Interim Results

RNS Number : 8170A

4imprint Group PLC

07 August 2008

 



7 August 2008

4imprint Group plc

Interim Results for the period ended 28 June 2008.

4imprint Group plc announces today its interim results for the period ended 28 June 2008.

Highlights

•   Group sales increased to £78.12m, up 13% on half year 2007 

• Operating profit before exceptional items was £4.69m, 4% ahead of half year 2007 

•  Profit before tax was £3.41m (2007: £1.35m)

• Basic EPS were 9.22p (2007: 3.70p)

•  Interim dividend of 4.25p per share, an increase of 6% on prior half year.

• North American sales were US$80.65m, up 21% on half year 2007

• Strong performance from the End User Division, sales 16% ahead and operating profit before exceptional items 213% ahead of half year 2007

- Ends -

For further information, please contact:

Ken Minton

Chairman

4imprint Group plc                                                                                                                                  Tel. + 44 (0) 207 299 7201

Gillian Davies

Group Finance Director

4imprint Group plc                                                                                                                                  Tel. + 44 (0) 207 299 7201

Chairman's Statement

Group sales for the first half of 2008 at £78.12m were 13% ahead of the same period last year. Group operating profit before exceptional items was £4.69m; an increase of 4% on the first half 2007. After exceptional costs of £0.85m and net interest costs of £0.43m, pre tax profit was £3.41m compared with £1.35m for half year 2007. The Board has declared a dividend of 4.25p to be paid on 16 September 2008.

The tax charge was £1.09m and basic earnings per share were 9.22p compared with 3.70p for half year 2007. 

The half year total comprises two very different quarters. The first quarter saw sales improve over quarter one 2007 by only 6%, but sales in the second quarter were much stronger, at 19% over quarter two last year. Quarter one operating profit, before exceptional items, was 54% of the same period last year, but was 15% ahead of prior year in quarter two. 

The reasons for this are made clear by looking at the Divisional performances. 

(a) Direct Marketing Division

In the first half of this year, Direct Marketing Division sales were 21% over the same period in 2007. Divisional operating profit was 14% ahead of last year. These rates of growth were somewhat lower than planned, for the following reasons:

In quarter one, sales were 17% ahead of last year, due to lower sales yields from our prospecting investments. In quarter two we saw a reversal of this trend and sales advanced to 23% ahead of last year as yields increased to more normal levels. Operating profit in quarter one was 15% lower than last year reflecting the lower yields, but quarter two operating profit recovered strongly at 20% ahead of quarter two 2007. 

(b) End User Division

The End User Division had an excellent first half, with sales at £26.48m, 16% ahead of last year, and Divisional operating profit of £2.14m, 3.1 times ahead of last year's operating profit, before exceptional items, of £0.68m. 

The Manchester based business, now rebranded as Brand Addition, generated £1.0m of this £1.46m growth. This business was reorganised after the integration of the Product Source business into the Trade Division based in Blackpool. The £1.0m improvement arose largely from cost reductions made possible through this integration. It is noteworthy that the Manchester based business is now generating the equivalent operating profit on a standalone basis as it formerly did with the Product Source business included. 

The other two businesses in this Division, namely the Product Plus business based in London and the Kreyer business based in Germany, both showed substantial growth in sales and operating profit. 

(c) Trade Division 

The Trade Division had a very poor start to the year; sales in quarter one were well down on quarter one 2007, and operating profit was even more impacted, because of higher costs. Actions to address these issues were implemented during the second quarter. Notably, major reductions in manning and operating costs and changes to sales and merchandising management. The full benefits of these actions are still to be achieved, however improvements were evident in quarter two, where sales improved and operating profit was running at around a £2.0m annualised rate. However, the associated redundancy costs and inventory and trade receivables write downs gave rise to an exceptional charge of £0.85m. 

The general trading climate has impacted on the Group's Divisions in different ways:-

In the Direct Marketing Division there is no doubt that general demand is less buoyant in North America and to a degree in the UK. However, the attractiveness of the 4imprint product offering and service coupled with sustained marketing and prospecting investment is offsetting these less buoyant conditions. 

In the End User Division, as yet, the component businesses continue to benefit from a widening range of customers in our Corporate Programmes and other sectors, who find our products and services attractive. 

In the Trade Division, the poorer performance is much to do with the roll through into 2008 of the quality and supply problems of the second half of last year, coupled with higher levels of costs than planned. These issues are largely overcome, and pursuit of sales growth though new customers and products is now a priority. General market conditions in UK and Europe continue to offer plenty of opportunity for growth. 

Outlook

Group sales in July continued the trend of the second quarter, and the current order pattern is in line with this. Furthermore, as I stated earlier, there are a number of initiatives underway in the Divisions which should make additional contribution over the coming months. The Board believes that the Group will make further progress in the second half.

Ken Minton

Executive Chairman

7 August 2008

Finance Director's Report

Segment reporting 

As at the year end, the Group's results are reported in three Divisions, in accordance with the way the business is managed. 

• Direct Marketing Division
• End User Division
• Trade Division

The UK Direct Marketing business was transferred from the End User Division to the Direct Marketing Division in 2007 and prior half year comparatives have been restated accordingly.

Group results

	Half year  2008	Half year  2007	Change
	£m	£m
Group sales	78.12	69.09	+13%
Group operating profit before exceptional items	4.69	4.50	+4%
Group operating profit	3.85	1.56	+147%
Group operating profit before tax	3.41	1.35	+153%

Sales and operating profit in the End User and Direct Marketing Divisions are both ahead of prior year. Trade Division sales and operating profit before exceptional items are below prior year.

Share option charges

The Group charged £0.19m (half year 2007: £0.32m) to operating profit in accordance with IFRS 2 'Share-based payments'.

Pensions

The pension deficit on the defined benefit scheme increased to £12.66m in the period (half year 2007: £9.84m; full year 2007: £10.55m). 

The assets at 28 June 2008 were £73.58m a reduction of £7.41m since year end. This was partially offset by a reduction in liabilities of £5.30m, principally due to an increase in the discount rate to 6.7% from 6.0% at the year end. 

Exceptional items

The exceptional charge of £0.85m relates to further costs in the Trade Division in Blackpool relating to the integration in 2007, in particular, further reduction of the cost base and a re-assessment of inventory and trade receivables carrying values.

Taxation 

The taxation charge for the period is £1.09m at a rate of 32% (half year 2007: 32%, full year 2007: 32%). Cash payments due for the period are below this rate, principally due to the unwinding of the deferred tax assets.

Earnings per share

Basic Earnings per share were 9.22p (half year 2007: 3.70p; full year 2007: 8.93p).

Dividend 

The Board has declared a dividend of 4.25p, a 6% increase over prior half year. 

Cash flow

The Group's net debt and borrowings at 28 June 2008 were £7.01m (29 December 2007: £7.08m). The principal components of the cash flow movement are as follows:

	£m
Cash generated from operating profit before exceptional items	5.76
Defined benefit pension contribution	(1.00)
Cash exceptional items (2007 and 2008)	(0.87)
Operating working capital	0.31
Capital investment	(0.95)
Tax, dividends and interest	(2.67)
Net share issue/purchase	(0.55)
Exchange	0.04
Cash inflow for the half year	0.07

Balance sheet and Shareholders' funds

Equity Shareholders' funds decreased by £2.10m to £22.62m, profit for the period was £2.32m and dividends paid were £2.02m. The after tax movement in the pension deficit decreased Shareholders' funds by £2.29m and further decreases in Shareholders' funds from other items totalled £0.11m.

Exchange rates

The average US dollar exchange rate for the period for translating US profits was $1.9859 (half year 2007: $1.9827) and for Euros was 1.2876 (half year 2007: €1.4749) to the pound. The exchange rate at the balance sheet date, used to translate assets and liabilities in US Dollars, was $1.9916 (June 2007: $2.0064) and for Euros was € 1.2645 (June 2007: €1.4856).

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 limited to pension, exceptional items, deferred taxation, share based payments and inventory provisions. Full details are given in the Group's published Annual Report for the year ended 29 December 2007.

Principal risks

The Group reported in its Annual Report for the period ended 29 December 2007 that its activities expose it to a number of operational and financial risks. These principal risks, as set out in the Directors' Report and note 20 of the 2007 Annual Report, remain unchanged at the date of the interim report.

The principal risks are: Macroeconomic conditions; operational risks; changes in accounting standards, law and regulation; market competition; and potential litigation and complaints.

Gillian Davies

Group Finance Director

7 August 2008

  Operating Review 

Direct Marketing Division

	Half year 2008	Half year 2007	Full year 2007
	£'000	£'000	£'000
Sales	43,030	35,654	76,738
Operating profit	3,183	2,792	6,167

The Direct Marketing Division set out two primary objectives for the first half of 2008:

(i)    Continue to drive our strategy for strong organic growth established over the last few years in the US

        and Canadian markets; and

(ii)    Complete the integration of the UK Direct Marketing business into the Division, creating a platform

         for growth in that market using the expertise and methodologies employed in North America.

Both of these objectives have been successfully achieved. 

The North American business, based in Oshkosh, Wisconsin, generated strong growth despite a difficult trading environment. In the first half of 2008 sales in US Dollars were $80.65m (2007: $66.59m), representing a 21% increase over prior half year. Central to this growth is a continuing commitment to substantial investment in our two main marketing disciplines:

•  New customer acquisition, or prospecting, driven by a combination of catalogue mailings and internet-based marketing. Increases in prospecting costs have caused the yield on this activity to decrease slightly over prior year; however response rates remain firmly in line with expectations. In the first half of 2008 over 47,000 new customers were acquired versus 38,000 over the same period in the prior year, an increase of approximately 24%.

•  Customer retention efforts are focused around a carefully executed programme of activities designed to maximise the sales potential of the growing customer file. Key elements of the programme are the popular Blue Box™ sample mailings, catalogues and other printed materials, email and internet techniques and account management. Orders from customers who have ordered from us previously were up 30% over prior year, again in line with expectations.

The Manchester-based UK Direct Marketing business has operated independently from the End User Division since the start of the year. Considerable progress has been made, with sales 27% ahead of the first half of 2007. Response and retention rates are improving, and are running close to or better than anticipated levels. Currently, although the growth in this business is contributing to the sales growth of the whole Division, it is still in the investment phase as the groundwork is laid for expansion into the wider European market.

Underpinning the operations of all of the Division's businesses is a commitment to innovative merchandising and new product development, a keen ear for the changing needs and values required by our target markets, and an unwavering dedication to providing the best customer service experience in the industry. 

Operating profit from all activities increased 14% over prior half year. The return on sales was down slightly on the same period prior year reflecting the minor decrease in prospecting yield in the North American market and the investment required in the growth phase of the UK Direct Marketing business. The cash generative nature of the Direct Marketing business model enables these investments to be absorbed in the operating results. 

  Operating Review (continued)

End User Division 

	Half year 2008	Half year 2007	Full year 2007
	£'000	£'000	£'000
External and inter divisional sales	26,484	22,885	50,846
External sales	26,286	22,683	50,383
Operating profit before exceptional items	2,139	684	2,880
Operating profit /(loss)	2,139	(515)	1,099

The End User Division comprises three separate businesses, each with its own management team, based in Manchester, London and Germany. The core activity of this group of businesses is the distribution of promotional items principally to large corporate clients using innovative product design, project management capabilities and providing our clients with technology based solutions. Although the businesses operate largely independently, the specialist skills within each business and their geographical locations are complementary to each other in meeting the needs of our clients.

Taking each of these businesses in turn:

(a) Brand Addition (Manchester)

This business is in its first full year of operating on a standalone basis following its reorganisation in 2007. The business was successfully rebranded in February 2008 and now operates under the name of Brand Addition. This rebranding has provided sharper focus, and greater awareness in the market place of the range of products and services supplied by this business. 

Brand Addition is the largest provider of out-sourced promotional product marketing programmes in the UK. Sales, excluding the underperforming contract terminated in May 2007, were slightly ahead of prior year and the financial and operational benefits of the reorganisation continue to be realised as planned. 

The business now successfully operates on a much lower cost base and the focus on excellent delivery to our clients through a single business stream has resulted in significant improvement in operating profit from a breakeven position in the prior half year period.

(b) Product Plus International (London)
Sales in the period were 53% ahead of the comparable period in 2007 benefitting from substantial growth from some of our existing customers and the addition of new client business. Gross margins were maintained while other costs increased somewhat, reflecting the increased sales opportunities achieved.

(c) Kreyer (Germany)
The services provided by this business are similar to those of Brand Addition, offering value added out-sourced promotional product marketing programmes to our clients and working in partnership with the Manchester business where appropriate.
Over the past three years this business has become a much greater part of the Division as sales continue to increase, benefitting from expanding relationships with our existing clients. Sales were 40% ahead of prior half year. To meet the needs of this fast growing business additional resources have been implemented and operating profit for the half year was 33% ahead of prior half year. 

  Operating Review (continued)

Trade Division 

	Half year 2008	Half year 2007	Full year 2007
	£'000	£'000	£'000
External and inter divisional sales	10,347	13,259	23,727
External sales	8,799	10,751	19,702
Operating profit before exceptional items	239	2,027	3,334
Operating (loss)/profit	(607)	283	(158)

The Trade Division had a difficult first half. Quarter one started slowly, with sales well down on the same period last year when the business was based at two locations, Manchester and Blackpool. Furthermore, costs were considerably higher than planned with manning levels and overtime costs inflated, due to the 'carry over' of problems from the integration of the Manchester business into Blackpool, during the second half of last year. As a result quarter one traded at a loss. 

These issues were addressed as follows:-

(a) Residual problems of consistency of customer service and quality were rectified; these issues had been

       holding back our sales opportunities. 

(b) Sales resources have been strengthened and a new Divisional Sales and Marketing Director has just

      been appointed. Furthermore a new Divisional Merchandise Director was appointed in early July 2008.

      Both Directors have previous experience of this business sector. 

In addition, a new Divisional Finance Director was appointed in February. 

(c)  Costs have been significantly reduced and total manning levels have been reduced by 10% compared

       with the end of 2007 to below 300, which is below the original planned level. Total savings are equal to

       over £1m per annum. 

As a result of these actions taken during the first quarter, the performance in quarter two improved considerably. Sales increased over quarter one and the actions to cut costs made a modest contribution. Quarter two delivered profits at an annual rate of around £2m per annum. 

  Condensed Consolidated Income Statement (unaudited)

		Half year 2008	Half year 2007	Full year 2007
	Note	£’000	£’000	£’000
Sales – continuing operations	3	78,115	69,088	146,823
Operating expenses		(74,269)	(67,529)	(143,076)
Operating profit	3	3,846	1,559	3,747
Operating profit before exceptional items and share grant	3	4,692	4,502	10,160
Exceptional items	4	(846)	(2,943)	(5,273)
Share grant	3	-	-	(1,140)
Operating profit	3	3,846	1,559	3,747
Finance costs		(445)	(214)	(458)
Finance income		12	5	13
Profit before tax		3,413	1,350	3,302
Taxation	5	(1,092)	(432)	(1,072)
Profit attributable to equity Shareholders		2,321	918	2,230
Earnings per share
Basic	6	9.22p	3.70p	8.93p
Diluted	6	8.98p	3.56p	8.65p
Dividends		£’000	£’000	£’000
Dividends paid in the period	7	2,020	1,549	2,557
Dividends per share declared - Interim	7	4.25p	4.00p	4.00p
- Final	7			8.00p

Condensed Statement of Recognised Income and Expense (unaudited)

		Half year 2008	Half year 2007	Full year 2007
		£'000	£'000	£'000
Profit for the period		2,321	918	2,230
Exchange gains/(losses) offset in reserves		199	(123)	59
Actuarial (losses)/gains taken to reserves net of tax		(2,286)	5,461	3,886
Net (losses)/gains not recognised in income statement		(2,087)	5,338	3,945
Total recognised income for the period		234	6,256	6,175

Condensed Consolidated Balance Sheet (unaudited)

		At 28 June 2008	At 30 June 2007	At 29 Dec 2007
	Note	£’000	£’000	£’000
Non current assets
Property, plant and equipment		10,205	10,266	10,240
Goodwill		9,084	9,084	9,084
Intangible assets		1,511	1,596	1,459
Investments		8	7	8
Deferred tax assets		4,653	4,433	4,334
		25,461	25,386	25,125
Current assets
Inventories		10,219	10,001	9,335
Trade and other receivables		30,265	26,370	31,156
Cash and cash equivalents		6,632	2,545	2,744
		47,116	38,916	43,235
Current liabilities
Trade and other payables		21,873	21,000	21,890
Current tax		690	909	322
Deferred consideration		1,090	-	1,060
Borrowings		7,644	5,792	3,821
Provisions		-	370	-
		31,297	28,071	27,093
Net current assets		15,819	10,845	16,142
Non current liabilities
Retirement benefit obligations	9	12,662	9,842	10,549
Deferred consideration		-	1,030	-
Borrowings		6,000	-	6,000
		18,662	10,872	16,549
Net assets		22,618	25,359	24,718
Shareholders’ equity
Share capital	10	9,846	9,798	9,823
Share premium reserve	10	38,016	37,886	37,943
Capital redemption reserve	10	208	208	208
Cumulative translation differences	10	(1,491)	(1,873)	(1,690)
Retained earnings	10	(23,961)	(20,660)	(21,566)
Total equity		22,618	25,359	24,718

Condensed Consolidated Cash Flow Statement (unaudited)

				Half year		Half year		Full year
				2008		2007		2007
		Note		£'000		£'000		£'000
Cash flows from operating activities - continuing operations
Cash generated from operations		8		4,203		618		782
Tax paid				(267)		(903)		(2,734)
Finance income				12		74		82
Finance costs				(393)		(173)		(406)
Net cash generated from/(used in) operating activities				3,555		(384)		(2,276)
Cash flows from investing activities
Acquisition of subsidiary				-		(266)		(266)
Purchases of property, plant and equipment				(625)		(559)		(1,220)
Purchases of intangible assets				(352)		(363)		(672)
Proceeds from sale of property, plant and equipment				22		-		-
Net cash used in investing activities				(955)		(1,188)		(2,158)
Cash flows from financing activities
Proceeds from new borrowings				-		-		6,000
Proceeds from issue of ordinary shares				96		161		243
Purchase of own shares				(652)		-		-
Dividends paid to Shareholders				(2,020)		(1,549)		(2,557)
Net cash (used in)/generated from financing activities				(2,576)		(1,388)		3,686
Net movement in cash and bank overdrafts				24		(2,960)		(748)
Cash and bank overdrafts at beginning of the period				(1,077)		(249)		(249)
Exchange gains/(losses) on cash and bank overdrafts				41		(38)		(80)
Cash and bank overdrafts at end of the period				(1,012)		(3,247)		(1,077)
Analysis of cash and bank overdrafts
Cash at bank and in hand				6,632		2,545		2,744
Bank overdrafts				(7,644)		(5,792)		(3,821)
				(1,012)		(3,247)		(1,077)

Notes to the Interim Financial Statements

for the period ended 28 June 2008

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 financial statements were authorised for issue in accordance with a resolution of the Directors on 6 August 2008.

These condensed consolidated interim financial statements do not comprise statutory accounts within the meaning of Section 240 of the Companies Act 1985. Statutory accounts for the year ended 29 December 2007 were approved by the Board of Directors on 4 March 2008 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 237 of the Companies Act 1985. 

The financial information contained in this report is unaudited.

2 Basis of preparation 

These condensed consolidated interim financial statements for the half year ended 28 June 2008 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 29 December 2007, which have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union. 

The accounting policies applied in these condensed consolidated interim financial statements are consistent with those of the annual financial statements for the year ended 29 December 2007, as described in the annual financial statements. The adoption of standards, amendments and interpretations effective in 2008 has not led to any changes in the Group's accounting policies. 

3 Segmental analysis

At 28 June 2008, the Group is reported in three primary business segments: 

Sales	Gross sales			Inter segment sales			External sales
	Half year 2008 £’000	Half  year (restated) 2007 £’000	Full year 2007 £’000	Half year 2008 £’000	Half year (restated) 2007 £’000	Full year 2007 £’000	Half year 2008 £’000	Half year (restated) 2007  £’000	Full year 2007 £’000
Direct Marketing Division	43,030	35,654	76,738	-	-	-	43,030	35,654	76,738
End User Division	26,484	22,885	50,846	(198)	(202)	(463)	26,286	22,683	50,383
Trade Division	10,347	13,259	23,727	(1,548)	(2,508)	(4,025)	8,799	10,751	19,702
	79,861	71,798	151,311	(1,746)	(2,710)	(4,488)	78,115	69,088	146,823

During 2007 the UK Direct Marketing business was transferred to the Executive control of the Direct Marketing Division (previously called the North American Division). Its results for 2007 have been included in this Division and 2007 half year results have been restated accordingly.

Inter segment sales are made on an arms-length basis. 

  Notes to the Interim Financial Statements

for the period ended 28 June 2008

3 Segmental analysis (continued)

Operating profit	Operating profit/(loss) before exceptional items			Exceptional items and share grant			Operating profit/(loss)
	Half year 2008 £’000	Half year (restated) 2007 £’000	Full year 2007 £’000	Half year 2008 £’000	Half year (restated) 2007 £’000	Full year 2007 £’000	Half year 2008 £’000	Half year (restated) 2007 £’000	Full year 2007 £’000
Direct Marketing Division	3,183	2,792	6,167	-	-	-	3,183	2,792	6,167
End User Division	2,139	684	2,880	-	(1,199)	(1,781)	2,139	(515)	1,099
Trade Division	239	2,027	3,334	(846)	(1,744)	(3,492)	(607)	283	(158)
Head office	(743)	(524)	(1,331)	-	-	(1,140)	(743)	(524)	(2,471)
Operating profit before defined benefit pension and share option charges	4,818	4,979	11,050	(846)	(2,943)	(6,413)	3,972	2,036	4,637
Defined benefit pension credit/(charge)	64	(157)	(295)	-	-	-	64	(157)	(295)
Share option charge	(190)	(320)	(595)	-	-	-	(190)	(320)	(595)
	4,692	4,502	10,160	(846)	(2,943)	(6,413)	3,846	1,559	3,747

The overheads and infrastructure costs of the Manchester site are shown entirely in the End User Division. These overheads supported the Manchester site, including the Manchester based trade business until its relocation in the second half of 2007. 

The share grant charge in 2007 represents a one off award of 200,000 shares to the Chairman in August 2007.

Net finance costs totalling £433,000 (half year 2007: £209,000, full year 2007: £445,000), and taxation charge of £1,092,000 (half year 2007: £432,000, full year 2007: £1,072,000) cannot be separately allocated to individual segments. 

4 Exceptional items

	Half year	Half year	Full year
	2008	2007	2007
	£'000	£'000	£'000
Trade Division integration costs	(846)	(1,744)	(3,492)
End User Division reorganisation costs	-	(829)	(980)
Contract exit costs	-	(370)	(801)
	(846)	(2,943)	(5,273)

The Trade Division integration costs in 2008 include additional costs of reorganisation of the cost base, and provisions of £650,000 for issues on inventory and receivables recoverability attributable to the 2007 integration. Trade Division integration costs and End User Division reorganisation costs, in 2007, 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 in 2007 represent the costs of exiting an onerous customer contract in the End User Division, including a £500,000 inventory write down.

5 Taxation

The taxation charge for the period to 28 June 2008 has been calculated at 32%, (half year 2007: 32%; full year 2007: 32%) of the profit before tax for the period.

  Notes to the Interim Financial Statements

for the period ended 28 June 2008

6 Earnings per share

Basic and diluted

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

	Half year	Half year	Full year
	2008	2007	2007
	£'000	£'000	£'000
Profit for the financial period	2,321	918	2,230
	Number 000's	Number 000's	Number 000's
Basic weighted average number of shares	25,187	24,784	24,969
Dilutive potential ordinary shares - employee share options	675	995	802
Diluted weighted average number of shares	25,862	25,779	25,771
Basic earnings per share	9.22p	3.70p	8.93p
Diluted earnings per share	8.98p	3.56p	8.65p

The basic weighted average excludes shares held in the employee share trust. The effect of this is to reduce the average by 400,000 (half year 2007: 665,000; full year 2007: 501,000).

7 Dividends

The interim dividend for 2008 of 4.25p per ordinary share (interim 2007: 4.00p, final 2007: 8.00p) will be paid on 16 September 2008 to ordinary Shareholders on the register at the close of business on 15 August 2008.

Dividends paid in the period totalled £2,020,000 (period to 30 June 2007: £1,549,000, period to 29 December 2007: £2,557,000).

8 Cash generated from operations

	Half year	Half year	Full year
	2008	2007	2007
	£’000	£’000	£’000
Operating profit	3,846	1,559	3,747
Adjustments for:
Depreciation charge	653	590	1,206
Amortisation of intangibles	292	371	688
Exceptional non cash items	665	678	1,253
Exceptional accrual utilised	(688)	-	-
Share option charge	190	320	595
Share grant	-	-	1,140
IAS 19 pension (credit)/charge for defined benefit scheme	(64)	157	295
Contributions to defined benefit pension scheme	(998)	(950)	(1,900)
Changes in working capital:
Increase in inventories	(997)	(1,754)	(1,426)
Decrease/(increase) in trade and other receivables	568	(2,818)	(7,537)
Increase in trade and other payables	736	2,465	2,721
Cash generated from operations	4,203	618	782

  Notes to the Interim Financial Statements

for the period ended 28 June 2008

9 Employee pension schemes

The Group operates defined contribution 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 operates a 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 2007 and this has been updated on an approximate basis to 28 June 2008.

The principal assumptions made by the actuaries at 28 June 2008 were:

		Half year		Half year		Full year
		2008		2007		2007
Rate of increase in pensionable salaries		5.0%		4.2%		4.3%
Rate of increase in pensions in payment and deferred pensions		4.0%		3.2%		3.3%
Discount rate		6.7%		6.0%		6.0%
Inflation assumption		4.0%		3.2%		3.3%
Expected return on scheme assets		7.4%		6.6%		7.0%

The mortality assumptions adopted at 28 June 2008 have not changed from those at 29 December 2007.

Analysis of the movement in the balance sheet liability:

		Half year		Half year		Full year
		2008		2007		2007
		£'000		£'000		£'000
At start of period		10,549		18,436		18,436
Total (credited)/ charged in the income statement		(64)		157		295
Contributions paid		(998)		(950)		(1,900)
Actuarial gain on the scheme liabilities		(5,919)		(8,806)		(9,524)
Actuarial loss on scheme assets		9,094		1,005		3,242
At end of period		12,662		9,842		10,549

  Notes to the Interim Financial Statements

for the period ended 28 June 2008

10 Consolidated statements of changes in Shareholders' equity 

	Share	Share premium	Capital redemption	Cumulative translation	Retained earnings
					Own	Profit	Total
	capital	reserve	reserve	differences	shares	and loss	Equity
	£’000	£’000	£’000	£’000	£’000	£’000	£’000
At 30 December 2007	9,823	37,943	208	(1,690)	(751)	(20,815)	24,718
Profit for the period						2,321	2,321
Exchange adjustments net of tax				199			199
Shares issued	23	73					96
Own shares utilised					701	(701)	-
Own shares purchased					(469)		(469)
Employee share options taken to reserves						168	168
Deferred tax on employee share options taken to reserves						(109)	(109)
Actuarial losses taken to reserves						(3,175)	(3,175)
Deferred tax on actuarial losses taken to reserves						889	889
Dividends						(2,020)	(2,020)
At 28 June 2008	9,846	38,016	208	(1,491)	(519)	(23,442)	22,618

	Share	Share premium	Capital redemption	Cumulative translation	Retained earnings
					Own	Profit	Total
	capital	reserve	reserve	differences	shares	and loss	Equity
	£’000	£’000	£’000	£’000	£’000	£’000	£’000
At 31 December 2006	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 taken to reserves						320	320
Deferred tax on employee share options taken to reserves						95	95
Actuarial gains taken to reserves						7,801	7,801
Deferred tax on actuarial gains taken to reserves						(2,340)	(2,340)
Dividends						(1,549)	(1,549)
At 30 June 2007	9,798	37,886	208	(1,873)	(1,398)	(19,262)	25,359

 Notes to the Interim Financial Statements

for the period ended 28 June 2008

11 Share based payments

Share options are granted to Executive Directors and Senior Management and in addition a SAYE scheme is available to all UK and US employees. The exercise price of options issued after 7 November 2002 to Executive Directors and 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 not been exercised by 30 December 2007) is determined using either the Monte Carlo valuation model or the Binomial model as appropriate 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
		2008		2007		2007
		£'000		£'000		£'000
Charge resulting from spreading the fair value of options granted after 7 November 2002, which have not been exercised by 30 December 2007, over the expected vesting period of the options		190		320		595

The Group has no legal or constructive obligation to repurchase or settle the options in cash.

12 Capital commitments

The Group had capital commitments of £104,000 contracted but not provided for in these financial statements (30 June 2007: £nil, 29 December 2007: £nil).

13 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 4.2.7 and 4.2.8 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 2007. A list of current Directors is maintained on the Group website: www.4imprint.co.uk in the investor relations section.

By order of the Board

Ken Minton		Gillian Davies
Executive Chairman		Group Finance Director

7 August 2008

4imprint Group plc Group office 7/8 Market Place  London W1W 8AG Telephone + 44 (0)207 299 7201 Fax + 44 (0)207 299 7209 E-mail [e-mail]
Direct Marketing Division USA 4imprint 101 Commerce Street Oshkosh WI 54901, USA Telephone [phone] Fax [phone] E-mail [e-mail]	End User Division UK Brand Addition Broadway Trafford Wharf Road Manchester M17 1DD Telephone [phone] Fax [phone] E-mail [e-mail]	Trade Division UK SPS (EU) Limited  Neptune House Sycamore Trading Estate Squires Gate Lane Blackpool Lancashire FY4 3RL Telephone [phone] Fax [phone] E-mail [e-mail]
UK 4imprint Broadway Trafford Wharf Road Manchester M17 1DD Telephone [phone] Fax [phone] E-mail [e-mail]	Germany Kreyer Promotion Service Heydastraße 13 D-58093 Hagen Germany Telephone [phone] Fax [phone] E-mail [e-mail]
	UK Product Plus International Unit 9 South Bank Business Centre Ponton Road London SW8 5BL Telephone [phone] Fax [phone] E-mail [e-mail]
	Hong Kong Product Plus Far East Suites 914-915, 9th Floor, Wharf T & T Centre, Harbour City 7 Canton Road Tsimshatshui Kowloon, Hong Kong Telephone + 852 2301 3082 Fax + 852 2724 5128 E-mail [e-mail]
	France Product Plus France  164 bis rue d'Aguesseau 92100 - Boulogne Billancourt France Telephone [phone] Fax [phone] E-mail [e-mail]

 

END

 

 

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