Final Results
St. Ives PLC
9 October 2001
FOR IMMEDIATE RELEASE 9th OCTOBER 2001
ST IVES plc - PRELIMINARY RESULTS
St Ives, the leading UK-based printing group, today announces Preliminary
Results for the 53 weeks ended 3 August 2001, salient features of which
include:
2001 2000 Change
* Turnover £498m £473m + 5.3%
* Profit before tax and goodwill £62.0m £68.9m -10.1%
amortisation
* Earnings per share before 41.42p 45.87p - 9.7%
goodwill amortisation
* Total dividends per share 17.15p 16.90p + 1.5%
Commenting on the results, Miles Emley, Chairman, St Ives plc said:
'Conditions in many of our markets were tougher than for a decade,
particularly during the second half of our financial year. However, the
resilient performance of St Ives in these conditions is attributable to the
range of markets which we serve, to consistent investment to reduce the cost
of production and to our strategic concentration on market sectors where
customers place value on reliable, just-in-time service.
'Additionally, the strength of our Company's financial position and the
closeness of our relationships with customers, both of which have been built
up over many years, remain undiminished and unequalled. However, the short
term outlook is extremely uncertain and progress is therefore likely only to
be longer term.'
Enquiries to:
Miles Emley, Chairman St Ives plc
Brian Edwards, Managing Director
020 7928 8844
Julian Walker Citigate Dewe Rogerson
Georgina Peiser
020 7638 9571
Results
The results for the 53 weeks ended 3 August 2001 show turnover of £498.2
million (2000 - £473.2 million) and profit before taxation and amortisation of
goodwill of £62.0 million (2000 - £68.9 million). Basic earnings per share
before goodwill amortisation were 41.42p as compared with 45.87p in the
previous year.
Dividend
A final dividend of 12.15p per share is proposed which would make total
dividends of 17.15p per share for the year, an increase of 1.5 per cent over
the previous year's dividends of 16.9p per share.
Trading Conditions
Conditions in many of our markets were tougher than for a decade, particularly
during the second half of our financial year. Demand for corporate financial
print was subdued. Web offset markets in the UK, USA and continental Europe
have all experienced fierce price competition caused by a combination of
static or falling demand and recent investment in additional capacity by
competitors. The continued strength of sterling makes it easier for
continental European printers to compete for less time-sensitive products in
the UK market.
The resilient performance of our Company in these conditions is attributable
to the range of markets which we serve, to consistent investment to reduce the
cost of production and to our strategic concentration on market sectors where
customers place value on reliable, just-in-time service.
Books
Clays had another highly successful year in which it maintained growth in
sales and market share. We produced a high proportion of best-selling titles
in both cased and paperback editions for the UK trade and general market. Our
continued growth is attributable to our ability to offer a faster, more
flexible and reliable service than our competitors. Towards the end of the
year we installed new pre-press, press (for printing both text and covers and
jackets) and finishing (for both hard-back and paperback books) equipment.
This investment is now fully commissioned and will help us to enhance the
speed and flexibility of our service.
Direct Response and Commercial
UK
The performance of our businesses serving the direct response and commercial
markets in the UK has improved overall, despite the extremely competitive
conditions encountered for longer-run, less time-sensitive products. We
continue to refine our work mix by further concentration on customers with
specialist requirements for point-of-sale materials, personalisation, mailing
or fulfilment as well as print.
Germany
In a difficult economic environment, our German subsidiary, Johler Druck,
experienced low volumes and competitive pricing, especially for less
specialist products, which resulted in decreasing returns towards the end of
the financial year.
USA
St Ives Inc in Cleveland, Ohio delivered a significantly improved result
despite market conditions which became increasingly volatile towards the end
of the financial year. We achieved a more suitable balance of work, which we
were able to produce more efficiently as a result of our recent capital
investment. Progress has been made in integrating the operations of the Avanti
/Case-Hoyt companies, which we acquired on 1 February 2001, with those of our
existing US businesses. However, the initial contribution from Avanti and
Case-Hoyt was affected by deteriorating market conditions.
Financial
The market for corporate financial print was quiet throughout the year,
especially in comparison with the very busy conditions experienced in the
previous financial year. As a result, it was regrettably necessary to make a
number of redundancies in both the UK and USA. Market share in the UK has been
maintained. In the USA, we completed the integration of Packard Press and
Global Financial Press, acquired in June and September 2000 respectively. Low
levels of activity in the market have not enabled us to exploit the full
potential of the combined businesses, although we achieved an improved
performance during the second half year by winning new business.
In both the UK and USA, we have maintained our share of the market for annual
reports and accounts.
Magazines
UK
In the UK, demand for magazine printing has been variable. Internet and
computer related titles have shown significant reductions in pagination,
whereas the high quality, specialist magazines on which we mostly concentrate
have maintained both circulation and pagination. In the latter part of the
year, however, we experienced increasingly volatile market conditions caused
by weaker demand for longer-run, general titles, some title closures and
increased competition from overseas as well as from domestic competitors
seemingly desperate to fill recently installed capacity.
USA
St Ives Inc in Hollywood, Florida generated improved returns despite similar
volumes to the previous year through greater efficiency, effective control of
costs and more consistent utilisation and work mix throughout the year.
Multimedia
In music and multimedia markets, both in the UK and continental Europe, we
experienced continued pricing pressure and wide seasonal variations in demand
which made it hard to achieve proper capacity utilisation.
Balance sheet
At the end of the year, our shareholders' funds stood at £238 million,
including £44 million of goodwill arising on acquisitions. During the year we
acquired Global Financial Press and the Avanti/Case-Hoyt companies for an
aggregate consideration (including debt assumed) of approximately $83 million
(£56 million) and spent £37 million on capital investment in our existing
businesses. Towards the end of the year, we expended some £8.4 million on
purchasing for cancellation approximately 2 million of our own shares. Net
cash resources at the end of the year were £1.7 million.
Outlook
Current market conditions are more uncertain than at any time in recent
memory. In some markets, demand is currently falling far short of levels
previously experienced; in others, short-term volatility is increasing. There
are as yet few signs that surplus capacity, even where this is technologically
outdated or uneconomic, is being retired.
The strength of our Company's financial position and the closeness of our
relationships with customers, both of which have been built up over many
years, remain undiminished and unequalled. The short-term outlook, however, is
extremely uncertain and progress is therefore likely only to be longer-term.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
53 weeks to 3 August 2001 52 weeks to
28 July
2000
£'000 £'000 £'000
Turnover (note 2)
Continuing activities 463,760 473,207
Acquired activities 34,394 -
---------------- ----------------
498,154 473,207
Cost of sales (361,063) (340,101)
---------------- ----------------
Gross Profit 137,091 133,106
Sales and distribution (31,223) (24,315)
costs
Administrative expenses
Goodwill amortisation (1,546) (108)
Other administrative (46,151) (42,704)
expenses
---------------- ----------------
(47,697) (42,812)
Other operating income 889 542
---------------- ----------------
Operating profit (note 2)
Continuing activities 58,401 66,521
Acquired activities 659
---------------- ----------------
Profit before interest 59,060 66,521
Interest receivable 2,563 3,561
Interest payable (1,164) (1,243)
---------------- ----------------
Profit before taxation 60,459 68,839
Taxation (18,803) (21,340)
---------------- ----------------
Profit after taxation 41,656 47,499
Dividends (note 3) (17,711) (17,559)
---------------- ----------------
Retained profit 23,945 29,940
========== ==========
Earnings per share (note 4) 40.03p 45.77p
========== ==========
Diluted earnings per share 39.83p 45.28p
(note 4)
========== ==========
Earnings per share before goodwill 41.42p 45.87p
amortisation (note 4)
========== ==========
Dividend per ordinary share 17.15p 16.90p
(note 3)
========== ==========
CONSOLIDATED BALANCE SHEET
3 August 28 July
2001 2000
£'000 £'000
Fixed assets
Intangible assets 44,328 12,133
Tangible assets 205,580 183,182
Current assets
Stocks 21,134 16,934
Debtors 87,521 75,202
Cash at bank and in hand 32,961 65,877
------------- -------------
141,616 158,013
Creditors - due within one year (137,827) (112,326)
------------- -------------
Net current assets 3,789 45,687
------------- -------------
Total assets less current liabilities 253,697 241,002
Creditors - due after more than one year (3,817) (5,899)
Provisions for liabilities and charges (10,260) (14,270)
Accruals and deferred income (1,786) (2,312)
------------- -------------
237,834 218,521
========= =========
Capital and reserves
Called up share capital 10,256 10,388
Share premium account 43,568 41,522
Capital redemption reserve 1,238 1,040
Profit and loss account 182,772 165,571
------------- -------------
Equity shareholders' funds 237,834 218,521
========= =========
SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
53 weeks to 52 weeks to
3 August 28 July
2001 2000
£'000 £'000
Net cash inflow from operating activities 81,618 93,419
Returns on investments and servicing of finance 1,463 2,016
Tax paid (21,781) (21,222)
Capital expenditure (35,212) (32,270)
Acquisitions (35,489) (13,556)
Equity dividends paid (17,866) (15,771)
------------- -------------
Net cash (outflow)/inflow before financing (27,267) 12,616
Financing
Issue of shares 2,112 669
Purchase of own shares (8,370) -
Increase/(decrease) in debt 1,292 (12,693)
------------- -------------
(Decrease)/increase in cash in the year (32,233) 592
======== ========
NOTES TO THE SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
Reconciliation of operating profit to net cash
inflow from operating activities
Operating profit 59,060 66,521
Depreciation 31,556 28,266
Other non cash movements 4 (1,148)
Changes in working capital (9,122) (340)
Other items 120 120
------------- -------------
81,618 93,419
======== ========
NOTES TO THE SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
continued
53 weeks to 52 weeks to
3 August 28 July
2001 2000
£'000 £'000
Reconciliation of net cash flow to movement
in net funds
(Decrease)/increase in cash in the year (32,233) 592
Cash (inflow)/outflow from (increase)/decrease
in debt and lease financing (1,292) 12,693
---------------- ----------------
Change in net funds resulting from cash flows (33,525) 13,285
Loans acquired with subsidiary (20,815) -
Exchange adjustments (670) (482)
---------------- ----------------
Movement in net funds in the year (55,010) 12,803
Opening net funds 56,750 43,947
---------------- ----------------
Closing net funds 1,740 56,750
========== ==========
Analysis 28 July Cash Acquisitions Other Exchange 3 August
of net funds 2000 flow excl cash & non cash movement 2001
overdrafts changes
£'000 £'000 £'000 £'000 £'000 £'000
Cash at 65,877 (32,970) - - 54 32,961
bank and
in hand
Overdrafts (969) 737 - - - (232)
---------
(32,233)
Debt due (515) (12,415) (11,896) (501) (706) (26,033)
within one
year
Debt due (2,628) 8,919 (8,919) 501 (18) (2,145)
after one
year
Finance (5,015) 2,204 - - - (2,811)
leases
-------- -------- -------- ------- ------- --------
56,750 (33,525) (20,815) - (670) 1,740
======= ======= ======= ======= ======= =======
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
53 weeks to 52 weeks to
3 August 28 July
2001 2000
£'000 £'000
Profit after taxation 41,656 47,499
Exchange differences 1,626 1,346
-------------- ------------
Total recognised gains and losses relating to 43,282 48,845
the year
============ ==========
MOVEMENTS IN CONSOLIDATED SHAREHOLDERS' FUNDS
53 weeks to 52 weeks to
3 August 28 July
2001 2000
£'000 £'000
Opening shareholders' funds 218,521 186,566
Total recognised gains and losses 43,282 48,845
Dividends (17,711) (17,559)
Issue of ordinary shares 2,112 669
Purchase of own shares (8,370) -
------------ ----------
Closing shareholders' funds 237,834 218,521
========== =========
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 Annual
Report for 2001.
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-three weeks to 3 August 2001 and for
the fifty-two weeks to 28 July 2000 has been extracted from the Group's
statutory accounts for the respective years. The Group's statutory accounts
for the fifty-two weeks to 28 July 2000 have been filed with the Registrar of
Companies. The Group's statutory accounts for the fifty-three weeks to 3
August 2001 will be sent to all shareholders before 31 October 2001. 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:
53 weeks to 52 weeks to
3 August 28 July
2001 2000
£'000 £'000
Turnover
United Kingdom 340,875 371,240
United States of America 130,878 72,314
Rest of the World 26,401 29,653
-------------- ---------------
498,154 473,207
========= ==========
Operating profit
United Kingdom 53,976 60,677
United States of America 6,962 3,764
Rest of the World (332) 2,188
---------------------- -----------------------
60,606 66,629
Goodwill amortisation - USA (1,546) (108)
---------------------- -----------------------
59,060 66,521
========= ==========
The directors consider that the Group has only one class of business and
consequently no further analysis of turnover or profit is given.
3. Dividends
The directors propose a final ordinary dividend of 12.15p (2000 - 12.15p) net
per share. The payment date will be 4 December 2001 and the record date will
be 2 November 2001.
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 £41,656,000 (2000 -
£47,499,000). Basic earnings per share and adjusted basic earnings per share
are calculated on a weighted average of 104,067,152 (2000 - 103,776,115)
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 104,575,248 (2000 - 104,896,559) shares during the year.
The difference between the number of shares used in the basic and diluted
earnings per share calculation is 508,096 (2000 - 1,120,444) 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 435.77p (2000 -
520.72p).
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:
2001 2001 2000 2000
Earnings Earnings Earnings Earnings
per share per share
£'000 Pence £'000 Pence
Earnings and 41,656 40.03 47,499 45.77
basic earnings
per share
Goodwill 1,447 1.39 108 0.10
amortisation net
of tax
Earnings and ---------- ---------- --------- ----------
basic earnings
per share
before goodwill 43,103 41.42 47,607 45.87
amortisation
========= ========= ========= =========
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