Final Results

St. Ives PLC 10 October 2000 ST IVES plc - PRELIMINARY RESULTS 2000 1999 Change * Turnover £473m £452m +4.6% * Profit before tax £68.8m £60.1m +14.5% * Earnings per share 45.77p 39.87p +14.8% * Total dividends per share 16.90p 14.70p +15.0% Miles Emley, Chairman, commented: 'The Group's financial result last year was our best ever and marks another year of significant growth. The performance of our UK businesses taken together has been especially strong. We are confident of a satisfactory outcome for the new financial year.' Enquiries to: Miles Emley, Chairman St Ives plc Brian Edwards, Managing Director 020 7928 8844 Cary Martin Citigate Dewe Rogerson Penny Cross 020 7638 9571 Duncan Murray Results The Group's financial result last year was our best ever and marks another year of significant growth. Turnover was £473.2 million (1999 - £452.2 million), an increase of 4.6 per cent. Profit before taxation increased 14.5 per cent to £68.8 million (1999 - £60.1 million). Basic earnings per share were 45.77p, an increase of 14.8 per cent on the previous year's 39.87p. Over the last decade, earnings have grown at an average rate of over 14 per cent per annum. The performance of our UK businesses taken together has been especially strong. In particular, we have benefited from consistently high levels of activity and a number of large, complex jobs in corporate financial printing markets. In the USA, a combination of factors, including the initial costs of growing our facilities to serve the US financial printing market, led to reduced results. Our businesses in continental Europe have performed creditably in market conditions which have remained unsettled. However, some of the benefit of this improved performance was eroded on translation, as a result of the strengthening of sterling against the Euro relative to the previous year. Dividend A final dividend of 12.15p per share is proposed, which, if approved, will make a total of 16.9p for the year as a whole, an increase of 15 per cent on the 14.7p paid in the previous year. Books Clays, our book printing company, had another excellent year, and produced a high proportion of best selling titles for the UK trade and general market. This work has been won through our ability to deliver a consistently fast service for initial orders and reprints of both cased and paperback books. Following the adverse outcome of the judicial review into the planning application for a new book factory, we have decided instead to invest in the development of Clays' existing site. New equipment, principally directed at further improving flexibility and turn-round times, will be installed towards the end of this financial year. Direct Response and Commercial Our companies serving these markets in the UK have made further progress. This has been achieved mainly through greater production efficiency and improved work mix. Continental competition has had an impact on the market for longer run and less time sensitive products. In the USA, St Ives Inc in Cleveland has experienced volatile market conditions and a very competitive pricing environment. Demand from our larger customers was reduced and sales of instore discount coupons and associated advertising material were lower. Towards the end of the year, we took steps to reduce the cost base of the business, which should be of benefit in the new financial year. Construction delays have postponed the commissioning of a new replacement press until next month. In Germany, the performance of Johler Druck was improved, principally as a result of more even utilisation throughout the year. Financial Both domestic and international corporate financial printing markets remained busy throughout most of the year. We won a number of large jobs involving complex distribution plans. Towards the end of the first half of the year, we terminated our joint venture serving the international corporate finance market. We have established our own US typesetting, sales and service operation, based in New York, which has been further expanded by the acquisition of Packard Press, which we announced in May, and the more recent acquisition of a significant part of the business of Global Financial Press. Burrups' international network of offices now includes presences in London, New York, Philadelphia, Tokyo, Frankfurt, Paris and Luxembourg. In the UK, our reputation for the production of company annual reports and high quality commercial and fine art print continues to grow. We have made progress in filling the additional press capacity which we installed to serve this market in the middle of the year at Westerham Press. Magazines In the UK, overall demand for magazines has been steady. Paginations have generally been maintained and launches of new titles continue. Demand for shorter run, more specialist titles, on which we mainly concentrate, has been more resilient than for longer run titles, and recently we have experienced increasing price competition from competitors who have lost work to continental European printers. The trend from saddle-stitched to perfect bound product, which we are well placed to serve, continues as before. New replacement sheetfed and web offset presses and a new perfect binding line were successfully commissioned at our factories in Plymouth and Roche towards the end of the year. In the USA, St Ives Inc in Hollywood, Florida was busy throughout the year operating at close to effective maximum capacity for much of the time. In the first half of the year, however, paginations were higher than our customers had predicted with the result that we experienced production inefficiencies and incurred costly outwork. Multimedia Pricing in the market for music related product continues to be competitive as our customer base adapts to less rapid growth in their own markets. We have mitigated the effects of this by broadening our range of commercial and multimedia customers both in the UK and the Netherlands. Balance Sheet At the year end, shareholders' funds had increased to approximately £219 million, including £12 million of goodwill arising on the acquisition of Packard Press. Our pre-tax return on average capital employed (including goodwill written off) is around 27 per cent. Capital expenditure during the year totalled £38.9 million. Despite significant capital expenditure and the acquisition of Packard Press for cash, net cash resources at the year end increased to £56.8 million. Outlook Recently, so-called 'e-commerce' activity has provided additional demand for printed products, especially for advertising and leisure purposes. In many different parts of the Group, we are using new telecommunication and digital technologies to enhance the speed and immediacy of the service which we offer our customers. We believe that these factors, together with our consistent approach to investment in people and equipment to reduce the cost of production and our determination to make continuous improvements in service and efficiency, will contribute to the continued growth of our business. Opportunities for growth will also arise from sensibly priced acquisitions of complementary businesses serving markets with demanding service requirements. Current conditions in our markets, which reflect significant investment in new capacity by a number of our competitors and, in the UK, increased continental competition for less time-sensitive work, may make for less rapid growth in the short term than we have achieved recently. However, we are confident of a satisfactory outcome for the new financial year. CONSOLIDATED PROFIT AND LOSS ACCOUNT 52 weeks to 28 July 2000 52 weeks to 30 July 1999 ------------ ------------ ------------- £'000 £'000 £'000 Turnover (note 2) Continuing activities 471,382 452,237 Acquired activities 1,825 - ------------ ------------- 473,207 452,237 Cost of sales (340,101) (331,477) ------------ ------------- Gross Profit 133,106 120,760 Sales and distribution costs (24,315) (21,528) Administrative expenses Goodwill amortisation (108) - Other administrative expenses (42,704) (40,684) ------------ ------------- (42,812) (40,684) Other operating income 542 954 ------------ ------------- Operating profit (note 2) Continuing activities 66,812 59,502 Acquired activities (291) - ------------ ------------- Profit before interest 66,521 59,502 Interest receivable 3,561 2,085 Interest payable (1,243) (1,482) ------------ ------------- Profit before taxation 68,839 60,105 Taxation (21,340) (19,053) ------------ ------------- Profit after taxation 47,499 41,052 Equity dividends (note 3) (17,559) (15,207) ------------ ------------- Retained profit 29,940 25,845 ============ ============= Earnings per share (note 4) 45.77p 39.87p ============ ============= Diluted earnings per share (note 4) 45.28p 39.63p ============ ============= Earnings per share before goodwill amortisation (note 4) 45.87p 39.87p ============ ============= Dividend per ordinary share (note 3) 16.90p 14.70p ============ ============= CONSOLIDATED BALANCE SHEET 28 July 30 July 2000 1999 ------------ ------------- £'000 £'000 Fixed assets Intangible assets 12,133 - Tangible assets 183,182 170,306 Current assets Stocks 16,934 14,692 Debtors 75,202 76,342 Cash at bank and in hand 65,877 64,233 ------------ ------------- 158,013 155,267 Creditors - due within one year (112,326) (112,173) ------------ ------------- Net current assets 45,687 43,094 ------------ ------------- Total assets less current liabilities 241,002 213,400 Creditors - due after more than one year (5,899) (8,868) Provisions for liabilities and charges (14,270) (14,982) Accruals and deferred income (2,312) (2,984) ------------ ------------- 218,521 186,566 ============ ============= Capital and reserves Called up share capital 10,388 10,366 Share premium account 41,522 40,875 Capital redemption reserve 1,040 1,040 Profit and loss account 165,571 134,285 ------------ ------------- Equity shareholders' funds 218,521 186,566 ============ ============= SUMMARISED CONSOLIDATED CASH FLOW STATEMENT 52 weeks to 52 weeks to 28 July 30 July 2000 1999 ------------ ------------- £'000 £'000 Net cash inflow from operating activities 93,419 92,344 Returns on investments and servicing of finance 2,016 852 Taxation (21,222) (21,381) Capital expenditure (32,270) (19,291) Acquisitions (13,556) (312) Equity dividends paid (15,771) (13,581) ------------ ------------- Net cash inflow before financing 12,616 38,631 Financing Issue of shares 669 2,022 Decrease in debt (12,693) (4,395) ------------ ------------- Increase in cash in the year 592 36,258 ============ ============= NOTES TO THE SUMMARISED CONSOLIDATED CASH FLOW STATEMENT 52 weeks to 52 weeks to 28 July 30 July 2000 1999 ------------ ------------- £'000 £'000 Reconciliation of operating profit to net cash inflow from operating activities Operating profit 66,521 59,502 Depreciation 28,266 29,537 Other non cash movements (1,148) (1,694) Changes in working capital (340) 4,882 Other items 120 117 ------------ ------------- 93,419 92,344 ============ ============= NOTES TO THE SUMMARISED CONSOLIDATED CASH FLOW STATEMENT continued 52 weeks to 52 weeks to 28 July 30 July 2000 1999 ------------ ------------- £'000 £'000 Reconciliation of net cash flow to movement in net funds Increase in cash in the year 592 36,258 Cash outflow from decrease in debt and lease financing 12,693 4,395 ------------ ------------- Change in net funds resulting from cash flows 13,285 40,653 New finance lease - (1,021) Exchange adjustments (482) (64) ------------ ------------- Movement in net funds in the year 12,803 39,568 Opening net funds 43,947 4,379 ------------ ------------- Closing net funds 56,750 43,947 ============ ============= Analysis of net funds 30 July Cash flow Other Exchange 28 July 1999 non cash movement 2000 changes --------- ---------- ---------- ------------ ----------- £'000 £'000 £'000 £'000 £'000 Cash at bank and in hand 64,233 1,561 - 83 65,877 Overdrafts - (969) - - (969) ---------- 592 Debt due within one year (9,379) 9,972 (505) (603) (515) Debt due after one year (3,906) 735 505 38 (2,628) Finance leases (7,001) 1,986 - - (5,015) --------- ---------- ---------- ------------ ----------- 43,947 13,285 - (482) 56,750 --------- ---------- ---------- ------------ ----------- CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 52 weeks to 52 weeks to 28 July 30 July 2000 1999 ------------ ------------- £'000 £'000 Profit after taxation 47,499 41,052 Exchange differences 1,346 35 ------------ ------------- Total recognised gains and losses relating to the year 48,845 41,087 ============ ============= MOVEMENTS IN CONSOLIDATED SHAREHOLDERS' FUNDS 52 weeks to 52 weeks to 28 July 30 July 2000 1999 ------------ ------------- £'000 £'000 Opening shareholders' funds 186,566 158,288 Total recognised gains and losses 48,845 41,087 Dividends (17,559) (15,207) Issue of ordinary shares 669 2,022 Goodwill adjustment - 376 ------------ ------------- Closing shareholders' funds 218,521 186,566 ============ ============= NOTES TO THE FINANCIAL STATEMENTS 1. Basis of preparation The preliminary financial statements have been prepared in accordance with the accounting policies set out in, and are consistent with, the Group's financial statements for 2000 and 1999. The financial information set out in these statements does not comprise statutory accounts for the purposes of Section 240 of the Companies Act 1985. The abridged information for the fifty-two weeks to 28 July 2000 and for the fifty-two weeks to 30 July 1999 has been extracted from the Group's statutory accounts for the respective years. The Group's statutory accounts for the fifty-two weeks to 30 July 1999 have been filed with the Registrar of Companies. The Group's statutory accounts for the fifty-two weeks to 28 July 2000 will be sent to all shareholders before 31 October 2000. The auditors reports on the accounts of the Group for both years were unqualified and did not contain a statement under either Section 237 (2) or Section 237 (3) of the Companies Act 1985. 2. Geographical analysis The geographical analysis of turnover and operating profit by origin is stated below: 52 weeks to 52 weeks to 28 July 30 July 2000 1999 ------------ ------------- £'000 £'000 Turnover United Kingdom 372,008 351,925 United States of America 72,314 68,799 Rest of the World 28,885 31,513 ------------ ------------- 473,207 452,237 Operating profit United Kingdom 60,677 50,894 United States of America 3,764 6,708 Rest of the World 2,188 1,900 ------------ ------------- 66,629 59,502 Goodwill amortisation - USA (108) - ------------ ------------- 66,521 59,502 ============ ============= The directors consider that the Group has only one class of business and consequently no further analysis of turnover or profit is given. 3. Equity dividends The directors propose a final ordinary dividend of 12.15p (1999 - 10.45p) net per share. The interim dividend paid was 4.75p (1999 - 4.25p) net per share. The payment date will be 4 December 2000 and the record date will be 3 November 2000. 4. Earnings per share The calculation of basic earnings per ordinary share is based on profits after taxation as disclosed in the profit and loss account of £47,499,000 (1999 - £41,052,000). Basic earnings per share and adjusted basic earnings per share are calculated on a weighted average of 103,776,115 (1999 - 102,958,104) ordinary shares in issue during the year. The calculation of the diluted earnings per share is based on profit after taxation as disclosed in the profit and loss account and on a diluted weighted average of 104,896,559 (1999 - 103,579, 568) shares during the year. The difference between the number of shares used in the basic and diluted earnings per share calculation is 1,120,444 (1999 - 621,464) representing dilutive share options held but not yet exercised. Dilution has been restricted to share options where the individual option price is less than the average market value of shares during the year, which was 520.72p (1999 - 435.75p). An adjusted basic earnings per share has been presented in order to highlight the underlying performance of the Group, and is calculated as set out in the table below: 2000 2000 1999 1999 Earning Earnings Earnings Earnings per share per share --------- ---------- ----------- ----------- £'000 Pence £'000 Pence Earnings and basic earnings per share 47,499 45.77 41,052 39.87 Goodwill amortisation 108 0.10 - - --------- ---------- ----------- ----------- Earnings and basic earnings per share before goodwill amortisation 47,607 45.87 41,052 39.87 ========= ========== =========== ===========

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