date of sale was £11.31m and post tax profit was £9,000.

 

Profit on disposal of Brand Addition in the half year was £8.63m, net assets sold were £12.28m and net cash inflow from the disposal (after fees, working capital and cash at date of disposal adjustments) was £18.60m.

 

Taxation

Continuing operations tax charge for the half year was £0.93m at a rate of 38% (H1 2011: 38%), this relates predominantly to taxation chargeable in respect of profit earned in the USA.

 

 

 

 

Basic earnings per share

Underlying earnings per share from continuing operations was 8.61p (H1 2011: 6.89p), an increase of 25% and earnings per share from continuing operations were 5.82p, 48% ahead.

 

Earnings per share from discontinued operations, including profit on the disposal of Brand Addition, were 32.97p, resulting in total earnings per share of 38.79p

 

Cash flow

The Group's net cash at 30 June 2012 was £11.39m, following a net cash inflow of £5.93m in the half year period.

 

Net cash generated from operating activities was £1.67m, (£4.88m inflow from continuing operations and £(3.21)m cash outflow for discontinued operations). 4imprint Direct Marketing remains highly cash generative, with low working capital requirements. SPS working capital increased in the period to support revenue growth.

 

Net cash generated from investing activities was £6.18m (£18.60m net cash inflow on business disposal, £(11.40)m cash deposited into an escrow account for the pension fund and £(1.02)m capital expenditure); dividends paid to shareholders were £(2.52)m and proceeds from issue of ordinary shares were £0.54m (exercise of share options).

 

Balance sheet and Shareholders' funds

 

30 June 2012


31 December 2011


£'000


£'000

Non current assets

30,743

*

19,019

Working Capital

        5,377


5,157

Net cash

11,391


5,463

Pension deficit

       (26,981)


(23,547)

Other liabilities

(1,657)


(951)

Net assets held for sale

-


7,916

Net assets

18,873


13,057

* includes £11.40m pension scheme bank account.

 

Net assets and Shareholders' funds increased by £5.82m to £18.87m. Profit for the half year period of £10.16m (including £8.63m profit on disposal of business) was offset by £3.17m actuarial losses on the pension scheme, Shareholder dividend of £2.52m and £1.35m other items.

 

Pension deficit

The Group sponsors a UK defined benefit pension scheme, closed to new members and future accruals. At 5 April 2012 (the date of the scheme accounts), the scheme had 1,291 pensioners and 646 deferred pensioners.

 

Finance costs included a £0.52m charge in relation to the scheme (H1 2011: £0.29m).

 

At 30 June 2012 the deficit for the scheme, calculated in accordance with IAS 19, was £26.98m (31 December 2011: £23.55m). The increase was principally due to a reduction in the discount rate to 4.5% (31 December 2011: 4.9%). Liabilities of the scheme at 30 June 2012 were £96.10m and assets of the scheme were £69.12m.

 

Following the sale of Brand Addition, £11.40m was placed on bank deposit for the benefit of the pension fund. This amount is held in escrow to be used for pension scheme risk reduction exercises to be agreed between the Trustee and the Company. Under the terms of the escrow agreement it cannot be returned to the Company.

 

The Company cash contribution to the scheme in the first half of the year was £0.26m. In line with the schedule of contributions, a further payment of £2.90m will be made into the scheme out of the escrow cash account by 31 December 2012 if the escrow monies have not been paid into the scheme for risk reduction exercises by that date.

 

 

 

Exchange

The average US dollar exchange rate for the half year period was 1.58 (H1 2011: 1.62; FY 2011: 1.60). The closing rate at 30 June 2012 was 1.57 (2 July 2011: 1.60; 31 December 2011: 1.55).

 

Critical accounting policies

Critical accounting policies are those that require significant judgements or estimates and potentially result in materially different results under different assumptions or conditions. It is considered that the Group's critical accounting policies are pensions, deferred taxation and goodwill.

 

Risks

The Group continues to be affected by a number of risks. These have not changed since the year end and are detailed on pages 11 and 12 of the Group's Annual Report and Accounts 2011, a copy of which is available on the Group's website, http://investors.4imprint.com. The risks include: macroeconomic conditions, market competitors;  operational risks; purchase of materials and services; and potential litigation and complaints.

 

 

Gillian Davies

Group Finance Director

2 August 2012

Condensed consolidated income statement (unaudited)

 

 


Half year

2012

 

Half year

2011

restated

Full year

2011

 


Note

£'000

£'000

£'000

Continuing operations





Revenue

5

88,357

75,842

158,824

Operating expenses


(85,310)

(73,744)

(157,533)

Operating profit

5

3,047

2,098

1,291

Operating profit before exceptional items


3,047

2,646

7,969

Exceptional goodwill impairment


-

-

(4,743)

Exceptional items

7

-

(548)

(1,935)

Operating profit

5

3,047

2,098

1,291






Interest receivable


37

-

-

Interest payable


(109)

(177)

(352)

Net pension finance charge

12

(516)

(286)

(581)

Net finance cost


(588)

(463)

(933)

Profit before tax


2,459

1,635

358

Taxation

8

(934)

(625)

(1,950)

Profit/(loss) for the period from continuing operations


1,525

1,010

(1,592)

Discontinued operations





Profit on disposal of business

6

8,625

-

-

Profit from discontinued operations

6

9

1,801

3,777

Profit for the period


10,159

2,811

2,185






Earnings/(loss) per share





Basic





From continuing operations

9

5.82p

3.92p

(6.18)p

From continuing and discontinued operations

9

38.79p

10.91p

8.48p

Diluted





From continuing operations

9

5.73p

3.83p

(6.03)p

From continuing and discontinued operations

9

38.19p

10.65p

8.28p

Underlying





From continuing operations

9

8.61p

6.89p

22.01p

 

Condensed consolidated statement of comprehensive income (unaudited)

 

 


Half year

2012

 

Half year

2011

restated

Full year

2011

 


Note

£'000

£'000

£'000

Profit for the period


10,159

2,811

2,185

Other comprehensive (expense)/income:





Exchange differences on translation of foreign subsidiaries


(48)

(43)

10

Actuarial (losses)/gains on defined benefit scheme

12

(3,175)

396

(3,855)

Tax relating to components of other comprehensive income


730

(105)

1,022

Effect of change in UK tax rate


(220)

(208)

(462)

Other comprehensive (expense)/income net of tax


(2,713)

40

(3,285)

Total comprehensive income/(expense) for the period


7,446

2,851

(1,100)

 

Condensed consolidated balance sheet (unaudited)

 

 

 

At

30 June

2012

At

2 July

2011

At

31 Dec

2011


Note

£'000

£'000

£'000

Non current assets





Property, plant and equipment


11,794

12,358

11,959

Goodwill


-

9,084

-

Other intangible assets


988

1,564

945

Investments


-

9

-

Pension scheme bank account

11

11,400

-

-

Deferred tax assets


6,561

5,870

6,115



30,743

28,885

19,019

Current assets





Assets held for resale


-

-

20,680

Inventories


3,328

7,618

2,728

Trade and other receivables


20,948

31,000

17,828

Cash and cash equivalents

13

13,108

5,637

12,492



37,384

44,255

53,728

Current liabilities





Trade and other payables


(18,899)

(25,838)

(15,399)

Current tax


(961)

(874)

(159)

Borrowings

13

(1,636)

(2,016)

(4,095)

Provisions for other liabilities and charges


(236)

(266)

(257)

Liabilities held for sale


-

-

(12,764)

 


(21,732)

(28,994)

(32,674)

Net current assets


15,652

15,261

21,054

Non current liabilities





Retirement benefit obligations

12

(26,981)

(20,304)

(23,547)

Borrowings

13

(81)

(5,658)

(2,934)

Provisions for other liabilities and charges


(460)

(272)

(535)



(27,522)

(26,234)

(27,016)

Net assets


18,873

17,912

13,057






Shareholders' equity





Share capital

15

10,155

9,939

9,939

Share premium reserve

15

38,344

38,016

38,016

Capital redemption reserve


208

208

208

Cumulative translation differences


148

178

231

Retained earnings


(29,982)

(30,429)

(35,337)

Total equity


18,873

17,912

13,057

 

Consolidated statements of changes in Shareholders' equity (unaudited)

 

                                                           

 

Share

capital

Share

premium

reserve

Capital

redemption

reserve

 

Cumulative

translation

differences

Retained earnings

 

Own

shares

Profit

and loss

Total

equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000

At 2 January 2011

9,939

38,016

208

221

(161)

(31,012)

17,211

Profit for the period






2,811

2,811

Other comprehensive income




(43)


83

40

Total comprehensive income for the period




(43)


2,894

2,851

Share based payment charge






168

168

Own shares utilised





21

(21)

-

Dividends






(2,318)

(2,318)

At 2 July 2011

9,939

38,016

208

178

(140)

(30,289)

17,912

Loss for the period






(626)

(626)

Other comprehensive expense




53


(3,378)

(3,325)

Total comprehensive expense for the period




53


(4,004)

(3,951)

Share based payment charge






384

384

Own shares utilised





16

(16)

-

Dividends






(1,288)

(1,288)

At 31 December 2011

9,939

38,016

208

231

(124)

(35,213)

13,057

Profit for the period






10,159

10,159

Other comprehensive expense




(48)


(2,665)

(2,713)

Total comprehensive income for the period




(48)


7,494

7,446

Share based payment charge






379

379

Cumulative translation differences of businesses sold




(35)



(35)

Shares Issued (note 15)

216

328





544

Own shares utilised





3

(3)

-

Dividends






(2,518)

(2,518)

At 30 June 2012

10,155

38,344

208

148

(121)

(29,861)

18,873

 

 

Condensed consolidated cash flow statement (unaudited)

 


Half year

2012

Half year

2011

Full year

2011


Note

£'000

£'000

£'000

Cash flows from operating activities




 

Cash generated from operations

14

1,910

1,530

12,974

Net tax paid


(112)

(53)

(1,414)

Finance income


8

-

-

Finance costs


(136)

(186)

(367)

Net cash generated from operating activities


1,670

1,291

11,193






Cash flows from investing activities





Sale of business

6

18,597

-

-

Payment into pension scheme bank account

11

(11,400)

-

-

Purchases of property, plant and equipment


(706)

(550)

(1,142)

Purchases of intangible assets


(309)

(270)

(652)

Net cash used in investing activities


6,182

(820)

(1,794)






Cash flows from financing activities





Repayment of borrowings


(5,200)

(916)

(1,590)

Capital element of finance lease payments


(70)

(64)

(132)

Proceeds from issue of ordinary shares


544

-

-

Dividends paid to Shareholders


(2,518)

(2,318)

(3,606)

Net cash used in financing activities


(7,244)

(3,298)

(5,328)






Net movement in cash and cash equivalents


608

(2,827)

4,071

Cash and cash equivalents at beginning of the period


12,492

8,465

8,465

Exchange gains/(losses) on cash and cash equivalents


8

(1)

(44)

Cash and cash equivalents at end of the period


13,108

5,637

12,492

 





Analysis of cash and cash equivalents





Cash at bank and in hand

13

8,500

5,637

6,992

Short term deposits

13

4,608

-

5,500

 


13,108

5,637

12,492

 

Notes to the interim financial statements

 

1 General information

4imprint Group plc is a public limited company incorporated and domiciled in the UK and listed on the London Stock Exchange. Its registered office is 7/8 Market Place, London, W1W 8AG.

 

The condensed consolidated interim financial statements were authorised for issue in accordance with a resolution of the Directors on 1 August 2012.

 

These condensed consolidated interim financial statements do not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2011 were approved by the Board of Directors on 7 March 2012 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006.

 

The financial information contained in this report has neither been audited nor reviewed, pursuant to Auditing Practices Board guidance on Review of Interim Financial Information, by the auditors.

 

2 Basis of preparation

These condensed consolidated interim financial statements for the half year ended 30 June 2012 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and IAS 34 'Interim Financial Reporting', as adopted by the European Union, and should be read in conjunction with the Group's financial statements for the year ended 31 December 2011, which were prepared in accordance with International Financial Reporting Standards as adopted by the European Union.

 

3 Accounting policies

The accounting policies applied in these condensed consolidated interim financial statements are consistent with those of the annual financial statements for the year ended 31 December 2011, as described in those annual financial statements.

 

The tax charge for the interim period is accrued based on the best estimate of the tax charge for the full financial year.

 

4 Restatement

The half year 2011 income statement and notes have been restated to classify the Brand Addition segment as a discontinued operation.

 

In addition the net interest charge in respect of the defined benefit pension scheme has been reclassified to finance costs from operating expenses to reflect the nature of the charge more accurately.

 

5 Segmental analysis

The chief operating decision maker has been identified as the Board, and the segmental analysis is presented based on the Group's internal reporting to the Board.

 

The continuing operations of the Group are reported in two primary business segments:

 

Revenue

Total

Inter segment

External

 

Half year

2012

 

Half year

2011

restated

Half year

2012

 

Half year

2011

restated

Full year

2011

 

Half year

2012

 

Half year

2011

restated

Full year

2011

 


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

4imprint Direct Marketing

81,297

69,400

146,030

-

-

-

81,297

69,400

146,030

SPS

7,802

7,193

14,221

(742)

(751)

(1,427)

7,060

6,442

12,794

Total

89,099

76,593

160,251

(742)

(751)

(1,427)

88,357

75,842

158,824

Inter segment revenues are on an arms-length basis.



 

Operating profit

Underlying operating profit/(loss)

Exceptional items

Operating profit/(loss)


Half

 year

2012

 

Half

year

2011

restated

Full

 Year

 2011

 

Half

year
 2012

 

Half

year

2011

restated

Full

 Year

 2011

 

Half

year
 2012

 

Half

year
2011

restated

Full

year
2011

 


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

4imprint Direct Marketing

3,954

3,521

10,004

-

-

-

3,954

3,521

10,004

SPS

354

103

228

-

(189)

(203)

354

(86)

25

Head office

(921)

(826)

(1,746)

-

(359)

(1,732)

(921)

(1,185)

(3,478)


3,387

2,798

8,486

-

(548)

(1,935)

3,387

2,250

6,551

Share option charge







(340)

(152)

(517)

Goodwill impairment  - SPS







-

-

(4,743)

Total







3,047

2,098

1,291

 

Net finance costs totalling £588,000 (H1 2011: £463,000, FY 2011: £933,000), and taxation charge of £934,000 (H1 2011: £625,000, FY 2011: £1,950,000) cannot be separately allocated to individual segments.

 

 



Half year

2012

Half year

2011

Full year

2011

Segmental assets

£'000

£'000

£'000

4imprint Direct Marketing

23,459

21,258

21,734

SPS

12,122

16,418

11,116

Unallocated assets

8,038

6,454

6,725

Pension scheme escrow account

11,400

-

-

Cash

13,108

5,637

12,492


68,127

49,767

52,067

Discontinued operations - Brand Addition

-

23,373

20,680

Total

68,127

73,140

72,747

 

Unallocated assets include head office items and tax.

 

6 Discontinued operations

On 23 March 2012 the Group disposed of the Brand Addition business to H.I.G., a leading global private equity investment firm. The aggregate consideration was £24m (based on a normalised level of working capital and on a cash and debt free basis). £1.25m of the consideration is deferred for twelve months, there are no conditions attaching to this payment and it is guaranteed under an irrevocable letter of credit from the Bank of Montreal.

 

 

 

 

Half year

2012

Half year

2011

Full year

2011


£'000

£'000

£'000

Revenue

11,313

27,791

63,004





Operating profit before exceptional items

9

2,016

5,022

Exceptional items - costs of disposal

-

-

(943)

Operating profit

9

2,016

4,079

Taxation

-

(215)

(302)

Profit for the period from discontinued operations

9

1,801

3,777

 

* £1.25m deferred until March 2013.

 

Included within the cash flow statement are the following cash items from discontinued operations:

 

7 Exceptional items

 

Half year

2012

Half year

2011

Full year

2011

 

£'000

£'000

£'000

Enhanced transfer value exercise

-

(359)

(1,732)

SPS restructuring costs

-

(189)

(203)


-

(548)

(1,935)

 

The Company made an enhanced transfer value (ETV) offer to deferred members of the defined benefit pension scheme during the prior year and 307 members accepted the offer and transferred out of the scheme.

 

SPS restructuring costs in 2011 related to a reduction in headcount.

 

8 Taxation

The taxation charge for continuing operations for the period to 30 June 2012 was 38% (H1 2011: 38%; FY 2011: 38%, after adjusting profit before tax for the non-taxable goodwill impairment). Tax paid in the period was £112,000 (H1 2011: £53,000; FY 2011: £1,414,000).

 

9 Earnings per share

 

Basic, underlying and diluted

The basic, underlying and diluted earnings per share are calculated based on the following data:

 
Half year

2012

 
Half year

2011

restated

Full year

2011

 

 

£'000

£'000

£'000

Profit/(loss) after tax - continuing operations

1,525

1,010

(1,592)

Profit from discontinued operations after tax

8,634

1,801

3,777

Profit after tax

10,159

2,811

2,185





 
Half year

2012

 
Half year

2011

restated

Full year

2011

 

 

£'000

£'000

£'000

Profit/(loss) after tax - continuing operations

1,525

1,010

(1,592)

Add back:




Impairment of goodwill

-

-

4,743

Defined benefit net pension finance charge

516

286

581

Share option charge

340

152

517

Exceptional items

-

548

1,935

Tax relating to above items

(126)

(221)

(513)

Underlying continuing operating profit after interest and tax

2,255

1,775

5,671

 

 

 
Half year
2012
Half year
2011

Full year

2011


Number

000's

Number

000's

Number

000's

Basic weighted average number of shares

26,193

25,760

25,760

Dilutive potential ordinary shares - employee share options

408

643

626

Diluted weighted average number of shares

26,601

26,403

26,386





Basic earnings/(loss) per share from continuing operations

5.82p

3.92p

(6.18)p

Basic earnings per share from discontinued operations

32.97p

6.99p

14.66p


38.79p

10.91p

8.48p





Diluted earnings/(loss) per share from continuing operations

5.73p

3.83p

(6.03)p

Diluted earnings per share from discontinued operations

32.46p

6.82p

14.31p


38.19p

10.65p

8.28p





Underlying basic earnings per share from continuing operations

8.61p

6.89p

22.01p

 

The basic weighted average number of shares excludes shares held in the employee share trust. The effect of this is to reduce the average by 75,856 (H1 2011: 80,984; FY 2011: 79,109).

 

10 Dividends

 

Half year

2012

Half year

2011

Full year

2011


£'000

£'000

£'000

Dividends paid in the period

2,518

2,318

3,606





Dividends per share declared - Interim

5.25p

5.00p

5.00p

                                                       - Final

-

-

9.60p

 

The interim dividend for 2012 of 5.25p per ordinary share (interim 2011: 5.00p; final 2011: 9.60p) will be paid on 14 September 2012 to ordinary Shareholders on the register at the close of business on 10 August 2012.

 

11 Pension scheme bank account

Following the sale of Brand Addition, under the terms of an escrow agreement with the Trustee of the defined benefit pension scheme, the Company deposited £11.40m into a bank account held jointly with the defined benefit pension scheme Trustee. This amount will be used for pension scheme risk reduction exercises as agreed between the Company and the Trustee and no payment may be made to the Company from the account.

 

12 Employee pension schemes

The Group operates defined contribution pension plans for the majority of its UK and US employees. The regular contributions are charged to the income statement as they are incurred.

 

The Group also sponsors a UK defined benefit pension scheme which is closed to new members and future accruals. The funds of the scheme are administered by a trustee company and are independent of the Group's finances.

 

During the period the financial position of the defined benefit pension scheme has been updated in line with the expected return on scheme assets, the interest on scheme liabilities and cash contributions made to the scheme. The last full actuarial valuation was carried out by a qualified independent actuary as at 5 April 2010 and this has been updated on an approximate basis to 30 June 2012.

The amounts recognised in the income statement are:

Half year

2012

Half year

2011

Full year

2011


£'000

£'000

£'000

Enhanced transfer value (ETV) exercise settlement cost - exceptional items - continuing operations

-

-

575

Interest cost on defined benefit obligations

2,217

2,669

5,174

Expected return on scheme assets

(1,701)

(2,383)

(4,593)

Net pension finance charge - continuing operations

516

286

581

Current service cost - discontinued operations

-

9

9

Total recognised in the income statement

516

295

1,165

 

The principal assumptions made by the actuaries at 30 June 2012 were:


Half year

2012

Half year

2011

Full year

2011

Rate of increase in pensionable salaries


n/a

4.5%

3.9%

Rate of increase in pensions in payment


2.6%

3.5%

2.8%

Rate of increase in pensions in deferred pensions


1.6%

3.5%

1.8%

Discount rate


4.5%

5.6%

4.9%

Inflation assumption - RPI


2.7%

3.5%

2.9%

                                      - CPI


1.7%

n/a

1.9%

 

The mortality assumptions adopted at 30 June 2012 imply the following life expectancies at age 65:

 

Analysis of the movement in the balance sheet liability:

Half year

2012

Half year

2011

Full year

2011


£'000

£'000

£'000

At start of period

23,547

21,905

21,905

Current service cost

-

9

9

Net finance charge

516

286

581

Settlement charge

-

-

575

Normal contributions paid

(257)

(1,500)

(3,000)

Exceptional contributions in respect of ETV exercise

-

-

(378)

Actuarial losses/(gains) recognised in other comprehensive income

3,175

(396)

3,855

At end of period

26,981

20,304

23,547

 

 

13 Analysis of net debt

Half year

2012

Half year

2011

Full year

2011


£'000

£'000

£'000

Cash at bank and in hand

4,608

5,637

6,992

Short term deposits

8,500

-

5,500

Cash, cash equivalents and bank overdrafts

13,108

5,637

12,492

Current finance leases

(142)

(135)

(143)

Current bank loans

(1,494)

(1,881)

(3,952)

Current borrowings

(1,636)

(2,016)

(4,095)

Non current finance leases

(81)

(218)

(152)

Non current bank loans

-

(5,440)

(2,782)

Non current borrowings

(81)

(5,658)

(2,934)

Net cash/(debt)

11,391

(2,037)

5,463

 

14 Cash generated from operations

Half year

2012

£'000

Half year

2011

£'000

Full Year

2011

£'000

Operating profit - continuing operations

                             - discontinued operations

3,047

9

2,098

2,016

1,291

4,079

Adjustments for:




Impairment of goodwill

-

-

4,743

Depreciation charge

651

648

1,338

Amortisation of intangibles

  252

323

656

Exceptional non cash items

-

-

575

Decrease in exceptional accrual/provisions

(256)

(315)

(310)

Share option non cash charges - continuing operations

                                                          - discontinued operations

340

39

152

16

517

35

IAS 19 current service cost

-

9

9

Contributions to defined benefit pension scheme normal

                                                                                           exceptional re ETV exercise

(257)

-

(1,500)

-

(3,000)

(378)

Changes in working capital:



Increase in inventories

(863)

(1,264)

(297)

(Increase)/decrease in trade and other receivables

(642)

(1,245)

1,480

(Decrease)/increase in trade and other payables

(410)

592

2,236

Cash generated from operations

1,910

1,530

12,974

 

Cash flows relating to discontinued operations are shown in note 6.

15 Share capital

During the period 561,519 shares, with a nominal value of £216,000, were issued for a consideration of £544,000 to satisfy exercises of share options under the UK SAYE and US Sharesave Schemes (2011: no shares issued in year).

 

16 Capital commitments

The Group had capital commitments of £43,000 contracted but not provided for in these financial statements

(2 July 2011: £44,000, 31December 2011: £213,000, of which £134,000 was in respect of discontinued operations).

 

17 Related party transactions

The Group did not participate in any related party transactions that require disclosure.



Statement of Directors' responsibilities

 

The Directors confirm that, to the best of their knowledge, this condensed consolidated set of interim financial statements has been prepared in accordance with IAS 34 as adopted by the European Union and that the interim management report includes a fair review of the information required by rules 4.2.7R and 4.2.8R of the Disclosure Rules and Transparency Rules of the United Kingdom's Financial Services Authority, namely:

 

·      An indication of the important events that have occurred during the first six months and their impact on the condensed consolidated interim financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year.

 

·      Disclosure of material related party transactions and changes therein.

 

The names of the Directors of 4imprint Group plc are as listed in the Group's Annual Report for 31 December 2011, apart from Mr K. Lyons-Tarr who was appointed an Executive Director and Mr J.A. Warren and Mr S.J. Gray who were appointed as Non-Executive Directors on 11 June 2012. Mr I. Brindle and Mr N. Temple resigned as Non-Executive Directors on 30 June 2012. A list of current Directors of 4imprint Group plc is maintained on the Group website: http://investors.4imprint.com

 

By order of the Board

 

 

 

John Poulter


Gillian Davies


Chairman


Group Finance Director


 

2 August 2012


This information is provided by RNS
The company news service from the London Stock Exchange
 
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