Interim Results

RNS Number : 8011W
4imprint Group PLC
04 August 2009
 










4 August 2009



4imprint Group plc

Interim Results for the period ended 27 June 2009.



4imprint Group plc announces today its interim results for the period ended 27 June 2009.


Summary



  • Group revenue increased to £80.96m, up 4% on half year 2008 


  • Direct Marketing Division revenue was £53.71m (half year 2008: £43.03m)


  • Operating profit before pensions, share options and exceptional items was £1.52m (half year 2008: £4.82m)


  • Operating profit was £0.47(half year 2008: £3.85m) 


  • Net debt at 27 June 2009 was £7.91m (half year 2008: £7.01m)


  • Interim dividend maintained at 4.25p per share 





- Ends -



For further information, please contact:


Ken Minton

Chairman

4imprint Group plc

Tel. + 44 (0) 20 7299 7201


Gillian Davies

Group Finance Director

4imprint Group plc

Tel. + 44 (0) 20 7299 7201




Executive Chairman's Statement 


Group Summary


Group sales for the first half of 2009, at £80.96m, were 4% ahead of the same period last year. Group operating profit before pension charge, share option charge and exceptional items at £1.52m compares with £4.82m for the same period last year. 


Pre tax profit at £0.29m compares with £3.41m last year. The Board has declared a maintained dividend of 4.25p per share, to be paid on 15 September 2009. Net debt at 27 June 2009 was £7.91m. 


As Shareholders will be aware from the quarterly trading statements issued by the Group, the first quarter of 2009 was particularly weak, as the depressed economic climate adversely impacted sales in all three Divisions. However, sales in quarter two were higher than quarter one in all three Divisions, but particularly Direct Marketing in the USA where more stable market conditions seem to be emerging. 


Group operating profit was also depressed in quarter one though cost reduction programmes implemented across all Divisions partly mitigated the impact on profitability of the lower sales volume. In quarter two, these costs reduction measures made a stronger impact and thus together with an improved sales performance, quarter two Group operating profit was stronger than quarter one though below the level achieved in quarter two 2008. 


The first half was characterised by a tight control of costs, working capital and debt and at the end of the first half of 2009 net debt was £7.91m. 


Divisional Performances - Summary


(a) Direct Marketing Division


Sales for the first half of 2009 at £53.71m were 25% ahead of the £43.03m achieved in the first half of 2008. In US dollars sales were 6% below the first half of 2008. 


Sterling operating profit for the first half of 2009 was £1.08m, 66% below the same period prior year. The weaker performance was a reflection of the following factors:


(i)

Although total orders achieved in the first half of 2009 were very similar in numbers to the first half of 2008, the average order value was 7% below 2008.


(ii)

The yield of new customers from investment in catalogue prospecting was lower than 2008.


(iii)

Gross margin percentage was slightly below that of 2008 reflecting market weakness and general trading pressure.


The effect of these factors was particularly felt in the first quarter which made a loss of £0.76m. However, in quarter two profitability was significantly stronger and the Division delivered operating profit of £1.84m. Furthermore, tight control of costs helped to offset weaker trading. 


(b) End User Division 


Total Division sales in the first half of 2009 were 23% below the same period 2008 and operating profit before exceptional items at £1.36m was 37% below. 


The three businesses in this Division all traded profitably in the first half, but at lower levels than 2008, reflecting the difficult environment (particularly in Germany). However, early implementation of substantial cost reduction initiatives have offset to a significant degree the impact of weak trading on operating profit.

  

(c) Trade Division 


The Trade Division delivered a first half loss of £0.16m compared to £0.24m profit before exceptional items in the same period in the prior year. However, sales were 19% below 2008 reflecting the weakness of the UK market. The impact of lower sales on profitability was offset by significant overhead cost reduction which should equip the Division to take advantage of any upturn in demand.


Outlook


While uncertainty in the markets served by the Group remains, the Board believes that the measures implemented at the start of the year to control costs and cash flow, together with initiatives underway to develop sales, should underpin progress in the second half. 






Ken Minton

Executive Chairman

4 August 2009



Finance Director's Report


Group results



Half year

2009

Half year

2008


£m

£m

Group revenue

80.96

78.12

Group operating profit before pension, share options and exceptional items

1.52

4.82

Group operating profit

0.47

3.85

Group profit before tax

0.29

3.41


Revenue for the Group is 4% ahead of prior year, however at constant currency revenue is 14% below prior year. Revenue is below prior year (in currency) in all Divisions.


Operating profit before defined benefit pension charge, share option charge and exceptional items is £1.52m, compared to £4.82m in half year 2008. 


Operating profit before exceptional items in all Divisions is below prior year. In the End User and Trade Divisions the impact of lower sales revenue is partly mitigated by cost savings. In the Direct Marketing Division the reduction is principally due to the impact of lower sales and an increased cost of marketing with lower yield than prior years


Head office costs at £0.75m were in line with prior year.


Share option charge


The Group charged £0.29m (half year 2008: £0.19m) to operating profit in accordance with IFRS 2 'Share-based payments'.


The charge is mainly a non cash item and principally relates to the Executive Chairman and Senior Management LTIP schemes which are unlikely to meet their vesting condition. 


Pensions


The pension deficit on the defined benefit scheme increased to £22.07m in the period (half year 2008: £12.66m; full year 2008: £16.94m). 


The assets at 27 June 2009 were £66.00m, a reduction of £0.23m since the year end. There was an increase in liabilities of £4.90m to £88.07m, principally due to a change in discount rate. 


The defined benefit pension charge was £0.62m (half year 2008: £0.06m credit). The IAS 19 charge for 2009 is calculated with reference to asset and liability values at 27 December 2008. The expected return on assets has reduced (half year 2009: £2.03mhalf year 2008: £2.82m) due to lower asset values and lower expected return on assets, the interest charge on liabilities (half year 2009: £2.63mhalf year 2008: £2.72m) has decreased only marginally as at 27 December 2008 the decrease in the value of the liability was offset by an increase in the discount rate. 


Cash paid into the scheme was £1.22m (half year 2008: £1.00m).


Exceptional items


The exceptional charge of £0.14m in the End User Division related to further reduction of the cost base due to the worsening of economic conditions at the start of 2009.

  Taxation 


The taxation charge for the period was £86,000 at a rate of 30% (half year 2008: 32%, full year 2008: 30%).


Net cash tax refund in the period was £85,000.


Earnings per share


Basic earnings per share were 0.79p (half year 20089.22p; full year 200814.06p) (see note 7).


Dividend 


The Board has declared a dividend of 4.25p (half year 2008: 4.25p)


Cash flow


The Group's net debt at 27 June 2009 was £7.91(28 June 2008: £7.01m, 27 December 2008: £4.19m). The principal components of the cash flow movement are as follows:



£m

Cash generated from operating profit before exceptional items

2.55

Defined benefit pension contribution 

(1.21)

Cash exceptional items 

(0.52)

Operating working capital 

0.01

Capital investment  

(1.69)

Finance lease funded capital investment

(0.70)

Tax, dividends and interest

(2.13)

Exchange

(0.03)

Movement in net debt for the half year

(3.72)


Net debt of £7.91m included a loan of £2.18m relating to the construction of the new US distribution centre, which became fully operational in quarter one 2009, and a finance lease of £0.59m for a new US telephone system, also implemented in quarter one 2009.


Therefore, at 27 June 2009, the Group had available headroom on its UK and US facilities of £6.84m, together with cash balances of £1.95m; in total funding available of £8.79m. 


The £10m facilities with the Group's UK banker, Lloyds TSB Bank plc, which are due to expire on 31 December 2009 have been extended to 30 September 2010 on the same terms. Discussions will conclude before the end of  the year to agree new longer term facilities. 


Balance sheet and Shareholders' funds


Equity Shareholders' funds decreased by £7.15m to £14.41m, profit for the period was £0.20m and dividends paid were £2.02m. The after tax movement in the pension deficit decreased Shareholders' funds by £4.12m and further decreases in Shareholders' funds from other items, principally exchange, totalled £1.21m.


Exchange rates


The average US dollar exchange rate for the period for translating US profits was $1.4902 (half year 2008: $1.9859and for Euros was 1.1664 (half year 20081.2876) to the pound.  The exchange rate at the balance sheet date, used to translate assets and liabilities in US dollars, was $1.6516 (June 2008: $1.9916) and for Euros was €1.1739 (June 2008: €1.2645).


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 pensions, deferred taxation, share-based payments, inventory provisions, trade receivables provisions and exceptional items. Full details are given in the Group's published Annual Report for the year ended 27 December 2008.


Principal risks


The Group reported in its Annual Report for the period ended 27 December 2008 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 2008 Annual Reportremain unchanged at the date of the interim report.


The principal risks are: macroeconomic conditions; market competitors and new products; operational risks; purchase of material and services; potential litigation and complaints; changes in law or regulation; and changes in accounting standards. 



Gillian Davies

Group Finance Director

4 August 2009

  Operating Review 


Direct Marketing Division



Half year

2009

Half year

2008

Full year

2008


£'000

£'000

£'000

External revenue

53,712

43,030

96,663

Operating profit

1,077

3,183

6,466


The Direct Marketing Division provides promotional products to customers in the USA and Canada from its OshkoshWisconsin location and to the UK and Ireland from ManchesterUK


In North America, the Division's total revenue in US dollars in the first half of 2009 was $76.1m, compared to $80.6m in 2008. Direct Marketing sales, which comprise 96% of that total revenue, were 4% lower than prior year, whereas the small Corporate Programmes business saw its sales decline by a third over the same timeframe.


In the Direct Marketing business the sales decline against prior year was caused by lower average order values, which are to be expected in a difficult economy. Encouragingly, however, the number of orders received were up 1% over a particularly robust, pre-downturn first half in 2008. This compares to industry surveys indicating that promotional product sales in the United States were down by more than 20% in the first quarter of 2009. This validates the strategy outlined by the Board to continue to invest in prospecting to capture market share in a difficult trading environment, thereby positioning the business for strong future growth when the economy improves.


Prospecting for new customers in the current climate produces a yield that is well below historical levels, due to a decrease in response rates and average order values as customers are cautious with their own spending. However, the prospecting investment continues to generate a profit in the year in which it is incurred. In the first half of 2009 over 45,000 new customers were acquired, and the sharp reductions in response rate and average order value that were seen late in 2008 and in early 2009 have since stabilised.


Orders from customers who have ordered from us previously were up 6.4% over the first half of 2008, driven by our Blue Box™ marketing programme and an expanding product range marketed via the web and speciality catalogues. At the end of the first quarter of 2009 orders from this segment were up 5.4% over the same period in 2008, indicating an improving trend in the second quarter.


In February 2009, construction was completed of a new 100,000 sq. ft. distribution/fulfilment centre for the US business. This multi-functional facility provides significantly increased capacity to support a broad range of initiatives complementary to the growth plans of the business, including the development of our in-house embroidery operation, fulfilment of our expanding Blue Box mailings and other marketing plans, and enhancement of our existing Corporate Programme and sample fulfilment capabilities. 


The UK Direct Marketing business is in its second full year of operating independently, working to develop market share and build a platform for future growth. Orders received in the first half of 2009 ended 5.3% above prior year. The Manchester team launched its first 'Euro-based' web presence, serving Ireland, in early July 2009.


The reduction in operating profit for the Direct Marketing Division at the half year was principally a consequence of the decreased yield on our prospecting investment in the North American market. However, the continued expansion of the customer file and our ability to retain customers gives us confidence that the business is outperforming the industry in general. The working capital and cash generation characteristics of the business remain favourable, and management is actively managing costs, leaving the Direct Marketing Division well positioned for future growth when the economy improves.



  Operating Review (continued)


End User Division 



Half year

2009

Half year

2008

Full year

2008


£'000

£'000

£'000

External and inter divisional revenue

20,389

26,484

54,968

External revenue

20,103

26,286

54,647

Operating profit before exceptional items 

1,356

2,139

4,721

Operating profit 

1,216

2,139

4,138


The End User Division comprises three businesses, which supply promotional products for use in consumer promotions and corporate marketing programmes. The Division provides product design, logistic and other value added services to a target market of medium to large corporate enterprises, principally through contracted or preferred supplier relationships.


Total sales in the first half of 2009 were 23below prior year and operating profit before exceptional items was £1.36m, 37below prior year. This has been achieved in a difficult trading environment by focussing on three core objectives:


1.

Retaining current customers and adding to the customer portfolio

2.

Continuing to adapt the cost base to any significant change in sales levels

3.

Developing skills and services to position the Division for future growth. 


Taking each business in turn:

 

Brand Addition (Manchester)

Sales in the period were 31% below prior year due to lower sales to the same principal customers. Further cost reductions were implemented in the first quarter and this has mitigated the impact of the lower sales on profitability. Operating profit before exceptional items was 32% below prior year. New customers have been added during 2009. 


Product Plus International (London)

Sales in the period were 10% below prior year, with lower activity from existing customers offset by sales to new customers gained at the end of 2008. Operating profit was 33% below prior year due to lower sales and the impact, in the first two months, of the strengthening of the US dollar on the cost of imported goods ordered in the prior quarter.


Kreyer (HagenGermany)

In Sterling, sales in the period were 22% below prior year as a result of lower volumes across all major customers. Operating profit was 53% below prior year due to a combination of the lower sales and pressure on margins which were partly mitigated by a cost reduction exercise in the first quarter. 


Each business has remained cash generative and in total, cash generated was more than double operating profit as a result of working capital control.


To allow the Division to strengthen its customer proposition and to develop business opportunities, it will operate under the single brand name of Brand Addition from 1 January 2010. 



  Operating Review (continued)


Trade Division 



Half year

2009

Half year

2008

Full year

2008


£'000

£'000

£'000

External and inter divisional revenue

8,347

10,347

19,764

External revenue

7,146

8,799

16,775

Operating (loss)/profit before exceptional items 

(164)

239

(38)

Operating loss 

(164)

(607)

(2,831)


The Trade Division is based in Blackpool. It is one of the largest promotional and advertising product trade supply companies in the UK, utilising its capabilities in specialist manufacturing, printing and worldwide sourcing of products.


During the first half of 2009, the Division has continued to be adversely affected by the significant economic downturn which commenced during the fourth quarter of 2008. This has resulted in lower levels of business activity and increased competitiveness in pricing and service levels. Although the improvements implemented by the Division during 2008 have enabled it to respond to these pressures, the market remains challenging.


As a result of these factors, total sales in the Division were 19% below prior year in the first half. 


The Division made a loss in the half year of £0.16m However, following a loss in the first quarter, it achieved a modest profit in the second quarter due to higher levels of sales. The impact of cost reduction undertaken in 2008 has mitigated the impact of lower sales and total overhead costs were £0.84m below half year 2008. 


Divisional management continues to focus on driving through improvements in sales, marketing and production to build on the progress made in 2008.


A modest of amount of cash was absorbed into working capital at the half year, in line with the seasonality of the business. 




  Condensed Consolidated Income Statement (unaudited)




Half year

2009

Half year

2008

Full year

2008


Note

£'000

£'000

£'000

Revenue

4

80,961

78,115

168,085

Operating expenses


(80,495)

(74,269)

(162,296)

Operating profit

4

466

3,846

5,789

Operating profit before exceptional items 

4

606

4,692

9,342

Exceptional items

5

(140)

(846)

(3,553)

Operating profit

4

466

3,846

5,789

Finance income


1

12

37

Finance costs


(181)

(445)

(756)

Profit before tax


286

3,413

5,070

Taxation 

6

(86)

(1,092)

(1,520)

Profit attributable to equity Shareholders


200

2,321

3,550






Earnings per share





Basic 

7

0.79p

9.22p

14.06p

Diluted 

7

0.78p

8.98p

13.67p


Dividends


£'000

£'000

£'000

Dividends paid in the period


2,025

2,020

3,090

Dividends per share declared - Interim

8

4.25p

4.25p

4.25p

                - Final

8

-

-

8.00p


All operations are continuing operations in the current and prior periods. 


Condensed Statement of Recognised Income and Expense (unaudited)




Half year

2009

Half year

2008

Full year

2008



£'000

£'000

£'000

Profit for the period


200

2,321

3,550

Exchange (losses)/gains offset in reserves net of tax


(1,425)

199

2,841

Actuarial losses taken to reserves net of tax


(4,123)

(2,286)

(6,336)

Net losses not recognised in income statement


(5,548)

(2,087)

(3,495)

Total recognised (expense)/income for the period 


(5,348)

234

55



  

Condensed Consolidated Balance Sheet (unaudited)



At

27 June 

2009

At

28 June 

2008

At

27 Dec

2008


Note

£'000

£'000

£'000

Non current assets





Property, plant and equipment


13,321

10,205

12,548

Goodwill


9,084

9,084

9,084

Intangible assets


1,707

1,511

1,630

Investments


9

8

11

Deferred tax assets


7,319

4,653

5,861



31,440

25,461

29,134

Current assets





Inventories


8,248

10,219

8,449

Trade and other receivables


24,353

30,265

28,854

Cash and cash equivalents

10

1,948

6,632

4,411



34,549

47,116

41,714

Current liabilities





Trade and other payables


(19,503)

(21,873)

(23,601)

Current tax


(150)

(690)

(151)

Deferred consideration


-

(1,090)

-

Finance leases

10

(118)

-

-

Borrowings

10

(6,307)

(7,644)

-



(26,078)

(31,297)

(23,752)

Net current assets


8,471

15,819

17,962

Non current liabilities





Retirement benefit obligations

9

(22,071)

(12,662)

(16,937)

Finance leases

10

(468)

-

-

Borrowings

10

(2,967)

(6,000)

(8,600)



(25,506)

(18,662)

(25,537)

Net assets


14,405

22,618

21,559






Shareholders' equity





Share capital

11

9,939

9,846

9,846

Share premium reserve

11

38,016

38,016

38,016

Capital redemption reserve

11

208

208

208

Cumulative translation differences

11

(274)

(1,491)

1,151

Retained earnings

11

(33,484)

(23,961)

(27,662)

Total equity


14,405

22,618

21,559




  Condensed Consolidated Cash Flow Statement (unaudited)




Half year

Half year

Full year



2009

2008

2008


Note

£'000

£'000

£'000

Cash flows from operating activities 





Cash generated from operations

12

822

4,203

12,563

Tax refund/(paid)


85

(267)

(960)

Finance income 


1

12

37

Finance costs


(191)

(393)

(761)

Net cash generated from operating activities


717

3,555

10,879






Cash flows from investing activities





Acquisition of subsidiary


-

-

(1,090)

Purchases of property, plant and equipment


(1,438) 

(625)

(2,809)

Purchases of intangible assets 


(249)

(352)

(623)

Proceeds from sale of property, plant and equipment


-

22

24

Net cash used in investing activities


(1,687)

(955)

(4,498)






Cash flows from financing activities





Proceeds from borrowings


797

-

2,600

Capital element of finance lease payments


(52)

-

-

Proceeds from issue of ordinary shares


-

96

96

Purchase of own shares


-

(652)

(652)

Dividends paid to Shareholders


(2,025)

(2,020)

(3,090)

Net cash used in financing activities


(1,280)

(2,576)

(1,046)






Net movement in cash, cash equivalents and bank overdrafts


(2,250)

24

5,335

Cash, cash equivalents and bank overdrafts at beginning of the period


4,411

(1,077)

(1,077)

Exchange (losses)/gains on cash, cash equivalents and bank overdrafts


(452)

41

153

Cash, cash equivalents and bank overdrafts at end of the period


1,709

(1,012)

4,411






Analysis of cash, cash equivalents and bank overdrafts





Cash at bank and in hand

10

1,948

6,632

4,411

Bank overdrafts 

10

(239)

(7,644)

-



1,709

(1,012)

4,411


Notes to the Interim Financial Statements

for the period ended 27 June 2009


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 PlaceLondon, W1W 8AG.


The condensed consolidated interim financial statements were authorised for issue in accordance with a resolution of the Directors on 3 August 2009.


These condensed consolidated interim financial statements do not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 27 December 2008 were approved by the Board of Directors on 25 February 2009 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006. 


The financial information contained in this report is unaudited.


2 Basis of preparation 


These condensed consolidated interim financial statements for the half year ended 27 June 2009 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 27 December 2008, which were prepared in accordance with International Financial Reporting Standards as adopted by the European Union. 


3 Accounting policies


The accounting policies applied in these condensed consolidated interim financial statements are consistent with those of the annual financial statements for the year ended 27 December 2008, as described in those annual financial statements. The adoption of standards, amendments and interpretations effective for the accounting period beginning on 28 December 2008 has not led to any changes in the Group's accounting policiesA list of standards yet to be adopted by the Group and the date from which they are effective is listed on page 37 of the 2008 Annual Report and Accounts. The new standards and amendments to standards that are mandatory for the first time for financial years beginning on or after 1 January 2009, will be applied in the Group's 2010 financial year, as the current financial year began before 1 January 2009.


4 Segmental analysis


At 27 June 2009, the Group is reported in three primary business segments: 


Revenue

Gross revenue

Inter segment revenue

External revenue


Half

year 2009

£'000

Half

 year

2008 

£'000

Full

Year

 2008

£'000

Half

year 
200
9
£'000

Half 

year

2008 
£'000

Full

 year
 200
8
£'000

Half 

year
 200
9
£'000

Half

 year

2008
 £'000

Full 

year
 200
8
£'000

Direct Marketing Division

53,712

43,030

96,663

-

-

-

53,712

43,030

96,663

End User Division

20,389

26,484

54,968

(286)

(198)

(321)

20,103

26,286

54,647

Trade Division

8,347

10,347

19,764

(1,201)

(1,548)

(2,989)

7,146

8,799

16,775


82,448

79,861

171,395

(1,487)

(1,746)

(3,310)

80,961

78,115

168,085

Inter segment revenues are on an arms-length basis. 

  Notes to the Interim Financial Statements

for the period ended 27 June 2009


4 Segmental analysis (continued)


Operating profit


Operating profit/(loss) before exceptional items

Exceptional items

Operating profit/(loss)


Half

 year

2009

£'000

Half 

year

2008

£'000

Full

 Year

 2008

£'000

Half 

year
 2009

£'000

Half 

year

2008

£'000

Full 

year 
2008

£'000

Half 

year
 2009

£'000

Half

year 
2008

£'000

Full

year 
2008

£'000

Direct Marketing Division

1,077

3,183

6,466

-

-

-

1,077

3,183

6,466

End User Division

1,356

2,139

4,721

(140)

-

(583)

1,216

2,139

4,138

Trade Division

(164)

239

(38)

-

(846)

(2,793)

(164)

(607)

(2,831)

Head office

(747)

(743)

(1,587)

-

-

(177)

(747)

(743)

(1,764)

Operating profit before defined benefit pension and share option charges

1,522

4,818

9,562

(140)

(846)

(3,553)

1,382

3,972

6,009

Defined benefit pension (charge)/credit

(624)

64

150

-

-

-

(624)

64

150

Share option charge

(292)

(190)

(370)

-

-

-

(292)

(190)

(370)


606

4,692

9,342

(140)

(846)

(3,553)

466

3,846

5,789


Net finance costs totalling £180,000 (half year 2008: £433,000full year 2008: £719,000), and taxation charge of £86,000 (half year 2008: £1,092,000full year 2008: £1,520,000) cannot be separately allocated to individual segments. 


5 Exceptional items



Half year

Half year

Full year


2009

2008

2008


£'000

£'000

£'000

End User Division reorganisation costs

(140)

-

(583)

Trade Division integration costs

-

(846)

(2,793)

Onerous leases

-

-

(177)


(140)

(846)

(3,553)


The End User Division reorganisation costs in 2009 related to a cost reduction exercise, due to the worsening economic conditions in early 2009, and in 2008 related to the restructuring of the UK operations across the London and Manchester businesses and the closure of a small, unprofitable overseas office.


The Trade Division exceptional costs in 2008 represented the finalisation of a major reorganisation. These costs principally comprised £409,000 (half year 2008: £181,000) relating to headcount reduction; £1,719,000 (half year 2008: £200,000) inventory write down and £665,000 (half year 2008: £465,000) provision for irrecoverable trade receivables. 


The onerous lease costs in 2008 related to leases on properties which have not been used by the Group since the disposal of businesses in 2000. They are sublet if possible. These charges related to excess costs incurred in 2008 and the net costs which will be incurred by the Group for the remainder of the lease periods. The final lease expires in 2011. 


Cash expenditure on exceptional items in 2009 was £522,000 (half year 2008: £861,000, full year 2008: £1,411,000) including £413,000 in respect of prior yearsexceptional items. Non cash items were £nil and £306,000 of cash items are included in accruals at 27 June 2009.

  Notes to the Interim Financial Statements

for the period ended 27 June 2009


6 Taxation


The taxation charge for the period to 27 June 2009 has been calculated at 30% (half year 200832%; full year 2008: 30%) of the profit before tax for the period


7 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


2009

2008

2008


£'000

£'000

£'000

Profit for the financial period

200

2,321

3,550


Number

000's

Number

000's

Number

000's

Basic weighted average number of shares

25,390

25,187

25,251

Dilutive potential ordinary shares - employee share options

220

675

715

Diluted weighted average number of shares

25,610

25,862

25,966

Basic earnings per share

0.79p

9.22p

14.06p

Diluted earnings per share

0.78p

8.98p

13.67p


The basic weighted average excludes shares held in the employee share trust. The effect of this is to reduce the average by 254,000 (half year 2008400,000; full year 2008343,000).


8 Dividends


The interim dividend for 2009 of 4.25p per ordinary share (interim 20084.25p; final 20088.00p) will be paid on 15 September 2009 to ordinary Shareholders on the register at the close of business on 14 August 2009.


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 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 27 June 2009.


The principal assumptions made by the actuaries at 27 June 2009 were:


Half year

Half year

Full year


2009

2008

2008

Rate of increase in pensionable salaries

4.2%

5.0%

3.8%

Rate of increase in pensions in payment and deferred pensions

3.2%

4.0%

2.8%

Discount rate

6.3%

6.7%

6.5%

Inflation assumption

3.2%

4.0%

2.8%

Expected return on scheme assets

6.5%

7.4%

6.3%


The mortality assumptions adopted at 27 June 2009 have not changed from those at 27 December 2008.


  Notes to the Interim Financial Statements

for the period ended 27 June 2009


9 Employee pension schemes (continued)


The amounts recognised in the income statement are:


Half year

Half year

Full year


2009

2008

2008


£'000

£'000

£'000

Current service cost

31

36

68

Interest cost on scheme liabilities

2,627

2,715

5,366

Expected return on scheme assets

(2,034)

(2,815)

(5,584)


624

(64)

(150)


Analysis of the movement in the balance sheet liability:


Half year

Half year

Full year


2009

2008

2008


£'000

£'000

£'000

At start of period

16,937

10,549

10,549

Total charged/(credited) in the income statement

624

(64)

(150)

Contributions paid

(1,216)

(998)

(2,261)

Actuarial loss/(gain) on the scheme liabilities

4,361

(5,919)

18,309

Actuarial loss/(gain) on scheme assets

1,365

9,094

(9,510)

At end of period

22,071

12,662

16,937


10 Borrowings


Analysis of net debt


Half year

Half year

Full year


2009

2008

2008


£'000

£'000

£'000

Cash at bank and in hand

1,948

6,632

4,411

Current bank overdrafts

(239)

(7,644)

-

Cash, cash equivalents and bank overdrafts

1,709

(1,012)

4,411

Finance leases

(586)

-

-

Current bank loans

(6,068)

-

-

Non current bank loans

(2,967)

(6,000)

(8,600)

Net debt

(7,912)

(7,012)

(4,189)


The Group had the following undrawn committed borrowing facilities available at 27 June 2009:




Floating rate



Half year 

2009

Half year 

2008

Full Year

2008 

Borrowing facilities


£'000

£'000

£'000

Expiring within one year


4,613

791

4,956

Expiring in more than one year


3,083

4,256

4,294



7,696

5,047

9,250


The £6m bank loan and £4m overdraft facility with the Group's UK banker, Lloyds TSB Bank plc, which are due to expire on 31 December 2009 have been extended to 30 September 2010 on the same terms. 

  Notes to the Interim Financial Statements

for the period ended 27 June 2009


11 Consolidated statements of changes in Shareholders' equity 





Share

Capital


Share

Premium

reserve


Capital

Redemption

reserve


Cumulative

Translation

differences

Retained earnings



Own

shares

Profit

and loss

Total 

Equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000

At 28 December 2008

9,846

38,016

208

1,151

(519)

(27,143)

21,559

Profit for the period






200

200

Exchange adjustments net of tax




(1,425)



(1,425)

Shares issued

93




(93)


-

Own shares utilised





452

(452)

-

Employee share options taken to reserves






233

233

Deferred tax on employee share options taken to reserves







(14)


(14)

Actuarial losses taken to reserves






(5,726)

(5,726)

Deferred tax on actuarial losses taken to reserves







1,603


1,603

Dividends






(2,025)

(2,025)

At 27 June 2009

9,939

38,016

208

(274)

(160)

(33,324)

14,405


During the period 240,000 shares were issued at par value to meet the requirements of share option exercises.




Share

capital

Share

Premium

reserve


Capital

Redemption

reserve


Cumulative

Translation

differences

Retained earnings


Own

shares

Profit

and loss

Total

Equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000

At 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

  Notes to the Interim Financial Statements

for the period ended 27 June 2009


12 Cash generated from operations



Half year

Half year

Full year


2009

2008

2008


£'000

£'000

£'000

Operating profit

466

3,846

5,789

Adjustments for: 




Depreciation charge

761

653

1,298

Amortisation of intangibles

324

292

661

Loss on disposal of property, plant and equipment 

-

-

19

Exceptional non cash items

-

665

2,432

Decrease in exceptional accrual 

(382)

(688)

(290)

Share option charge

233

190

370

IAS 19 pension charge/(credit) for defined benefit scheme

624

(64)

(150)

Contributions to defined benefit pension scheme

(1,216)

(998)

(2,261)





Changes in working capital:




Increase in inventories

(63)

(997)

(267)

Decrease in trade and other receivables

2,724

568

5,614

(Decrease)/increase in trade and other payables

(2,649)

736

(652)

Cash generated from operations

822

4,203

12,563


13 Capital commitments


The Group had capital commitments of £190,000 contracted but not provided for in these financial statements 

(28 June 2008: £104,000, 27 December 2008: £467,000).


14 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 Authoritynamely:


  • 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 27 December 2008. A list of current Directors of 4imprint Group plc 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




4 August 2009


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