Interim Results

St. Ives PLC 10 April 2001 10 APRIL 2001 St Ives plc - INTERIM RESULTS ROBUST PERFORMANCE IN CHALLENGING CONDITIONS St Ives, the leading UK-based printing group, today announces Interim Results for the 26 weeks ended 26 January 2001. Half Year Half Year Change 2001 2000 * Turnover £233.3m £239.0m -2.4% * Profit before tax and goodwill £30.7m £32.0m -4.1% * Earnings per share before goodwill 20.24p 21.30p -5.2% * Dividend per share 5.00p 4.75p +5.3% Commenting on the results, Miles Emley, Chairman, St Ives plc said: 'Due to our exposure to a range of product and geographic areas, the Group overall has experienced only a modest reduction in profit in the face of challenging conditions in certain of our markets. 'I am pleased to report that our market position remains strong, relative to our main competitors, and our recent acquisitions have helped to reduce our dependence on any particular market. However, conditions remain extremely competitive.' Enquiries to: Miles Emley, Chairman St Ives plc Brian Edwards, Managing Director 020 7928 8844 Julian Walker Citigate Dewe Rogerson Duncan Murray 020 7638 9571 Georgina Peiser Results The results for the twenty-six weeks ended 26 January 2001 show turnover of £ 233.3 million (2000 - £239.0 million) and profit before taxation and amortisation of goodwill of £30.7 million. Profit before taxation was £30.3 million (2000 - £32.0 million). Earnings per share before goodwill amortisation were 20.24p. Reported earnings per share were 19.88p compared with 21.30p in the first half of last year. Dividend An interim dividend of 5.00p per share (2000 - 4.75p) has been declared, which will be paid on 1 June 2001 to shareholders on the register on 11 May 2001. Trading Conditions Trading conditions in the markets which we serve have varied. Due to our exposure to a range of product and geographic areas, the Group overall has experienced only a modest reduction in profit in the face of challenging conditions in certain of our markets. Activity levels in corporate financial printing markets were very quiet throughout the period both in Europe and North America. The market for web offset products in the UK has seen increased competition, especially for longer run, non time-sensitive products, both from continental European printers as a result of the continuing strength of sterling and because a number of our competitors are installing new capacity on a speculative basis. These conditions are reflected in the Group's results for the half year, which have also borne the costs of some redundancies which it has regrettably been necessary to make. Books Sales of hardback and paperback books have grown in market conditions, which have remained steady. We have continued to gain market share as a result of the superior levels of service and reliability which we offer our customers. Direct Response and Commercial In the UK, overall levels of sales to the direct response and commercial markets were slightly lower than those for the same period in the previous year. While the market for longer run, less time-sensitive products is becoming increasingly competitive, sales of shorter run, more specialist products have grown modestly. In Germany, Johler Druck's sales were lower than in the first half of last year, in market conditions which continue to be affected by surplus capacity. As yet, we have seen no signs of an improvement in underlying levels of demand. In the USA, following completion of our investment in new press, pre-press and finishing equipment, and associated construction work, we achieved a much improved result in markets which remain subject to seasonal fluctuation. Financial Throughout the period, international and domestic markets for corporate financial print in the UK and USA were quieter than they have been for a long time. As a result, we have yet to exploit the full potential from the acquisitions of Packard Press and Global Financial Press. Progress has been made in integrating the management and systems of these businesses with those of Burrups, so that we are now fully established to meet the requirements of both our international corporate finance customers and the US domestic customers of Packard and Global. Demand for the printing of Annual Reports is mainly in the second half of our financial year. Magazines In the UK, our sales were similar to those in the first half of last year, as we maintained our share of the market for the shorter run, more specialist titles, on which we mainly concentrate. Levels of activity generally have been affected by the installation of additional capacity by our competitors and by increasing continental competition for longer run, less time-sensitive work. Our business serving the magazine markets was affected by industrial action at certain of our factories in the Autumn of last year, which was resolved before Christmas. In the USA, St Ives Inc Hollywood operated at close to maximum capacity for much of the period and achieved an improved performance as a result of a more suitable work mix and better utilisation. Towards the end of the period, paginations of some computer and internet related titles fell as a result of reduced marketing expenditure by e-commercial advertisers in both UK and US markets. Multimedia Conditions in the market for music and multimedia packaging products remain highly competitive. Although the volume of products supplied to the music market has been maintained, we have continued to experience pricing pressure from a consolidating customer base. Investment and Acquisition We continue throughout our businesses to invest selectively in new technology which enables us to enhance the flexibility and reliability of the service which we offer our customers. In response to growing customer demand, computer-to-plate investment has been, or will shortly be, made in our magazine, multimedia, annual reports and corporate financial printing businesses in the UK. This follows successful installation of similar equipment in Germany, Holland, the USA and at Clays in the UK. Significant capital expenditure on press and finishing equipment is in train at Clays, specifically aimed at reducing lead times and enhancing flexibility of service, as run lengths reduce. New, replacement press investment has recently been made at our factories at Plymouth and Roche and next financial year will see the commissioning of a replacement press at Edenbridge. These investments are directed at the further enhancement of our ability to produce specialist products for the commercial and magazine markets. On February 1, we completed the acquisition of Avanti Press Inc, and its subsidiary The Case-Hoyt Corporation, based in Miami, Florida and Rochester, New York respectively. These businesses serve the high quality commercial, direct response, direct mail and annual reports markets and represent an excellent fit with our existing US businesses in Cleveland and Hollywood. Since the half year, we have begun to realise the benefits of combining the businesses. Outlook Volatile global stock markets make it difficult to predict when the current levels of activity in corporate financial printing, which are extremely low, especially relative to the experience of the previous year, will recover. Indeed all of our markets would be affected if current uncertain economic conditions were to deteriorate. However, relative to our main competitors, our position remains strong, as a result of our commitment to service and quality, supported by continuing investment in the most flexible, modern technology. The acquisitions, which we have made in recent years, have broadened the range of markets which we serve, thus reducing our dependence on any particular market, while at the same time maintaining our concentration on specialist products and services. Despite this, conditions remain highly competitive, particularly in the UK market for longer run, less time-sensitive products as a result of over-capacity. CONSOLIDATED PROFIT AND LOSS ACCOUNT 26 weeks to 26 weeks to 52 weeks to 26 January 28 January 28 July 2001 2000 2000 ------------------ ---------------- ------------ £'000 £'000 £'000 Turnover (note 2) 233,309 239,018 473,207 Cost of sales (167,907) (174,949) (340,101) ------------------ ---------------- ------------ Gross profit 65,402 64,069 133,106 Sales and distribution costs (14,247) (11,841) (24,315) Administration expenses Goodwill amortisation (394) - (108) Other administrative (22,498) (21,261) (42,704) expenses (22,892) (21,261) (42,812) Other operating income 655 162 542 ------------------ ---------------- ------------ Operating profit (note 2) 28,918 31,129 66,521 Interest receivable 1,624 1,607 3,561 Interest payable (270) (713) (1,243) ------------------ ---------------- ------------ Profit before taxation 30,272 32,023 68,839 Taxation (note 1) (9,566) (9,927) (21,340) ------------------ ---------------- ------------ Profit after taxation 20,706 22,096 47,499 Dividends (note 3) (5,243) (4,938) (17,559) ------------------ ---------------- ------------ Retained profit 15,463 17,158 29,940 ------------------ ---------------- ------------ Earnings per share (note 4) 19.88p 21.30p 45.77p ------------------ ---------------- ------------ Diluted Earnings per share 19.75p 20.98p 45.28p (note 4) ------------------ ---------------- ------------ Earnings per share before goodwill amortisation (note 4) 20.24p 21.30p 45.87p ------------------ ---------------- ------------ Dividend per ordinary share 5.00p 4.75p 16.90p ------------------ ---------------- ------------ All transactions are derived from continuing and acquired activities (note 5). CONSOLIDATED BALANCE SHEET 26 January 28 January 28 July 2001 2000 2000 ------------- ----------------- ---------- £'000 £'000 £'000 Fixed assets Intangible assets 17,590 - 12,133 Tangible assets 179,962 171,180 183,182 ----------- ------------------ ---------- 197,552 171,180 195,315 Current assets Stocks 18,014 17,830 16,934 Debtors 81,534 81,290 75,202 Cash at bank and in hand 63,761 69,952 65,877 ----------- ------------------ ---------- 163,309 169,072 158,013 Creditors - due within one year (103,720) (113,876) (112,326) ----------- ------------------ ---------- Net current assets 59,589 55,196 45,687 ----------- ------------------ ---------- Total assets less current 257,141 226,376 241,002 liabilities Creditors - due after more than (4,930) (6,722) (5,899) one year Provisions and deferred (13,804) (14,181) (14,270) taxation Deferred income (1,955) (2,578) (2,312) ----------- ------------------ ---------- 236,452 202,895 218,521 ----------- ------------------ ---------- Capital and reserves Called up share capital 10,419 10,380 10,388 Share premium account 42,419 41,304 41,522 Capital redemption reserve 1,040 1,040 1,040 Profit and loss account 182,574 150,171 165,571 ----------- ------------------ ---------- Equity shareholders' funds 236,452 202,895 218,521 ----------- ------------------ ---------- This interim statement was approved by the Board of Directors on 10 April 2001 SUMMARISED CONSOLIDATED CASH FLOW STATEMENT 26 weeks to 26 weeks to 52 weeks to 26 January 28 January 28 July 2001 2000 2000 ------------------ ------------ ------------ £'000 £'000 £'000 Net cash inflow from operating 33,491 34,982 93,419 activities Returns on investments and 1,396 879 2,016 servicing of finance Tax paid (8,144) (6,121) (21,222) Capital expenditure (11,188) (13,197) (32,270) Acquisitions (4,591) - (13,556) Equity dividends paid (12,654) (10,841) (15,771) ------------------ ------------ ------------ Net cash (outflow)/inflow before (1,690) 5,702 12,616 financing Financing Issue of shares 928 443 669 Decrease in debt (1,319) (2,113) (12,693) ------------------ ------------ ------------ (Decrease)/increase in cash (2,081) 4,032 592 ------------------ ------------ ------------ NOTES TO THE SUMMARISED CONSOLIDATED CASH FLOW STATEMENT 26 weeks to 26 weeks to 52 weeks to 26 January 28 January 28 July 2001 2000 2000 -------------- --------------- ------------ £'000 £'000 £'000 Net cash inflow from operating activities Operating profit 28,918 31,129 66,521 Depreciation 14,449 13,573 28,266 Goodwill amortisation 394 - 108 Other non cash movements (977) (515) (1,256) Changes in working capital (9,293) (9,205) (340) Other items - - 120 -------------- --------------- ------------ 33,491 34,982 93,419 ============== =============== ============ NOTES TO THE SUMMARISED CONSOLIDATED CASH FLOW STATEMENT Continued 26 weeks to 26 weeks to 52 weeks to 26 January 28 January 28 July 2001 2000 2000 --------- ------------ ----------- £'000 £'000 £'000 Reconciliation of net cash flow to movement in net funds (Decrease)/increase in cash in the (2,081) 4,032 592 period Cash outflow from decrease in debt and lease financing 1,319 2,113 12,693 --------- ------------ ----------- Change in net funds resulting from cash flows (762) 6,145 13,285 Exchange adjustments 268 (274) (482) --------- ------------ ----------- Movement in net funds in the period (494) 5,871 12,803 Opening net funds 56,750 43,947 43,947 --------- ------------ ----------- Closing net funds 56,256 49,818 56,750 --------- ------------ ----------- Other 28 July non cash Exchange 26 January 2000 Cashflow Changes Movements 2001 --------------- --------------- --------------- ------------- £'000 £'000 £'000 £'000 £'000 Analysis of net funds Cash at bank and 65,877 (2,417) - 301 63,761 in hand Overdrafts (969) 336 - - (633) --------------- (2,081) Bank loans - due within one (515) 252 (252) (14) (529) year due after one year (2,628) - 252 (19) (2,395) Finance leases (5,015) 1,067 - - (3,948) --------------- --------------- --------------- ------------- 56,750 (762) - 268 56,256 --------------- --------------- --------------- ------------- STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 26 weeks to 26 weeks to 52 weeks to 26 January 28 January 28 July 2001 2000 2000 ------------------ ------------------ ------------ £'000 £'000 £'000 Profit after taxation 20,706 22,096 47,499 Exchange differences 1,540 (1,272) 1,346 ------------------ ------------------ ------------ Total recognised gains and 22,246 20,824 48,845 losses ------------------ ------------------ ------------ MOVEMENTS IN SHAREHOLDERS' FUNDS 26 weeks to 26 weeks to 52 weeks to 26 January 28 January 28 July 2001 2000 2000 ------------------ ------------------ ------------ £'000 £'000 £'000 Opening shareholders' funds 218,521 186,566 186,566 Total recognised gains and 22,246 20,824 48,845 losses Dividends (5,243) (4,938) (17,559) Issue of ordinary shares 928 443 669 ------------------ ------------------ ------------ Closing shareholders' funds 236,452 202,895 218,521 ------------------ ------------------ ------------ NOTES TO THE FINANCIAL STATEMENTS 1. Basis of preparation The interim statements have been prepared in accordance with the accounting policies set out in, and are consistent with, the Group's Annual Report for 2000 except that the taxation charge for the period is based on the estimated charge for the fifty-three weeks to 3 August 2001. The interim statements are neither audited nor reviewed. 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 has been prepared from the Group's statutory accounts for that period, which have been filed with the Registrar of Companies. The auditors' report on the accounts of the Group for that period was 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: 26 weeks to 26 weeks to 52 weeks to 26 January 28 January 28 July 2001 2000 2000 ------------------ ------------------ ---------------- £'000 £'000 £'000 Turnover United Kingdom 171,063 186,858 372,008 United States of America 48,024 36,789 72,314 Rest of the World 14,222 15,371 28,885 ------------------ ------------------ ---------------- 233,309 239,018 473,207 ------------------ ------------------ ---------------- Operating profit United Kingdom 25,806 27,032 60,677 United States of America 2,651 2,583 3,764 Rest of the World 855 1,514 2,188 ------------------ ------------------ ---------------- 29,312 31,129 66,629 Goodwill amortisation - (394) - (108) USA ------------------ ------------------ ---------------- 28,918 31,129 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 have declared an interim dividend of 5.00p (2000 - 4.75p) net per share. The payment date will be 1 June 2001 and the record date will be 11 May 2001. 4. Earnings per share The calculation of the basic earnings per share is based on profit after taxation as disclosed in the profit and loss account of £20,706,000 (2000: January £22,096,000; July £47,499,000). Earnings per share before goodwill amortisation is calculated by adding back goodwill amortisation, as adjusted for taxation, to the profit after taxation. Basic earnings per share and earnings per share before goodwill amortisation are calculated on a weighted average of 104.1 million (2000: January - 103.7 million; July - 103.8 million) shares in issue during the period. 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 104.8 million (2000: January - 105.3 million; July - 104.9 million) shares during the period. The difference between the number of shares used in the basic and diluted earnings per share calculation is 0.7 million (2000: January - 1.6 million; July - 1.1 million) 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 period, which was 452.6p (2000: January - 580.0p; July - 520.7p). 5. Acquisition of business On 25 September 2000 certain of the assets and business of Global Financial Press Inc ('Global') were acquired for a total consideration of US $6,489,000 (£4,591,000), representing cash consideration and associated acquisition costs. After adjustments to reduce the carrying value of certain fixed assets to their fair value and accounting policy alignments to provide for leasehold premises repair costs and other liabilities, goodwill arising on the acquisition is £5,851,000. It is not possible to determine the contribution of the acquired assets and business of Global to the results of the period as the assets and business were immediately integrated into the existing operations of the Group. 6. Post balance sheet event On 1 February 2001 the whole of the share capital of Avanti Press Inc and its subsidiary, The Case-Hoyt Corporation, was acquired for a cash consideration of US $42 million. 7. A copy of this interim statement will be sent to all shareholders.

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