Interim Results
4imprint Group PLC
31 July 2007
31 July 2007
4imprint Group plc
Interim Results for the period ended 30 June 2007.
4imprint Group plc announces today its interim results for the period ended 30
June 2007.
Highlights
• Sales at £69.09m were 25% up on half year 2006.
• Operating profit before exceptional items was £4.50m, 43% ahead of
half year 2006.
• Profit before tax and exceptional items was £4.29m, 31% ahead of half
year 2006.
• Exceptional items of £2.94m, £2.57m of which relates to the
integration of the Trade Division and the resultant reorganisation of
the Manchester business and infrastructure which will realise
substantial cost reduction.
• Profit after exceptionals, interest and tax, (tax rate 32%) was
£0.92m, compared to £2.15m in half year 2006 (tax rate 30%).
• Basic EPS pre exceptional items was 11.78p (half year 2006: 9.33p).
• Basic EPS was 3.70p (half year 2006: 8.79p).
• Interim dividend of 4.00p per share, an increase of 23% on prior
year.
Commenting on the results, Ken Minton, Executive Chairman said
'The Group made substantial progress in the first half and laid the foundations
for major gains in operating efficiency and cost reduction which will become
evident during the second half'.
- Ends -
For further information, please contact:
Ken Minton
Chairman
4imprint Group plc Tel. + 44 (0) 207 299 7201
Chairman's Statement
Shareholders will be pleased to see that the first half of 2007 has been another
period of substantial progress for their company.
Sales in the first half of 2007 at £69.09m were 25% above the same period last
year reflecting particularly, the contribution from Supreme, the UK Trade
business acquired in November 2006, and the continued strong growth of the US
Direct Marketing business.
Operating profits before exceptional items at £4.50m were 43% over the same
period last year.
Exceptional charges amounted to £2.94m and net interest costs were £0.21m. Pre
tax profit after exceptional charges was £1.35m.
The tax charge at 32% compares with 30% last half year, and post tax profits
after exceptionals were £0.92m.
Basic earnings per share amounted to 3.70 pence per share.
Net debt at the end of the period was £3.25m.
The Board has declared a dividend of 4.00 pence per share.
During the first half of this year, the Group planned and is now completing the
execution of a major change in the structure and efficiency of the UK
businesses.
Shareholders will recall that in the 2006 Annual Report, I reported on the
acquisition of the Blackpool based Supreme business, and our intentions to merge
this business with the Manchester based Product Source and MT Golf businesses to
create a combined company with sales in excess of £25m and operating profits of
£3m per annum. Furthermore I advised Shareholders that a complete integration of
these two companies was planned and was expected to realise synergies in excess
of £1.5m per annum.
I am pleased to report that the transfer of the Product Source business onto the
Blackpool site took place in July and the MT Golf transfer will be executed by
early October. Furthermore the forecast synergies of £1.5m per annum are on
schedule to be achieved when the integration is complete.
The principal sources of the £1.5m per annum synergies arising from the
integration of the Trade business onto the Blackpool site are:-
(a) The elimination of the infrastructure costs carried by the Product Source
and MT Golf businesses in Manchester since the Supreme Blackpool base can,
with marginal additional costs, support the transferred businesses; and
(b) Additional potential cost savings and commercial benefits created from the
fusion of the three businesses into a single enterprise.
The concentration of the Trade Business onto the Blackpool site has meant that
the infrastructure at the Manchester base is now far too large to be supported
by the remaining businesses on this site. A major review of the needs of the
remaining businesses has been carried out, as a result of which the Manchester
base has been considerably downsized and simplified.
The total numbers of employees at the Manchester and Blackpool sites will reduce
by 45, or around 10%, as a result of these changes.
These changes gave rise to the 'one off' exceptional costs of £2.57m noted
earlier, which are mainly due to severance costs and exceptional operating
costs.
The divisional trading performances during the first half have been as follows:-
The Trade Division produced gross sales of £13.26m compared with £6.43m last
year, reflecting the inclusion of Supreme. Operating profit before exceptional
items was £2.03m compared with £1.25m in 2006. Market conditions were generally
stable, with Supreme sales ahead of last year and those of Product Source and MT
Golf marginally behind.
The North American Division had an excellent first half with sales in US Dollars
of $66.59m, 30% above last year and divisional dollar profits of $5.54m, 44%
ahead of last year. The Direct Marketing business continued its fast growth with
first half sales 35% over the previous year. The small Corporate Programmes
business produced, as planned, lower sales than 2006 as the business is
progressively focussed on higher quality opportunities.
The End User Division performed as follows:-
(a) Sales of the Corporate Programmes business were ahead of last year but
profits were down reflecting the poor performance of a major contract now
terminated;
(b) Field Sales produced substantial growth in sales and operating profits;
(c) At PPI, the business improved margin on somewhat lower sales and held
profits at last year's levels;
(d) Kreyer, the Germany based Corporate Programmes and Field Sales business,
produced sales ahead of last year but profits were lower as a particularly
profitable Corporate Programme featured in the 2006 half year; and
(e) The UK Direct Marketing businesses had a good first half with sales 20%
ahead of last year.
Outlook
The Board expects the substantial progress made by the Group in the first half
to be continued in the second half underpinned by the benefits from the major
changes implemented during the first half.
Ken Minton
Executive Chairman
31 July 2007
Finance Director's Report
Segment reporting
Following the acquisition of the Supreme business in November 2006, the Group
reports its results in three divisions in line with the way the business is
managed:-
i) Trade Division, comprising the Supreme, Product Source and MT Golf
businesses.
ii) European End User Division, comprising UK Corporate Programmes, Field
Sales, Premium Promotions and Direct Marketing businesses and the German
business Kreyer.
iii) North American Division, comprising North American Direct Marketing and
the small US Corporate Programmes businesses.
The cost of infrastructure and support in Manchester for the European End User
Division, Product Source business and the MT Golf business (which form part of
the Trade Division) is not allocated by division and is reported separately in
note 2.
Sales
Sales were £69.09m, an increase of 25% over half year 2006. The impact of the
dollar exchange rate reduced Group sales by 6%. Growth of 12% was attributable
to sales from the Supreme business, acquired in November 2006.
Sales growth in the North American division was 30% in US dollars, with the
Direct Marketing business 35% ahead. The European End User division grew
external sales by 8% and the Trade business by 155% including the impact of the
Supreme acquisition.
Operating profit
Operating profit before exceptional items was £4.50m, a 43% increase over prior
half year. North American profits were £2.79m, 32% ahead of prior year; 44%
ahead in US dollars. Exchange movement in the US dollar reduced profits by
£0.24m compared to half year 2006.
European End User Division operating profit before exceptional items at £2.38m
was 92% of the prior half year. The reduction compared to prior half year is
principally due to losses on an underperforming contract which has been
terminated in the period.
Trade Division operating profit before exceptional items was £2.03m (half year
2006: £1.25m) including the benefit of the Supreme acquisition.
Overhead costs to support the European End User Division and the Product Source
and MT Golf businesses of the Trade Division were £1.70m (half year 2006:
£1.80m, full year 2006: £3.31m).
Group Headquarters' costs were in line with prior year.
Exceptional items
The exceptional charge in 2007 of £2.94m comprises three items:
1) Costs of £1.74m in the Trade Division as a result of the ongoing
integration of the Product Source and MT Golf businesses into the site
of the Supreme business in Blackpool;
2) Costs of £0.83m in the European End User Division relating to the Trade
Division integration including restructuring of the business and
related infrastructure; and
3) Provision of £0.37m in the European End User Division relating to the
exit of an onerous customer contract.
Pensions
The pension deficit on the Company's closed defined benefit pension scheme
reduced to £9.84m in the period (half year 2006: £16.77m and full year 2006:
£18.44m); primarily as a result of the increase in the discount rate due to
increased bond yields. The discount rate at half year 2007 was 6.00% (half year
2006: 5.40%, full year 2006: 5.30%). A full triennial valuation to 5 April 2007
is currently being prepared. Company contributions to the scheme in the period
were £0.95m (half year 2006: £0.74m, full year 2006: £1.50m).
Taxation
The taxation charge for the period was calculated at 32% (half year 2006: 30%;
full year 2006: 32%).
Earnings per share
Basic earnings per share before exceptional items were 11.78p (half year 2006:
9.33p). Basic earnings per share were 3.70p (half year 2006: 8.79p).
Dividend
The Board has declared a dividend of 4.00p, a 23% increase over prior half year.
Cashflow
The Group's net debt at 30 June 2007 was £3.25m, the opening net debt position
was £0.25m. Cash generated from operating profit after a £0.95m contribution to
the defined benefit pension scheme was £2.15m. Increase in working capital was
£1.54m (including the impact of a £1.27m increase in the period in trade
receivables due to the Supreme acquisition in 2006 and a £2.25m increase in
creditors and provisions relating to exceptional charges in the period). Cash
outflow relating to tax, dividends and interest was £2.55m, capital investment
was £0.92m and other items £0.14m.
Balance sheet and Shareholders' funds
Equity Shareholders' funds increased by £5.28m to £25.36m, profit for the period
was £0.92m and dividends paid were £1.55m. The after tax reduction in the
pension deficit increased Shareholders' funds by £5.46m and further increases in
Shareholders' funds from other items totalled £0.45m.
Exchange rates
The average US dollar exchange rate for the period for translating US profits
was $1.9827 (half year 2006 : $1.8244) and for Euros was €1.4749 (half year
2006: €1.4515) to the pound. The exchange rate at the balance sheet date, used
to translate assets and liabilities in US Dollars, was $2.0064 (June 2006:
$1.8496) and for Euros was €1.4856 (June 2006: €1.4465).
Gillian Davies
Group Finance Director
31 July 2007
Operating Review
Restructuring of the Manchester based business
The Manchester based business which, until the acquisition of Supreme at the end
of last year, represented over 80% of the Group's entire European activities,
comprises the following:
• The Product Source and MT Golf Trade businesses
• The Corporate Programmes business
• The Field Sales business
• The UK Direct Marketing business
Whilst the four businesses operated quite separately they were supported by a
common infrastructure including areas such as IT, Finance, Logistics and HR. The
total annual cost of this infrastructure amounted to £3.31m in 2006.
Earlier in 2007, the Board decided to merge the Product Source and MT Golf
businesses with the newly acquired Supreme company to create a single enterprise
entirely located on the Supreme site at Blackpool. The operational benefits and
cost savings to be achieved by this step were significant, and sufficient
infrastructure existed at Blackpool to accommodate the combined enterprise, with
only marginal additions. The transfer of the Product Source business took place
at the beginning of July 2007, the small MT Golf business will be transferred by
early October.
A consequence of establishing the entire Trade Division at Blackpool has been
the need for a major review of the whole organisation of the remaining business
at Manchester including the infrastructure and support services, since prior to
the Supreme acquisition the Product Source and MT Golf businesses were
significant users of these services.
This review is complete and major changes have been implemented, comprising the
following:
(a) the Direct Marketing business has been placed under the Executive
control of the US Direct Marketing business. This step will provide the
focus and integrated control necessary to underpin the growth of the
business and establish a viable base for extending the business into
Europe.
(b) The Corporate Programmes and Field Sales businesses have been merged to
provide a more efficient organisation.
(c) The Manchester infrastructure and support services have been reorganised
and have been incorporated into the merged Corporate Programmes and
Field Sales businesses, from July 2007.
As a result the whole Manchester based business is more focused, simpler and
leaner. The total number of people employed has been reduced by nearly 50% from
approximately 285 to 145.
Operating Review (continued)
European End User Division
Half year Half year Full year
2007 2006 2006
£'000 £'000 £'000
--------------------------------------------------------------------------------------------------------
External and inter divisional sales 24,800 23,049 50,818
External sales 24,598 22,723 50,388
Operating profit before exceptional items
and Manchester overheads 2,381 2,597 5,651
Operating profit after exceptional items but
before Manchester overheads 1,182 2,597 5,481
--------------------------------------------------------------------------------------------------------
This Division comprises the following sectors:-
a) Corporate Programmes - Sales of the core business grew 3% in the period and a
number of medium sized new account wins have been added to this business.
Corporate clients are becoming ever more sophisticated in terms of their
needs for design, product development and technology based solutions in order
to justify sole and preferred supplier status. Therefore the business
continues to invest in its technical, marketing and brand management
capabilities in order to retain existing relationships and form the platform
for further growth.
During the period, a contract which was implemented during 2006 and generated
losses in the period, has been terminated. The direct costs specifically
attributable to this contract have been removed.
b) Field Sales - This business had an excellent performance in the period with
sales increasing by 20% over prior year and has experienced the equivalent
increase in its overall performance as costs were managed in line with this
sales growth.
c) Premium Promotions - based in London, this business specialises in the supply
of bespoke products to a range of blue chip clients. Sales were 88% of prior
year, however profitability held at prior half year level due to an
improvement in margin as well as overhead cost control.
d) Direct Marketing - uses an integrated catalogue-web-customer service
marketing approach. The strategy of rapidly developing this division in line
with the US Direct Marketing business has continued with sales 20% ahead of
prior year. The sector has continued its investment in prospect catalogues,
search engine marketing initiatives and a widening product range and orders
from new customers were 29% ahead of prior year. From 1 July 2007, this
business has been placed under Executive control of the US Direct Marketing
business.
Kreyer Promotions, in Germany, operates in both the Corporate Programmes and
Field Sales areas. Sales of the business are 4% ahead of prior half year. There
was a slight reduction in margin and increased investment in resource compared
to prior year, resulting in a decrease in profitability.
The exceptional charges incurred in the period related to the reorganisation of
the End User Division as a result of the Trade integration (£0.83m) and a
provision for the termination of a significant, underperforming contract
reported within the Corporate Programmes business (£0.37m).
Operating Review (continued)
North American Division
Half year Half year Half year Half year Full year Full year
2007 2007 2006 2006 2006 2006
US$'000 £'000 US$'000 £'000 US$'000 £'000
-------------------------------------------------------------------------------------------------------------
Sales 66,593 33,739 51,147 28,368 111,585 60,053
Operating profit 5,536 2,792 3,855 2,113 9,123 4,910
-------------------------------------------------------------------------------------------------------------
The strong growth pattern demonstrated by the US division and sustained over
recent years continued in the first half of 2007, with total sales 30% over the
same period in 2006 in US dollars.
The division's Direct Marketing operations continued to drive top line growth,
with total sales 35% higher than the prior year comparative. The integrated
print/web marketing approach developed over the last few years is constantly
refined and expanded where opportunities arise, and is supported by a
significant investment in catalogues, customer marketing, website development
and search engine marketing. Underpinning these initiatives is an unwavering
dedication to first class customer service, based on the daily commitment of
each of our employees to deliver on our unique, market leading customer
guarantees. Customer acquisition activities remain effective, with new customer
orders increasing by 38%, and our existing customer base continues to perform
well, driven by creative retention techniques.
As ever, the performance of our supplier partners is fundamental in allowing us
to deliver on our customer promises. Our merchandising and marketing teams have
developed strong relationships with our vendors, resulting in offers and
exclusives with a winning combination of price, quality and service. In
addition, several small 'niche' catalogues have been developed, some focusing on
new product categories and others offering an expanded range of products in
existing categories. These books are being test marketed to our existing
customers first.
The application of the same Direct Marketing techniques in the Canadian market
continues to produce favourable results.
The smaller Corporate Programmes business had a successful first half, albeit
with sales slightly lower, (as planned), than in 2006. Our account management
team develops close relationships with large customers to provide a tailored
combination of products and services to suit the individual requirements of each
account.
Operating profit in the underlying currency increased 44% over the first half of
2006, however movements in the dollar/sterling exchange rate reduced this gain
to 32% when translated to the reporting currency. This division remains
efficient in its use of working capital.
From 1 July 2007 the 4imprint UK based Direct Marketing business becomes part of
the North American Division. This will allow the Division to provide increased
focus and Executive management direction to the Direct Marketing business.
Furthermore it is consistent with our intention to extend the American business
internationally.
Operating Review (continued)
Trade Division
Half year Half year Full year
2007 2006 2006
£'000 £'000 £'000
--------------------------------------------------------------------------------------------------------
External and inter divisional sales 13,259 6,431 13,137
External sales 10,751 4,223 9,078
Operating profit before exceptional items
and Manchester overheads 2,027 1,253 2,361
Operating profit after exceptional items but
before Manchester overheads 283 1,253 2,361
--------------------------------------------------------------------------------------------------------
The Trade Division comprises Product Source, MT Golf and Leisure and the Supreme
business, which was acquired in November 2006.
As from 1 July, Product Source has been transferred into the Supreme business in
Blackpool, under the new name of SPS (EU) Ltd, trading as Supreme and Product
Source Select.
MT Golf and Leisure will be transferred into the Blackpool business under the
umbrella of SPS (EU) Ltd at the beginning of October 2007, which is at the end
of the golf season.
The combined business is the largest promotional products trade supply company
in the UK within the promotional, marketing, advertising and business gift
market, utilising its specialist manufacturing and print processes combined with
its experience in worldwide sourcing of unique product ranges.
The combined strengths of the integrated division will facilitate an expected
increase in its range of sales to its UK and Eire distributors and a select
number of appointed agents throughout the rest of the world with its one stop
shop mentality.
The exceptional item of £1.74m relates to the one off costs of integration of
the Product Source and MT Golf and Leisure businesses onto the Blackpool site.
The division has traded satisfactorily in the first half of 2007. The market has
been stable and the division has benefited both from the opportunity to develop
intra group sales and from supplying a wider range of products into its combined
customer base.
The transfer of the Product Source business onto the Blackpool site in July 2007
included the transfer of substantial plant and machinery and inventory from
Manchester to Blackpool, system transfer and recruitment of approximately 100
people. This integration process is expected to be complete by early October.
Some temporary disruption to the standards of customer service has occurred as
these changes have been implemented.
Consolidated Income Statement (unaudited)
Half year Half year Full year
2007 2006 2006
Note £'000 £'000 £'000
----------------------------------------------------------------------------------------------------------
Sales 2 69,088 55,314 119,519
Operating expenses (67,529) (52,347) (112,355)
----------------------------------------------------------------------------------------------------------
Operating profit 2 1,559 2,967 7,164
----------------------------------------------------------------------------------------------------------
Operating profit before exceptional items 4,502 3,156 7,541
Exceptional items 3 (2,943) (189) (377)
----------------------------------------------------------------------------------------------------------
Operating profit 2 1,559 2,967 7,164
----------------------------------------------------------------------------------------------------------
Finance costs (214) (18) (44)
Finance income 5 128 218
----------------------------------------------------------------------------------------------------------
Profit before tax 1,350 3,077 7,338
Taxation 4 (432) (923) (2,348)
----------------------------------------------------------------------------------------------------------
Profit attributable to equity Shareholders 918 2,154 4,990
----------------------------------------------------------------------------------------------------------
Earnings per share
Basic 5 3.70p 8.79p 20.29p
Diluted 5 3.56p 8.41p 19.44p
----------------------------------------------------------------------------------------------------------
£'000 £'000 £'000
----------------------------------------------------------------------------------------------------------
Dividends paid in the period 6 1,549 1,109 1,911
Dividends per share declared - Interim 6 4.00p 3.25p 3.25p
- Final 6 6.25p
----------------------------------------------------------------------------------------------------------
Statement of Recognised Income and Expense (unaudited)
Half year Half year Full year
2007 2006 2006
£'000 £'000 £'000
---------------------------------------------------------------------------------------------------------
Profit for the period 918 2,154 4,990
---------------------------------------------------------------------------------------------------------
Exchange gains and losses offset in reserves (123) (808) (1,540)
Current tax deduction on exercise of employee share options - - 492
Actuarial gains taken to reserves net of tax 5,461 2,512 771
---------------------------------------------------------------------------------------------------------
Net gains/(losses) not recognised in income statement 5,338 1,704 (277)
---------------------------------------------------------------------------------------------------------
Total recognised income for the period 6,256 3,858 4,713
---------------------------------------------------------------------------------------------------------
Consolidated Balance Sheet (unaudited)
At At At
30 June 1 July 30 Dec
2007 2006 2006
Note £'000 £'000 £'000
----------------------------------------------------------------------------------------------------------
Non current assets
Property, plant and equipment 10,266 1,536 10,315
Goodwill 9,084 4,341 9,084
Intangible assets 1,596 3,324 1,616
Investments 7 8 7
Deferred income tax assets 4,433 7,177 6,149
----------------------------------------------------------------------------------------------------------
25,386 16,386 27,171
----------------------------------------------------------------------------------------------------------
Current assets
Inventories 10,001 6,883 8,409
Trade and other receivables 26,370 19,264 23,748
Cash and cash equivalents 2,545 8,403 2,115
----------------------------------------------------------------------------------------------------------
38,916 34,550 34,272
----------------------------------------------------------------------------------------------------------
Current liabilities
Trade and other payables 21,000 13,709 18,710
Current tax 909 1,039 857
Borrowings 5,792 - 2,364
Provisions 370 213 -
----------------------------------------------------------------------------------------------------------
28,071 14,961 21,931
----------------------------------------------------------------------------------------------------------
Net current assets 10,845 19,589 12,341
----------------------------------------------------------------------------------------------------------
Non current liabilities
Retirement benefit obligations 8 9,842 16,772 18,436
Deferred consideration 1,030 - 1,000
----------------------------------------------------------------------------------------------------------
10,872 16,772 19,436
----------------------------------------------------------------------------------------------------------
Net assets 25,359 19,203 20,076
----------------------------------------------------------------------------------------------------------
Shareholders' equity
Share capital 9 9,798 9,752 9,766
Share premium reserve 9 37,886 37,740 37,757
Capital redemption reserve 9 208 208 208
Cumulative translation differences 9 (1,873) (1,018) (1,750)
Retained earnings 9 (20,660) (27,479) (25,905)
----------------------------------------------------------------------------------------------------------
Total equity 25,359 19,203 20,076
----------------------------------------------------------------------------------------------------------
Consolidated Cash Flow Statement (unaudited)
Half year Half year Full year
2007 2006 2006
Note £'000 £'000 £'000
---------------------------------------------------------------------------------------------------------
Cash flows from operating activities
Cash generated from operations 7 618 1,273 3,052
Tax paid (903) (114) (848)
Finance income 74 128 167
Finance costs (173) (18) (23)
---------------------------------------------------------------------------------------------------------
Net cash (used in)/generated from operating activities (384) 1,269 2,348
---------------------------------------------------------------------------------------------------------
Cash flows from investing activities
Acquisition of subsidiary (266) - (2,058)
Cash acquired with subsidiary - - 520
Proceeds on disposal of subsidiary - - 526
Purchases of property, plant and equipment (559) (478) (822)
Purchases of intangible assets (363) (301) (643)
Proceeds from sale of property, plant and equipment - - 27
---------------------------------------------------------------------------------------------------------
Net cash used in investing activities (1,188) (779) (2,450)
---------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Repayment of borrowings on acquisition - - (7,219)
Proceeds from issuance of ordinary shares 161 174 205
Dividends paid to Shareholders (1,549) (1,109) (1,911)
---------------------------------------------------------------------------------------------------------
Net cash used in financing activities (1,388) (935) (8,925)
---------------------------------------------------------------------------------------------------------
Net decrease in cash and bank overdrafts (2,960) (445) (9,027)
Cash and bank overdrafts at beginning of the period (249) 9,012 9,012
Exchange losses on cash and bank overdrafts (38) (164) (234)
---------------------------------------------------------------------------------------------------------
Cash and bank overdrafts at end of the period (3,247) 8,403 (249)
---------------------------------------------------------------------------------------------------------
Analysis of cash and bank overdrafts
Cash at bank and in hand 2,545 8,403 2,115
Bank overdrafts (5,792) - (2,364)
---------------------------------------------------------------------------------------------------------
(3,247) 8,403 (249)
---------------------------------------------------------------------------------------------------------
1 Basis of preparation
This financial information comprises the consolidated interim balance sheet as
of 30 June 2007 and 1 July 2006 and related consolidated interim statements of
income and cashflows for the period then ended of 4imprint Group plc
(hereinafter referred to as 'financial information'). The interim financial
statements of 4imprint Group plc for the period ended 30 June 2007 are unaudited
and do not comprise statutory accounts within the meaning of Section 240 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 and accounts for
the year ended 30 December 2006. Those accounts carry an unqualified auditors'
report and have been delivered to the Registrar of Companies. The comparative
results for the year ended 30 December 2006 are abridged, and as such do not
represent statutory accounts. The Group has chosen not to adopt IAS34 'Interim
financial reporting', in preparing its interim statements.
2 Segmental analysis
At 30 June 2007, the Group was organised in three divisions:
Sales Gross sales Inter divisional sales Sales
Half Half Full Half Half Full Half Half Full
year year year year year year year year year
2007 2006 2006 2007 2006 2006 2007 2006 2006
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
----------------------------------------------------------------------------------------------------------------
Trade Division 13,259 6,431 13,137 (2,508) (2,208) (4,059) 10,751 4,223 9,078
European End User Division 24,800 23,049 50,818 (202) (326) (430) 24,598 22,723 50,388
North American Division 33,739 28,368 60,053 - - - 33,739 28,368 60,053
----------------------------------------------------------------------------------------------------------------
71,798 57,848 124,008 (2,710) (2,534) (4,489) 69,088 55,314 119,519
----------------------------------------------------------------------------------------------------------------
Operating profit Operating profit/(loss) Exceptional items Operating profit/(loss)
before exceptional items
Half Half Full Half Half Full Half Half Full
year year year year year year year year year
2007 2006 2006 2007 2006 2006 2007 2006 2006
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
------------------------------------------------------------------------------------------------------------------
Trade Division 2,027 1,253 2,361 (1,744) - - 283 1,253 2,361
European End User Division 2,381 2,597 5,651 (1,199) - (170) 1,182 2,597 5,481
Manchester overhead and (1,697) (1,800) (3,306) - - - (1,697) (1,800) (3,306)
infrastructure costs *
------------------------------------------------------------------------------------------------------------------
Total European 2,711 2,050 4,706 (2,943) - (170) (232) 2,050 4,536
North American Division 2,792 2,113 4,910 - - - 2,792 2,113 4,910
Group Headquarters costs (524) (538) (1,015) - (189) (207) (524) (727) (1,222)
------------------------------------------------------------------------------------------------------------------
Operating profit before defined 4,979 3,625 8,601 (2,943) (189) (377) 2,036 3,436 8,224
benefit pension and share option
charges
Defined benefit pension charges (157) (172) (325) - - - (157) (172) (325)
Share option charges (320) (297) (735) - - - (320) (297) (735)
------------------------------------------------------------------------------------------------------------------
4,502 3,156 7,541 (2,943) (189) (377) 1,559 2,967 7,164
------------------------------------------------------------------------------------------------------------------
Net finance costs totalling £209,000 (half year 2006: £110,000 income, full year
2006: £174,000 income), and taxation charge of £432,000 (half year 2006:
£923,000, full year 2006: £2,348,000) cannot be separately allocated to
individual segments. A review of the segments is included in the Operating
Review.
* The Manchester overhead and infrastructure costs support the End User Division
and the Product Source and MT Golf businesses of the Trade Division until their
transfer (see Operating Review)
3 Exceptional items
Half year Half year Full year
2007 2006 2006
£'000 £'000 £'000
------------------------------------------------------------------------------------------------------------
Trade Division integration costs (1,744) - -
European End User Division integration costs (829) - -
Contract exit costs (370) - -
Group restructuring costs - (125) (143)
OFT fine and related legal costs - (64) (64)
European End User Division reorganisation costs - - (170)
------------------------------------------------------------------------------------------------------------
(2,943) (189) (377)
------------------------------------------------------------------------------------------------------------
Trade Division integration costs and European End User Division integration
costs represent the costs attributable to the relocation of the Manchester based
Product Source and MT Golf trade businesses into the Supreme trade business in
Blackpool, together with the resultant reorganisation of the business and
related infrastructure in Manchester.
Contract exit costs represent a provision for the costs of exiting an onerous
customer contract in the European End User Division.
4 Taxation
The taxation charge for the period to 30 June 2007 has been calculated at 32%,
(half year 2006: 30%; full year 2006: 32%) of the profit before tax for the
period.
5 Earnings per share
Basic earnings per share (EPS) is calculated by dividing the earnings
attributable to ordinary Shareholders by the weighted average number of ordinary
shares in issue during the period, excluding those held in the Employee Share
Trust which are treated as cancelled.
For diluted earnings per share, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all potential dilutive ordinary
shares. The potential dilutive ordinary shares relate to those share options
granted to employees where the exercise price is less than the average market
price of the Company's ordinary shares at the balance sheet date.
Reconciliations of the earnings and weighted average number of shares used in
the calculations are set out below:
Half year Half year Full year
2007 2006 2006
Weighted Weighted Weighted
average average average
number Pence number Pence number Pence
Earnings of shares per Earnings of shares per Earnings of shares per
£'000 '000 share £'000 '000 share £'000 '000 share
-------------------------------------------------------------------------------------------------------------------
Earnings attributable to
ordinary Shareholders 918 2,154 4,990
Ordinary shares in issue 25,449 25,323 25,343
Shares held by Employee
Share Trust (665) (816) (754)
-------------------------------------------------------------------------------------------------------------------
Basic EPS 918 24,784 3.70 2,154 24,507 8.79 4,990 24,589 20.29
Effect of dilutive share 995 (0.14) 1,106 (0.38) 1,084 (0.85)
options
-------------------------------------------------------------------------------------------------------------------
Diluted EPS 918 25,779 3.56 2,154 25,613 8.41 4,990 25,673 19.44
-------------------------------------------------------------------------------------------------------------------
6 Dividends
The interim dividend for 2007 of 4.00p per ordinary share (interim 2006: 3.25p,
final 2006: 6.25p) will be paid on 31 August 2007 to ordinary Shareholders on
the register at the close of business on 10 August 2007.
Dividends paid in the period totalled £1,549,000 (period to 1 July 2006:
£1,109,000, period to 30 December 2006: £1,911,000).
7 Cash generated from operations
Half year Half year Full year
2007 2006 2006
£'000 £'000 £'000
---------------------------------------------------------------------------------------------------------
Operating profit 1,559 2,967 7,164
Adjustments for:
Depreciation charge 590 263 604
Loss/(profit) on disposal of property, plant and equipment 106 - (1)
Amortisation of intangibles 371 460 778
Share option charge 320 297 735
IAS 19 pension charge for defined benefit scheme 157 172 325
Contributions to defined benefit pension scheme (950) (741) (1,500)
Changes in working capital:
Increase in inventories (1,604) (1,249) (1,162)
(Increase)/decrease in trade and other receivables (2,818) 117 (5,195)
Increase/(decrease) in trade and other payables 2,517 (941) 1,589
Increase/(decrease) in provisions 370 (72) (285)
---------------------------------------------------------------------------------------------------------
Cash generated from operations 618 1,273 3,052
---------------------------------------------------------------------------------------------------------
In the full year 2006, on acquisition, trade receivables of Pramic Limited (the
trading company of the Supreme Group), amounting to £2,481,000, formed part of
the consideration paid to the vendors.
This payment necessitated the funding of trade receivables of Pramic Limited,
during the period from the date of acquisition. Accordingly, there was an
outflow of £1,200,000 in the full year 2006 and £1,270,000 in the half year
2007, included above, representing an increase in Pramic trade receivables.
8 Defined benefit pension scheme
The Group operates a UK defined benefit pension scheme which is closed to new
members. 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 anticipated annual cost for current service,
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 2004 and this has been updated on an approximate basis to
30 June 2007.
Analysis of the balance sheet liability:
Half year Half year Full year
2007 2006 2006
£'000 £'000 £'000
------------------------------------------------------------------------------------------------------------
At start of period 18,436 20,930 20,930
Total expense charged in the income statement 157 172 325
Contributions paid (950) (741) (1,500)
Actuarial gains (7,801) (3,589) (1,319)
------------------------------------------------------------------------------------------------------------
At end of period 9,842 16,772 18,436
------------------------------------------------------------------------------------------------------------
9 Consolidated statement of changes in Shareholders' equity
Share Capital Cumulative Retained earnings
Share premium redemption translation Own Profit Total
capital reserve reserve differences shares and loss Equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
------------------------------------------------------------------------------------------------------
At start of period 9,766 37,757 208 (1,750) (1,398) (24,507) 20,076
Profit for the period 918 918
Exchange adjustments net of tax (123) (123)
Shares issued 32 129 161
Employee share options 320 320
Deferred tax on employee share 95 95
options taken to reserves
Actuarial gains taken to reserves 7,801 7,801
Deferred tax on pensions taken to (2,340) (2,340)
reserves
Dividends (1,549) (1,549)
------------------------------------------------------------------------------------------------------
At end of period 9,798 37,886 208 (1,873) (1,398) (19,262) 25,359
------------------------------------------------------------------------------------------------------
10 Share based payments
Share options are granted to Senior Management and in addition a SAYE scheme is
available to all UK and US employees. The exercise price of options designed
for Senior Management is nil and for SAYE options is equal to the market rate,
plus any discount up to the limit imposed by the local tax authority at the
pricing date.
The fair value of options (granted after 7 November 2002 which had been
exercised by 1 January 2007) is determined using the Monte Carlo valuation model
for Senior Management and Executive options and the Binomial model for SAYE
options and is spread over the vesting period of the options. The significant
inputs into the model are an expected life of between 1.35 and 3 years for all
options, the volatility measured at the standard deviation of expected share
price returns is based on statistical analysis of daily share prices over the
last 3 years and a risk-free rate based on a 36 month UK LIBOR.
Half year Half year Full year
2007 2006 2006
£'000 £'000 £'000
-----------------------------------------------------------------------------------------------------------
Charge resulting from spreading the fair value of options granted after 7 320 297 735
November 2002, which have not been exercised by 1 January 2007, over the
vesting period of the options
-----------------------------------------------------------------------------------------------------------
The Group has no legal or constructive obligation to repurchase or settle the
options in cash.
4imprint Group plc
Group Headquarters
6 Cavendish Place
London W1G 9NB
Telephone + 44 (0)207 299 7201
Fax + 44 (0)207 299 7209
E-mail hq@4imprint.co.uk
UK
4imprint
Broadway
Trafford Wharf Road
Manchester M17 1DD
Telephone +44 (0)870 240 6622
Fax +44 (0)870 241 3440
E-mail sales@4imprint.co.uk
4imprint
Product Plus International
South Bank Business Centre
Ponton Road
London SW8 5BL
Telephone +44 (0)207 393 0033
Fax +44 (0)207 393 0080
E-mail sales@4imprint.co.uk
4imprint
Product Plus International
Clifton Heights
Triangle West
Bristol BS8 1EJ
Telephone +44 (0)117 929 9236
Fax +44 (0)117 925 1808
E-mail sales@4imprint.co.uk
Supreme and Product Source Select
SPS (EU) Limited
Neptune House
Sycamore Trading Estate
Squires Gate Lane
Blackpool
Lancashire FY4 3RL
Telephone +44 (0)1253 340 400
Fax +44 (0) 1253 340 401
E-mail sales@spseu.com
USA
4imprint
101 Commerce Street
Oshkosh
WI 54901
USA
Telephone +1 920 236 7272
Fax +1 920 236 7282
E-mail sales@4imprint.com
Germany
4imprint
Kreyer Promotion Service
Heydastrasse 13
D-58093
Hagen
Germany
Telephone +49 (0)2331 95970
Fax +49 (0)2331 959749
E-mail 4imprint@kreyer-promotion.de
France
4imprint
Product Plus France SA
4, boulevard des lles
92130 Issy-les-Moulineaux
France
Telephone +33 (0)1559 59640
Fax +33 (0)1559 59641
E-mail ppfrance@4imprint.co.uk
Hong Kong
4imprint
Product Plus (Far East) Limited
Suites 914-915, 9th Floor
Wharf T&T Centre, Harbour City
7 Canton Road
Tsimshatsui, Kowloon
Hong Kong
Telephone +852 2301 3082
Fax +852 2724 5128
E-mail ppfe@4imprint.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
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