Interim Results

4imprint Group PLC
24 September 2002


Press Release                                                  24 September 2002


                               4imprint Group plc

             Interim Results for the six months ended 29 June 2002

4imprint Group plc, the leading global distributor of imprinted promotional
products, today reports its Interim Results for the six months ended 29 June
2002.

Financial Highlights

  • Turnover down 1.4% from £45.7m to £45.0m

  • Profit before tax, exceptional items and goodwill amortisation down 45% from 
    £0.94m to £0.52m

  • Fundamental review of AIA produces a related £2.4m exceptional provision and 
    will lead to elimination of under-performing franchisees

  • Interim dividend of 1.0p per share is maintained

  • Balance sheet remains ungeared

  • Capital expenditure reduced from £2.8m to £1.2m


Operational Highlights


  • UK and US Corporate Programmes show continued sales growth - recently 
    established US channel is expected to move into profit in 2003

  • Direct Marketing reduced catalogue mailings and saw an increased response 
    rate, albeit with a lower average order value

  • AIA increased revenues, while franchise controls are being tightened and the 
    franchise owner base is under review

Commenting on the Results, Dick Nelson, Chief Executive of 4imprint Group plc,
said: 'The measures that have been taken since the start of the year, throughout
all of the Group's channels, to improve operational efficiency and cash
management, encourages us to believe that 2003 will see the Group back on a
growth track, notwithstanding the worst conditions seen in advertising in recent
history.'



                                    - Ends -



For further information, please contact:

4imprint Group plc
Dick Nelson, Chief Executive                          Tel: [phone]
[e-mail]                                         www.4imprint.co.uk


Media enquiries:

Bankside Consultants Limited
Julian Bosdet / Henry Harrison-Topham                 Tel: [phone]
[e-mail]                                          www.bankside.com


2002 Interim Announcement

Introduction

In what continues to be a challenging market worldwide for those in the
advertising sector, the Group achieved turnover comparable with the first half
of 2001.  Profits were, however, affected by these conditions to a greater
extent both in the US and Europe.

Financial Summary

The Group has maintained its turnover at £45.0m compared to £45.7m in 2001, with
strong sales performances from our UK Premiums and UK and US Corporate
Programmes channels.  These were largely able to offset shortfalls in our other
channels.

Profit before tax, exceptional items and goodwill amortisation for the period
was £0.5m, down from £0.9m last year.  An operating exceptional provision of
£2.4m has led to a loss before tax of £2.3m compared to a profit of £0.5m in
2001.

Growth in the US Corporate Programmes channel, at a lower gross margin and with
higher support costs in the set-up phase, has offset the reduction in Direct
Marketing sales.  In Direct Marketing we have increased our response rates from
a reduced catalogue circulation but have experienced a four percent reduction in
the average order value, as many of our customers are spending cautiously.
This, together with the difficulties experienced in integrating our Woking and
Manchester operations in the UK, have resulted in the reduction in underlying
Group profits.

As a result of a fundamental review of our Partner Services channel in the US we
have provided for certain one-off costs of £2.4m, which are described later in
this review.

The net cash outflows in the period are working capital based and have been
particularly impacted by a change of treatment of letter of credit payments.
This has resulted in one-off cash outflows to suppliers of £1.5m.

The Board has declared an interim dividend of 1.0p per ordinary share (2001 -
1.0p).

Corporate Programmes

Our Corporate Programmes channel designs, sources, manufactures, warehouses and
distributes promotional products for major clients, which include Barclays, IBM,
British Airways, KPMG Consulting and many others.

Programme wins during last year along with more recent wins, which include
Barclays, enabled the UK Corporate Programme channel to increase turnover
despite some internal challenges.  The integration of the Woking corporate
programme activities into our Broadway operation in Manchester, though now
complete, took longer than anticipated and was also more difficult than
originally envisaged.  This impacted service levels for several months in the
first half.  In June, Craig Slater, our Group Finance Director, took on the
additional responsibilities of Interim Managing Director of Broadway.  Service
levels are recovering in this operation, which also has a renewed emphasis on
continued profitability and cash management.

The investment made in the US Corporate Programme channel over the last eighteen
months is beginning to show tangible progress, as sales were up more than 200%
over the first half of 2001, albeit on a relatively small number.  We now have
six Fortune 500 company programmes where a year ago we had none.  Recent wins
include VNU (parent company of ACNielsen), KPMG Consulting, Union Planters Bank,
EMCOR and Alliance Data Systems.  Our US strategy of using the AIA franchise
owners to source corporate programme business continues.  A new certification
programme has been launched for a select group of franchise owners, which trains
them to identify and close significant corporate programme opportunities.  By
year-end, approximately 70 of our top franchise owners will have completed the
certification training giving us the largest corporate programme sales team in
the US.  Considerable resources have been put in place over the last eighteen
months to support the establishment of our US Corporate Programme channel and we
expect it to move into profit in 2003.

Direct Marketing

Our Direct Marketing channel mails over 8 million catalogues and other pieces
annually to customers and prospects, and serves more than 150,000 customers
worldwide.

As a result of the forecast weaknesses in the both the UK and the US economies
we chose to mail 25% fewer catalogues at the start of this year and,
encouragingly, the combined Direct Marketing turnover trailed the first half of
2001 by only 11%.  Despite a higher response rate from our mailings, profits
have been affected by the lower average order value that we have been
experiencing.  The UK Direct Marketing and Field Sales groups were the most
challenged operating units in the Group, both producing reduced turnover in the
period.  The shortfall in the Direct Marketing and the field sales group is
attributed more to the generally difficult trading conditions in the UK, as well
as the reduced number of mailings. Relief from these conditions is not expected
until 2003.

Premiums

Our Premiums channel designs, sources and arranges offshore manufacturing of
large one-off imprinted promotional products orders most often used by larger
companies in consumer promotions.

Our UK Premiums channel showed significant growth in profits compared to the
first half of 2001.  This was despite weakness in our airline amenity kit
business at the start of the year, which resulted from reduced air travel.  We
have seen solid growth amongst the core client base in the non-event area as we
continue to lessen our dependence on the cyclical impact of sporting event
promotions.  Additionally several multi-nationals, including Unilever, have
appointed us to preferred supplier status.

We continue to develop the US Premiums business through selected AIA franchise
owners and expect this business to contribute to profit in 2003.

Partner Services

Our Partner Services channel leverages our bespoke enterprise operating systems
and industry-leading supply chain management processes into other channels of
distribution.

Adventures in Advertising (AIA), our franchise operation in the US, increased
revenues by 11% over the first half of 2001.  The increase is attributable to an
increase in the total number of franchisees in the system, with 78 new
franchises sold in the first half of 2002, and a 3% increase in 'same store'
billings.  We now have more than one-third of the owners on the new OASIS
operating system and are on track to have them all converted by the year-end.
This will provide the opportunity for significant improvements in operational
efficiency.

A fundamental review of our AIA operation has identified control improvements,
structural changes and the most effective methods of developing this business
over the next few years.

We have concluded from this review that: -

  • There will be an immediate tightening of the control over the take-on and 
    management of franchise owners and the related use of working capital

  • AIA will benefit from the removal of under performing or non-compliant 
    franchise owners, allowing the business to concentrate its efforts on the 
    more professional owners.  This will lead to a cessation of some franchise 
    owners and we will, in future, adopt a more aggressive approach to the 
    identification and termination of any non-compliant franchise owners

  • Through the provision of real-time information and the delivery of a more 
    rigorous control environment, OASIS will deliver the benefits originally 
    planned and will provide further impetus to these changes in controls

Following a franchise-by-franchise review, a number of under-performing and
non-compliant owners will be removed from the AIA network, significantly
strengthening AIA through concentrating resources upon the more productive and
successful accounts.  This has resulted in one-off provisions of £2.4m that are
largely related to amounts owed by these franchise owners, who are being
vigorously pursued for payment.

Kurt Carlson, President and COO of Adventures in Advertising Franchise Inc, has
resigned to pursue other interests.  Tamara Borello, Managing Director of
Operations and a five-year veteran with the company, has been appointed Interim
COO.  Greg Iott, VP of Business Development for 4imprint, will oversee the
further integration of certain AIA back-office functions into the Oshkosh
facility.

Outlook

The measures that have been taken since the start of the year, throughout all of
the Group's channels, to improve operational efficiency and cash management,
encourages us to believe that 2003 will see the Group back on a growth track,
notwithstanding the worst conditions seen in advertising in recent history.

We expect the changes in AIA to lead to improved profitability in the future
years from a more tightly focused and managed franchise owner base. UK Premiums
and US Corporate Programmes are expected to continue to produce growth in
profits and the US Direct Marketing channel remains steady. Recovery in our
other UK channels is not expected before 2003.

Dick Nelson
Chief Executive
24 September 2002

Financial Summary
For the six months to 29 June 2002

                                                Half year            Half year                 Full year
                                                Unaudited            Unaudited                 Unaudited
                                                  29 June              30 June               29 December
                                                     2002                 2001                      2001
                                                       £m                   £m                        £m

Turnover                                            45.03                45.68                     93.97

Operating (loss)/profit                            (2.46)                 0.20                      1.02

Profit before taxation, goodwill                     0.52                 0.94                      2.44
amortisation and exceptional items

Exceptional items                                  (2.37)                    -                    (1.53)

Dividend per ordinary share                         1.00p                1.00p                     2.25p

Earnings per share
Basic & diluted                                   (5.65)p                1.16p                   (0.27)p

Shareholders' funds                                 43.46                47.02                     45.72

Net cash                                             0.23                 4.02                      3.30


Consolidated Profit & Loss Account
Unaudited, for the six months to 29 June 2002

                                               Notes         Half year      Half year        Full year
                                                                  2002           2001             2001
                                                                 £'000          £'000            £'000

Turnover                                          2             45,034         45,680           93,973

Operating profit before goodwill amortisation                      381            665            1,970
and exceptionals

Operating exceptional item                        3            (2,366)              -                -

Goodwill amortisation                                            (473)          (469)            (954)

Operating (loss)/profit                           2            (2,458)            196            1,016

Exceptional item: fundamental reorganisation                         -              -          (1,525)

Interest                                                           139            279              474

(Loss)/profit before taxation                                  (2,319)            475             (35)

Taxation                                          4                696          (142)             (42)

(Loss)/profit after taxation                                   (1,623)            333             (77)

Dividends                                         5              (287)          (287)            (646)

Transfer (from)/to reserves                                    (1,910)             46            (723)

Earnings per share
                     Basic & diluted              6            (5.65)p          1.16p          (0.27)p

Dividend per ordinary share:                                     1.00p          1.00p            2.25p



All operations relate to continuing activities.

These financial statements should be read in conjunction with the attached notes.



Reconciliation of Movement in Shareholders' Funds
Unaudited                                                     Half year       Half year       Full year
                                                                   2002            2001            2001
                                                                  £'000           £'000           £'000

(Loss)/profit for the financial period                          (1,623)             333            (77)
Dividends                                                         (287)           (287)           (646)

                                                                (1,910)              46           (723)

Other recognised gains and losses relating to the period          (350)           1,128             593

Net movement in shareholders' funds                             (2,260)           1,174           (130)

Opening shareholders' funds                                      45,715          45,845          45,845

Closing shareholders' funds                                      43,455          47,019          45,715



Consolidated Balance Sheet
Unaudited                                              At 29        At 30 June         At 29 December
                                                        June
                                                        2002              2001                   2001
                                                       £'000             £'000                  £'000

Fixed assets                                          20,832            25,079                 25,005

Current assets
Stock                                                  6,721             5,412                  5,295
Debtors due within one year                           36,020            39,577                 37,265
Debtors due after more than one year                   4,258             5,368                  6,471
Cash at bank                                          14,410            19,800                 25,360

                                                      61,409            70,157                 74,391

Creditors due within one year                       (35,310)          (40,632)               (44,517)

Net current assets                                    26,099            29,525                 29,874

Total assets less current liabilities                 46,931            54,604                 54,879

Creditors due after more than one year                     -           (5,333)                (5,178)
Provisions for liabilities and charges               (3,476)           (2,252)                (3,986)

Net assets                                            43,455            47,019                 45,715

Capital and reserves

Called up share capital                               11,044            11,044                 11,044
Other reserves                                        32,411            35,975                 34,671

Equity shareholders' funds                            43,455            47,019                 45,715


Net cash                                                 228             4,021                  3,296



These financial statements should be read in conjunction with the attached notes.

Consolidated Cashflow
Unaudited, for the six months to 29 June 2002

                                               Notes     Half year         Half year           Full year
                                                              2002              2001                2001
                                                             £'000             £'000               £'000

Cash (outflow)/inflow from operating           7           (2,053)             1,068               2,872
activities

Returns on investments and servicing of                        139               207                 402
finance

Taxation                                                     (199)             (111)               (314)

Capital expenditure                                        (1,168)           (2,815)             (4,654)

Acquisitions                                                     -          (10,954)            (10,468)

Disposals                                                        -               266               (747)

Equity dividends paid                                        (358)           (3,490)             (3,782)

Cash outflow before the use of liquid                      (3,639)          (15,829)            (16,691)
resources and financing

Financing

Issue of shares                                                  -                67                  67
(Repayment)/increase of loans                              (8,262)             7,794              13,046

                                                           (8,262)             7,861              13,113

Decrease in cash in the period                            (11,901)           (7,968)             (3,578)

Cash inflow/(outflow) from movement in                       8,262           (7,794)            (13,046)
debt and finance leasing

Change in net debt resulting from cash                     (3,639)          (15,762)            (16,624)
flows

Translation                                                    571             (214)                (77)

Cash outflow in the period                                 (3,068)          (15,976)            (16,701)

Opening net cash                                             3,296            19,997              19,997

Closing net cash                                               228             4,021               3,296



Notes to the Financial Statements

1   Basis of preparation

    This Interim Report for the half year ended 29 June 2002 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 29 December 2001.  Those accounts carry an 
    unqualified auditors' report and have been delivered to the Registrar of 
    Companies.  The comparative results for the year ended 29 December 2001 are
    abridged, and as such do not represent statutory accounts.


 2  Segmental Analysis            Half year 2002               Half year 2001              Full year 2001
                                       Operating                    Operating                   Operating
                           Turnover       profit        Turnover       profit        Turnover      profit
                              £'000     £'000         £'000             £'000           £'000       £'000
ORIGIN

United Kingdom               23,982          317          24,878          485          49,980       1,063
Goodwill amortisation             -        (138)               -        (138)               -       (277)

                             23,982          179          24,878          347          49,980         786

United States                21,052           64          20,802          180          43,993         907
Exceptional item                  -      (2,366)               -            -               -           -
Goodwill amortisation             -        (335)               -        (331)               -       (677)

                             21,052      (2,637)          20,802        (151)          43,993         230

TOTAL                        45,034      (2,458)          45,680          196          93,973       1,016

3   Operating exceptional item

    As a result of a fundamental review of our Partner Services channel in the 
    US we have provided for certain one-off costs of £2.4m.  These costs are 
    predominantly debtor provisions.

4   Taxation

    The taxation charge for the 6 months to 29 June 2002 has been calculated by 
    applying the best estimate of the Group's annual tax rate to the loss before 
    taxation for the period. FRS19, Deferred Tax, has been adopted during the 
    period and does not impact on the financial statements as the Group already 
    provided in full for deferred tax and recognised deferred tax assets to the 
    extent that they are regarded as recoverable.

5   Dividend

    The interim dividend for 2002 of 1.00p per ordinary share (2001:1.00p) will 
    be paid on 11 November 2002 to ordinary shareholders on the register at the 
    close of business on 18 October 2002.

6   Earnings Per Share

    The Earnings Per Share for the half year is based on the loss after tax of 
    £1,623,000 (2001 : Profit - £333,000) and weighted average shares in issue 
    of 28,712,756 (2001 : 28,712,756).

    The Diluted Earnings Per Share for the half year is based on the same loss 
    and profit 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 28,712,756 (2001 : 28,712,756).

7   Reconciliation of operating profit to operating
    cashflows
                                                            Half year          Half year          Full year
                                                                 2002               2001               2001
                                                                £'000              £'000              £'000

    Operating (loss)/profit                                   (2,458)                196              1,016
    Depreciation charge                                         1,241                843              1,922
    Amortisation of goodwill                                      473                469                954
    Profit on sale of tangible fixed assets                         -                (7)                113
    Release of deferred profit on sale and leaseback                -               (35)               (35)
    Exceptional reorganisation costs paid                       (603)               (27)              (190)
    (Increase)/decrease in stocks                             (1,466)                348                443
    Decrease in debtors                                           358              3,138              5,224
    Increase/(decrease) in creditors                              402            (3,857)            (6,474)
    Expenditure against provisions                                  -                  -              (101)

    Net cash (outflow)/inflow from operating                  (2,053)              1,068              2,872
    activities

8   Retirement benefits

    Under FRS17, Retirement Benefits, the Group's defined benefit pension 
    scheme's liabilities at the start of the year were £3.4m greater than its 
    assets, which represented a 4.7% deficit in the scheme.



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