Interim Results

International Greetings PLC 06 December 2005 6 December 2005 International Greetings plc Interim results show continued growth and development of overseas markets International Greetings plc ('International Greetings' or 'the Group') (AIM: IGR), the leading designer and manufacturer of private label greetings products, wrapping paper, Christmas crackers and film and television character based licensed stationery, announces interim results for the six months to 30 September 2005. Highlights include: • Group turnover grew 36% to £83.8 million (2004: £61.8 million) • Adjusted *profit before taxation increased by 6% to £6.7 million (2004: £6.3 million) • Basic earnings per share for the period were 9.6p (2004: 10.1p), whilst adjusted *earnings per share increased from 10.5p to 10.9p • US division performed strongly with sales growing 40% to $23.7 million (2004: $16.9 million) • Penetration into Europe continues with further growth expected • Anker International, a design, import and distribution business acquired for £35.5 million in May contributed a turnover of £16.9 million and profit before tax of £1.8 million and continues to perform in line with expectations • 14% increase in interim dividend to 2p a share (2004: 1.75p) proposed reflecting Board's continued confidence • £2.1 million exceptional profit from the recent £19 million sale and leaseback of Anker's head office and warehouse, which will be reflected in the full year's results • Stationery ranges launched for Little Britain, and Disney's Christmas film, The Chronicles of Narnia: The Lion, The Witch and The Wardrobe. * figure excludes amortisation of goodwill of £520,000 (six months to 30th September 2004: £182,000, 12 months to 31st March 2005: £443,000) and exceptional item of £121,000 (six months to 30th September 2004: £nil, 12 months to 31st March 2005: £738,000) and the tax relief thereof. Commenting on the results, Nick Fisher, joint chief executive, commented: 'Although we are now operating in a very challenging retail environment, consumers continue to demand our products and our market sector and business model remain robust. We are highly focused on the development of our international markets, as evidenced by the 40% growth in our US division this period and are confident of the full year's outcome.' For further information: International Greetings plc: 01707 630 600 Nick Fisher, Joint Chief Executive Mark Collini, Finance Director www.internationalgreetings.co.uk Tavistock Communications: 020 7920 3150 Richard Sunderland, rsunderland@tavistock.co.uk Rachel Drysdale, rdrysdale@tavistock.co.uk CHAIRMAN'S STATEMENT I am pleased to announce the interim results for the six months to 30th September 2005. Turnover for the period grew by 36% to £83.8 million, with operating profit increasing by 9% to £6.7 million. Interest payable during the period increased to £0.7 million from nil last year, resulting in profit before tax of £6.0 million, marginally below last year's £6.1 million. Adjusted *profit before taxation increased by 6% to £6.7 million. Basic earnings per share for the period were 9.6p (six months to 30th September 2004: 10.1p), whilst adjusted * earnings per share increased from 10.5p to 10.9p. The above figures include turnover of £16.9 million, interest payable of £0.4 million and profit before tax of £1.8 million attributable to the acquisition of Anker International PLC, a design, import and distribution business, which was acquired for £35.5 million in May this year. Excluding Anker's figures, turnover increased 8% to £66.8 million with operating profit before exceptional items of £4.6 million (six months to 30th September 2004: £6.1 million). This reduction in operating profit is purely a reflection of the seasonality of the Group's business and highlights the fact that the first six months figures are not a reliable indicator of the anticipated full year figures. The months of September and October account for approximately 35% of the Group's anticipated annual turnover, and the interim results are therefore extremely sensitive to the timing of deliveries at that time. Anker's integration into the Group has proceeded smoothly. The business is performing in line with expectations and we continue to explore synergy benefits and integration opportunities which will deliver further value to the Group. Subsequent to the period end, we have concluded the sale and leaseback of Howard House, Anker's head office and warehouse, for £19 million. This sale will generate an exceptional profit of approximately £2.1 million, which will be reflected in the results for the full year to 31st March 2006. There are a number of restructuring changes to the Group's operations planned to occur during the period to 31st March 2006, which will help ensure our business maintains its competitiveness and efficiency. We are currently in the process of merging our licensed stationery business, Copywrite Designs, based in Duxford, into Anker's operations in Newport Pagnell. Hoomark, our Dutch subsidiary, has merged its European sales force with that of our UK gift wrap division and, following last year's relocation of our greetings card and tag division to Latvia, additional manufacturing machinery is being relocated there. The exceptional costs of these restructuring changes, primarily redundancy and relocation costs, are estimated to be approximately £1.8 million, most of which will be incurred during the six month period to 31st March 2006. Overseas, our US division has performed well during the period, with sales growing by 40%. We have also continued our penetration into Europe, and expect to see continued strong growth in both of these geographical regions for the foreseeable future. Design and licensed merchandise continues to play an important role in our business. In addition to the recently announced Little Britain licence, we have launched licensed ranges of stationery for this year's Disney Christmas film, The Chronicles of Narnia: The Lion, The Witch and The Wardrobe, which premiers in London tomorrow. CURRENT TRADING The retail sector, particularly in the UK, has gone through a difficult period of trading during the spring and summer seasons and the trend in recent years for consumers to carry out their Christmas shopping later each year continues. The bulk of our sales take place in the second half of the year and, whilst we are not immune to the current challenging retail climate, we have now completed the majority of the season's deliveries to our customers. We remain clearly focused on developing sales opportunities in all our markets, particularly overseas and have commenced working on the creative design and range developments for the Christmas 2006 season with all our major retail customers. Reflecting our confidence in the outcome for the full year and in our business model of organic growth coupled with highly focused acquisitions, we are proposing to pay an interim dividend of 2p a share, an increase of 14% over last year. The dividend will be paid on 20th January 2006 to all shareholders on the register on 23rd December 2005. John Elfed Jones CBE DL Chairman * figure excludes amortisation of goodwill of £520,000 (6 months to 30th September 2004: £182,000, 12 months to 31st March 2005: £443,000) and exceptional item of £121,000 (6 months to 30th September 2004: £nil, 12 months to 31st March 2005: £738,000). International Greetings PLC Interim Report 2005 Consolidated profit and loss account for the six months to 30th September 2005 Note Unaudited 6 months Unaudited 6 months Audited 12 months to 30th September 2005 to 30th Sept 2004 to 31st March 2005 £000 £000 £000 £000 £000 Continuing Acquisition Total Operations -Note 2 Turnover 66,841 16,930 83,771 61,781 143,689 --------------------------------------------------------------------------------------------------------------- Operating profit before exceptional item 4,645 2,169 6,814 6,140 13,391 Exceptional item 3 (121) - (121) - (738) --------------------------------------------------------------------------------------------------------------- Operating Profit 4,524 2,169 6,693 6,140 12,653 Net interest payable (295) (375) (670) (30) (36) --------------------------------------------------------------------------------------------------------------- Profit before taxation 4,229 1,794 6,023 6,110 12,617 ------------------------------------------------------------- Taxation 5 (1,716) (1,809) (3,098) --------------------------------------------------------------------------------------------------------------- Profit for the financial year 4,307 4,301 9,519 --------------------------------------------------------------------------------------------------------------- Earnings per share 4 Basic 9.6p 10.1p 22.4p Diluted 9.4p 10.0p 22.1p --------------------------------------------------------------------------------------------------------------- Statement of recognised gains and losses for the six months to 30th Sept 2005 Unaudited 6 months Unaudited 6 months Audited 12 months to 30th September 2005 to 30th Sept 2004 to 31st March 2005 £000 £000 £000 Profit for the period 4,307 4,301 9,519 Currency translation differences arising on foreign currency net investments 703 99 (160) --------------------------------------------------------------------------------------------------------------- Total recognised gains and losses relating to the period 5,010 4,400 9,359 --------------------------------------------------------------------------------------------------------------- International Greetings PLC Interim Report 2005 Consolidated balance sheet at 30th September 2005 Unaudited Unaudited Audited 30th September 2005 30th September 2004 31st March 2005 Note £000 £000 £000 (restated- (restated - see note 1) see note 1) Fixed assets Intangible assets - goodwill 22,318 2,557 5,113 Tangible assets 46,381 25,484 30,853 Investments 170 - - --------------------------------------------------------------------------------------------------------------- 68,869 28,041 35,966 Current assets Stocks 59,605 39,110 24,178 Debtors 68,045 45,873 16,477 Investments 58 - - Cash at bank and in hand 3 5 6,490 --------------------------------------------------------------------------------------------------------------- 127,711 84,988 47,145 Creditors: amounts falling due within on year (120,477) (59,512) (22,956) --------------------------------------------------------------------------------------------------------------- Net current assets 7,234 25,476 24,189 --------------------------------------------------------------------------------------------------------------- Total assets less current liabilities 76,103 53,517 60,155 Creditors: amounts falling due after more than one year (1,599) (1,999) (1,611) Provisions for liabilities and charges (1,888) (199) (380) Deferred income (4,382) (2,656) (4,575) ---------------------------------------------------------------------------------------------------------------- Net assets 68,234 48,663 53,589 --------------------------------------------------------------------------------------------------------------- Capital and reserves Called up share capital 2,306 2,129 2,140 Share premium account 15,079 2,515 2,704 Potential issue of shares 672 413 926 Other reserves 724 280 21 Profit and loss account 49,453 43,326 47,798 --------------------------------------------------------------------------------------------------------------- Equity shareholders' funds 6 68,234 48,663 53,589 --------------------------------------------------------------------------------------------------------------- International Greetings PLC Interim Report 2005 Consolidated cash flow statement for the six months to 30th September 2005 Unaudited 6 months Unaudited 6 months Audited 12 months to 30th Sept 2005 to 30th Sept 2004 to 31st March 2005 Note £000 £000 £000 Net cash (outflow)/inflow from operating activities 7 (47,311) (28,585) 14,398 Returns on investments and servicing of finance 8 (483) (21) (54) Taxation (1,642) (1,399) (3,600) Capital expenditure 8 (4,145) (3,408) (8,793) Acquisitions and disposals 8 (13,145) (1,520) (5,984) Equity dividends paid (2,652) (2,126) (2,872) ----------------------------------------------------------------------------------------------------------------- Cash (outflow) before financing (69,378) (37,059) (6,905) Financing 8 (76) (1,276) (1,180) ----------------------------------------------------------------------------------------------------------------- (Decrease) in cash (69,454) (38,335) (8,085) ----------------------------------------------------------------------------------------------------------------- Reconciliation of net cash flow to movement in net (debt)/funds for the six months to 30th September 2005 Unaudited 6 months Unaudited 6 months Audited 12 months to 30th Sept 2005 to 30th Sept 2004 to 31st March 2005 £000 £000 £000 (Decrease) in cash in the period (69,454) (38,335) (8,085) Cash outflow from debt and lease financing 117 1,438 1,541 ----------------------------------------------------------------------------------------------------------------- Change in net (debt) resulting from cash flows (69,337) (36,897) (6,544) Translation differences (564) (276) 66 ----------------------------------------------------------------------------------------------------------------- Movement in net (debt) in the period (69,901) (37,173) (6,478) Net funds at beginning of period 3,790 10,268 10,268 ----------------------------------------------------------------------------------------------------------------- Net (debt)/funds at end of period (66,111) (26,905) 3,790 ----------------------------------------------------------------------------------------------------------------- International Greetings PLC Interim Report 2005 Notes 1. Basis of preparation The interim statement has been prepared under the same accounting policies as those used for the financial statements for the year ended 31st March 2005. The comparative figures for the year ended 31st March 2005 are an abridged version of the published accounts, as restated, and are not the company's statutory accounts for that financial year. Those accounts have been reported on without qualification by the auditors, and without any statement under Section 237 (2) or (3) of the Companies Act 1985, and have been delivered to the Registrar of Companies. Following adoption of FRS21 (Events after the balance sheet date), the comparative figures as at 30th September 2004 and 31st March 2005 have been restated to exclude the proposed dividend of £745,000 and £2,112,000 respectively, with a corresponding increase in the profit and loss account balance. 2. Acquisitions On 27th May 2005, the Group acquired 100% of the issued share capital of Anker International PLC, an international design, import and distribution business, for a total consideration of up to £35.5 million. £25 million was paid on completion, of which the issue of 3,294,242 new ordinary shares, and £12.5 million in cash represented £12.5 million. The remaining £10.5 million is payable in cash on 27th May 2006, of which £0.5 million is dependent on Anker achieving a certain level of profitability. During the period from 27th May 2005 to 30th September 2005, the Group's results include turnover of £16.9 million, interest payable (including interest on cash consideration) of £0.4 million and profit before tax of £1.8 million attributable to the acquisition of Anker. 3. Exceptional Item The exceptional item of £121,000 during the six months to 30th September 2005 and £738,000 during the year ended 31st March 2005 represents the costs associated with the transfer of manufacturing of greetings cards and tags from Hatfield to a new facility in Latvia. 4. Earnings per share Unaudited Unaudited Audited 6 months 6 months 12 months to 30th Sept 2005 to 30th Sept 2004 to 31st March 2005 Adjusted basic earnings per share excluding goodwill and exceptional item 10.9p 10.5p 24.5p Loss per share on goodwill (1.1p) (0.4p) (0.9p) Loss per share on exceptional item (0.2p) - (1.2p) --------------------------------------------------------------------------------------------- Basic earnings per share 9.6p 10.1p 22.4p --------------------------------------------------------------------------------------------- Diluted earnings per share 9.4p 10.0p 22.1p --------------------------------------------------------------------------------------------- The calculation of basic earnings per share is based on 45,002,232 (6 months to 30th September 2004: 42,378,290, 12 months to 31st March 2005: 42,529,155) ordinary shares being the average number of shares in issue during the period. The calculation of diluted earnings per share is based on 45,822,342 (6 months to 30th September 2004: 42,883,669, 12 months to 31st March 2005: 43,165,480) ordinary shares. The difference of 820,110 (6 months to 30th September 2004: 505,379, 12 months to 31st March 2005: 636,325) represents the dilutive effect of outstanding employee share options which have been calculated in accordance with FRS 14. Adjusted basic earnings per share excluding goodwill and exceptional item is calculated after adjusting for amortisation of goodwill of £520,000 (6 months to 30th September 2004: £182,000, 12 months to 31st March 2005: £443,000) with attributable tax relief of £24,000 (six months to 30th September 2004: £22,000, 12 months to 31st March 2005: £48,000) and the exceptional item of £121,000 (6 months to 30th September 2004: £nil, 12 months to 31st March 2005: £738,000) with attributable tax relief of £36,000 (six months to 30th September 2004: £nil, 12 months to 31st March 2005: £221,000). 5. Taxation The taxation charge for the six months ended 30th September 2005 is based on the estimated tax rate for the full year. 6. Reconciliation of movement in shareholders' funds Unaudited 6 months Unaudited 6 months Audited 12 months to 30th Sept 2005 to 30th Sept 2004 to 31st March 2005 £000 £000 £000 (restated - see (restated - see note 1) note 1) Profit for the period 4,307 4,301 9,519 Dividend (2,652) (2,126) (2,872) --------------------------------------------------------------------------------------------------------- 1,655 2,175 6,647 Other recognised gains and losses relating to the period (net) 703 99 (160) New share capital subscribed 12,541 829 1,029 Potential issue of shares (254) (667) (154) --------------------------------------------------------------------------------------------------------- Net addition to shareholders' funds 14,645 2,436 7,362 Opening shareholders' funds (restated - see Note 1) 53,589 46,227 46,227 --------------------------------------------------------------------------------------------------------- Closing shareholders' funds 68,234 48,663 53,589 --------------------------------------------------------------------------------------------------------- 7. Reconciliation of operating profit to net cash (outflow)/inflow from operating activities Unaudited 6 months Unaudited 6 months Audited 12 months to 30th Sept 2005 to 30th Sept 2004 to 31st March 2005 £000 £000 £000 Operating profit before exceptional item 6,814 6,140 13,391 Exceptional item (121) - (738) Depreciation charge 2,592 2,102 4,472 (Increase) in stocks (29,500) (16,129) (1,251) (Increase) in debtors (44,241) (34,364) (3,366) (Decrease) in provision for liabilities (269) - - Increase in creditors 17,087 13,634 2,001 Grant income (193) (150) (554) Goodwill amortisation 520 182 443 --------------------------------------------------------------------------------------------------------- Net cash (outflow)/inflow from operating activities (47,311) (28,585) 14,398 --------------------------------------------------------------------------------------------------------- 8. Gross Cash Flow Unaudited 6 months Unaudited 6 months Audited 12 Months to 30th Sept 2005 to 30th Sept 2004 to 31st March 2005 £000 £000 £000 Returns on investment and servicing of finance Net interest paid (474) (11) (13) Interest element of finance lease repayments (9) (10) (41) --------------------------------------------------------------------------------------------------------- (483) (21) (54) --------------------------------------------------------------------------------------------------------- Capital expenditure Purchase of tangible fixed assets (4,335) (3,438) (11,262) Disposal of tangible fixed assets 190 30 146 Grants received in relation to capital expenditure - - 2,323 --------------------------------------------------------------------------------------------------------- (4,145) (3,408) (8,793) --------------------------------------------------------------------------------------------------------- Acquisitions and disposals Acquisition cost (13,114) (1,520) (5,984) Net overdraft acquired with subsidiary (31) - - --------------------------------------------------------------------------------------------------------- (13,145) (1,520) (5,984) --------------------------------------------------------------------------------------------------------- Financing New shares issued 41 162 361 Repayment of amounts borrowed (48) (1,269) (1,256) Capital element of finance lease payments (69) (169) (285) --------------------------------------------------------------------------------------------------------- (76) (1,276) (1,180) --------------------------------------------------------------------------------------------------------- Analysis of movement in net (debt)/funds At 31st March Cash flow Exchange Movement At 30th September 2005 2005 £000 £000 £000 £000 Cash at bank and in hand 6,490 (6,698) 211 3 Overdrafts (672) (62,756) (659) (64,087) -------------------------------------------------------------------------------------------------- 5,818 (69,454) (448) (64,084) Banks loans (1,233) 48 (91) (1,276) Finance leases (795) 69 (25) (751) -------------------------------------------------------------------------------------------------- (2,028) 117 (116) (2,027) -------------------------------------------------------------------------------------------------- Total net (debt)/funds 3,790 (69,337) (564) (66,111) -------------------------------------------------------------------------------------------------- This information is provided by RNS The company news service from the London Stock Exchange
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