Interim Results
St. Ives PLC
23 April 2002
St Ives plc
Interim Results Announcement
Equipment investment and cost reduction programme
position group well to respond to a market upturn
St Ives, the leading UK-based printing group, today announces Interim Results
for the 26 weeks ended 1 February 2002.
26 weeks to 26 weeks to
1 Feb 2002 26 Jan 2001
• Turnover £241.1m £233.3m
• Profit before tax, exceptional items & goodwill £16.6m £30.7m
amortisation
• Earnings per share before exceptional items & 10.9p 20.3p
goodwill amortisation
• Interim dividend per share 5.0p 5.0p
Commenting on the interim results, Miles Emley, Chairman, St Ives plc said:
'In most of our markets conditions have been more challenging than at any time
in recent history. In the UK book market, supply and demand have recently moved
towards equilibrium. All our other markets are experiencing significant excess
capacity and there is little sign of an upturn in demand. Against this
background, progress will be hard to achieve in the short term.
'In the longer term, the steps recently announced to reduce costs and
rationalise capacity, together with our long standing policy of investing in the
most modern and flexible equipment, make us well placed to respond to an upturn
when it occurs.'
For further information, please contact:
St Ives plc 020 7928 8844
Miles Emley, Chairman
Brian Edwards, Managing Director
Citigate Dewe Rogerson 020 7638 9571
Julian Walker / Duncan Murray
Results
The results for the twenty-six weeks ended 1 February 2002 show turnover of
£241.1 million (2001 - £233.3 million) and profit before taxation, exceptional
items and amortisation of goodwill of £16.6 million (2001 - £30.7 million).
Profit before taxation, which is struck after goodwill amortisation of
£1.1million and exceptional costs of £9.4 million relating to rationalisation
measures completed or announced throughout the Group, was £6.1million (2001 -
£30.3 million). Earnings per share before exceptional items and goodwill
amortisation were 10.93p (2001 - 20.33p).
Dividend
An interim dividend of 5.00p per share (2001 - 5.00p) has been declared, which
will be paid on 5 June 2002 to shareholders on the register on 3 May 2002.
Trading Conditions
In most of our markets conditions have been more challenging than at any time in
recent history. There has been a widespread reduction in advertising expenditure
which has affected direct response, commercial and magazine markets in the
geographic areas in which we operate; the uncertainties facing global capital
markets have led to a dearth of corporate financial documentation; and demand
for music and multimedia related product is weak. The effect of reducing demand
has been exacerbated by the significant excess of capacity over demand which was
already in evidence in mid-2001 and, in the UK, by the continued strength of
sterling against the euro. Only the UK market for books has shown some
resilience.
We have reacted swiftly to the hostile environment by reducing costs and taking
steps to retire our least efficient capacity. Regrettably, most of these
initiatives involve reductions in the number of people employed, and, in the UK
and Europe, lengthy consultations can be required before they are finalised. As
ever, we keep our cost base under continuous review.
Books
Overall demand for monochrome consumer books in the UK has been steady. We have
produced the majority of best-selling titles during the half year by virtue of
our ability to offer a faster and more responsive service than our competitors.
Sales of paperback books were strong, partly because we produced a number of
titles associated with recent film releases.
Direct Response and Commercial
In the UK we have experienced reduced demand overall and competitive pricing,
mainly as a result of falling advertising expenditure and continued overseas
competition for longer-run, less time-sensitive products. We continue to
concentrate on more specialist products which require a higher level of service
and for which demand has been generally more resilient. Towards the end of the
period we announced proposals to reduce capacity by decommissioning three of our
older presses, which were less suited to the production of specialist material,
and associated finishing equipment, at our Leeds factory. These actions are now
complete.
The profitability of our business in Germany serving these markets has been
further affected by weak demand and pricing pressure resulting from excess
capacity. As a result we decommissioned one of our 32 page presses towards the
end of the half-year.
In the USA we experienced particularly sharp reductions in demand in the travel
and leisure sectors as well as for high quality retail advertising material,
which made for volatile utilisation and persistent pricing pressure. We have
taken some costs out of the business as a result of the consolidation of Avanti
and Case-Hoyt with our pre-existing US business, mitigating the adverse effects
of the challenging economic environment.
Financial
As a result of unsettled conditions in global capital markets, demand for
corporate financial print remained at extremely low levels throughout the
half-year in the USA, UK and Europe. We have sustained our market share in this
depressed market. In France, we were particularly successful in winning a very
high proportion of the few global transactions that were launched. The cost base
of this business has been further reduced both in the UK and USA. We are also
maintaining our share of the market for Annual Reports and Accounts, the
majority of which are produced in the second half of our financial year.
Magazines
In the UK falling advertising demand, especially in the travel and internet
related sectors, has resulted in reduced paginations and a number of title
closures, the effect of which has been exacerbated by a surplus of web offset
capacity. The fashion and lifestyle sectors were more resilient. Generally, the
consumer titles which we print, many of which are market leaders in their
fields, have maintained circulation levels. At the end of the period, we
announced proposals to close our factory at Gillingham in Kent which should
enable us to take advantage of under-utilised capacity at our other sites.
Similar factors have affected our business serving the US market for these
products, where the reduction in page count in the travel and leisure sectors
has been more marked, but where internet related titles represent a smaller
proportion of our volumes.
Multimedia
Levels of demand for both music and multimedia related products deteriorated and
adversely affected our plants in both the UK and Holland. As yet we have not
experienced any significant growth in our customers' requirements for
DVD-related packaging. Pricing continues to be extremely competitive and short
term volatility in demand makes it hard to achieve acceptable utilisation.
Balance Sheet
The Group's financial position remains strong. Our commitment to continued
investment in the business is undiminished. In the last eighteen months we have
invested in excess of £50 million in further improving the flexibility and
productivity of our equipment. Shareholders' funds at the end of the period
stood at over £237 million and net debt was below £4 million.
Outlook
In the UK book market, supply and demand have recently moved towards
equilibrium. All our other markets are experiencing significant excess capacity
and there is little sign of an upturn in demand. Against this background,
progress will be hard to achieve in the short term. In the longer term, the
steps recently announced to reduce costs and rationalise capacity, together with
our long standing policy of investing in the most modern and flexible equipment,
make us well placed to respond to an upturn when it occurs.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
26 weeks to 1 February 2002
----------------------------------------------
Before Exceptional
exceptional items and 26 weeks to 53 weeks to
items and goodwill 26 January 3 August
goodwill amortisation 2001 2001
amortisation (note 6) Total (Restated) (Restated)
---------------------- ---------------- ----------- -------------- ---------------
£'000 £'000 £'000 £'000 £'000
Turnover 241,124 - 241,124 233,309 498,154
(note 2)
Cost of (183,468) (4,007) (187,475) (167,907) (361,063)
sales
----------- ---------- ----------- ---------- ---------
Gross 57,656 (4,007) 53,649 65,402 137,091
profit
Sales (16,368) (503) (16,871) (14,247) (31,223)
and distribution costs
Administrative
expenses
Goodwill - (1,096) (1,096) (394) (1,546)
amortisation
Exceptional - (4,074) (4,074) - -
items
Other (24,787) - (24,787) (22,498) (46,151)
administrative
expenses
(24,787) (5,170) (29,957) (22,892) (47,697)
Other 362 (845) (483) 655 889
operating income/(costs)
----------- ----------- --------- ---------- ---------
Operating 16,863 (10,525) 6,338 28,918 59,060
profit (note 2)
Interest 402 - 402 1,624 2,563
receivable
Interest (649) - (649) (270) (1,164)
payable
----------- ------------ --------- --------- ----------
Profit 16,616 (10,525) 6,091 30,272 60,459
before
taxation
Taxation (5,397) 3,277 (2,120) (9,478) (18,628)
(note 3)
----------- ------------- ---------- ---------- ----------
Profit 11,219 (7,248) 3,971 20,794 41,831
after
taxation
Dividends (5,137) - (5,137) (5,243) (17,711)
(note 4)
------------ ------------ --------- ---------- ----------
Retained 6,082 (7,248) (1,166) 15,551 24,120
(loss)/profit
======== ======== ====== ======= =======
Basic 3.87p 19.97p 40.20p
earnings per share
(note 5)
======= ======= =======
Diluted 3.86p 19.83p 40.00p
earnings per share
(note 5)
======= ======= =======
Earnings
per share before
exceptional items
and goodwill
amortisation 10.93p 20.33p 41.59p
(note 5)
========= ======== ========
Dividend 5.00p 5.00p 17.15p
per ordinary
share
======= ======== ========
Comparative figures for the 26 weeks to 26 January 2001 and the 53 weeks to 3
August 2001 have been restated to reflect a change in accounting policy for
deferred taxation following the adoption of FRS19 'Deferred Taxation' (see notes
1 and 3).
All transactions are derived from continuing activities.
CONSOLIDATED BALANCE SHEET
1 February 26 January 3 August
2002 2001 2001
(Restated) (Restated)
------------------ --------------------- ---------------------
£'000 £'000 £'000
Fixed assets
Intangible assets 43,228 17,590 44,328
Tangible assets 205,640 179,962 205,580
---------------- ---------------- ---------------
248,868 197,552 249,908
---------------- -------------- --------------
Current assets
Stocks 17,343 18,014 21,134
Debtors 82,321 81,534 87,521
Cash at bank and in hand 26,826 63,761 32,961
--------------- --------------- --------------
126,490 163,309 141,616
Creditors - due within one year (114,889) (103,720) (137,827)
--------------- ---------------- ---------------
Net current assets 11,601 59,589 3,789
--------------- ---------------- ---------------
Total assets less current liabilities 260,469 257,141 253,697
Creditors - due after more than one year (3,295) (4,930) (3,817)
Provisions and deferred taxation (18,303) (14,518) (10,887)
Deferred income (1,728) (1,955) (1,786)
---------------- ---------------- --------------
237,143 235,738 237,207
========= ========= ========
Capital and reserves
Called up share capital 10,271 10,419 10,256
Share premium account 44,070 42,419 43,568
Capital redemption reserve 1,238 1,040 1,238
Profit and loss account 181,564 181,860 182,145
---------------- --------------- ---------------
Equity shareholders' funds 237,143 235,738 237,207
========= ========= =========
This interim statement was approved by the Board of Directors on 23 April 2002.
SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
26 weeks to 26 weeks to 53 weeks to
1 February 26 January 3 August
2002 2001 2001
--------------- ----------------- -----------------
£'000 £'000 £'000
Net cash inflow from operating activities 32,262 33,491 81,618
Returns on investments and servicing of finance (305) 1,396 1,463
Tax paid (8,614) (8,144) (21,781)
Capital expenditure (16,670) (11,188) (35,212)
Acquisitions - (4,591) (35,489)
Equity dividends paid (12,467) (12,654) (17,866)
---------------- ----------------- ---------------
Net cash outflow before financing (5,794) (1,690) (27,267)
Financing
Issue of shares 517 928 2,112
Purchase of own shares - - (8,370)
(Decrease)/increase in debt (784) (1,319) 1,292
---------------- ---------------- ----------------
Decrease in cash (6,061) (2,081) (32,233)
========== ========= =========
NOTES TO THE SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
26 weeks to 26 weeks to 53 weeks to
1 February 26 January 3 August
2002 2001 2001
------------------ ----------------- ----------------
£'000 £'000 £'000
Net cash inflow from operating activities
Operating profit 6,338 28,918 59,060
Depreciation 16,734 14,449 31,556
Goodwill amortisation 1,096 394 1,546
Other non cash movements 6,670 (977) (1,542)
Changes in working capital 1,283 (9,293) (9,122)
Other items 141 - 120
----------------- ---------------- ----------------
32,262 33,491 81,618
======== ========= =========
NOTES TO THE SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
Continued
26 weeks to 26 weeks to 53 weeks to
1 February 26 January 3 August
2002 2001 2001
-------------------- ------------------ -----------------
£'000 £'000 £'000
Reconciliation of net cash flow to
movement in net
(debt)/funds
Decrease in cash (6,061) (2,081) (32,233)
in the period
Cash outflow/(inflow) from
decrease/(increase)
in debt and lease 784 1,319 (1,292)
financing
---------------- -------------- ----------------
Change in net funds resulting from (5,277) (762) (33,525)
cash flows
Loans acquired - - (20,815)
with subsidiary
Exchange (199) 268 (670)
adjustments
--------------- --------------- ---------------
Movement in net (5,476) (494) (55,010)
funds in the
period
Opening net funds 1,740 56,750 56,750
---------------- ---------------- --------------
Closing net (3,736) 56,256 1,740
(debt)/funds
========== ========= ========
Other
3 August non cash Exchange 1 February
2001 Cashflow Changes Movements 2002
--------------- ----------------- ------------------ ------------------- ----------------
£'000 £'000 £'000 £'000 £'000
Analysis of net
(debt)/funds
Cash at bank and 32,961 (6,293) - 158 26,826
in hand
Overdrafts (232) 232 - - -
-------------
(6,061)
Bank loans -
due within one (26,033) 262 (209) (359) (26,339)
year
due after one year (2,145) - 209 2 (1,934)
Finance leases (2,811) 522 - - (2,289)
-------------- --------------- ---------------- --------------- --------------
1,740 (5,277) - (199) (3,736)
========= ======== ========= ========= ========
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
26 weeks to 26 weeks to 53 weeks to
1 February 26 January 3 August
2002 2001 2001
(Restated) (Restated)
---------------- -------------------- -------------------
£'000 £'000 £'000
Profit 3,971 20,794 41,831
after
taxation
Exchange 585 1,540 1,626
differences
----------------- ------------------- -------------------
Total
recognised
gains and
losses
relating to 4,556 22,334 43,457
the period
Prior year - (802) (802)
adjustment
----------------- ------------------- -------------------
Total
recognised
gains and
losses
since last 4,556 21,532 42,655
Annual
Report
MOVEMENTS IN SHAREHOLDERS' FUNDS
26 weeks to 26 weeks to 53 weeks to
1 February 26 January 3 August
2002 2001 2001
(Restated) (Restated)
----------------- ------------------- -------------------
£'000 £'000 £'000
Opening 237,834 218,521 218,521
shareholders
' funds
Prior year (627) (802) (802)
adjustment
----------------- ------------------ -----------------
Opening 237,207 217,719 217,719
shareholders
' funds (as
restated)
Total 4,556 22,334 43,457
recognised
gains and
losses
Dividends (5,137) (5,243) (17,711)
Issue of 517 928 2,112
ordinary
shares
Purchase of - - (8,370)
own shares
------------------ ----------------- ------------------
Closing 237,143 235,738 237,207
shareholders
' funds
========== =========== ===========
The prior year adjustments shown in the total recognised gains and losses and
the movement in shareholders' funds for the periods ended 1 February 2002, 26
January 2001 and 3 August 2001 are a result of the adoption of FRS19 (see notes
1 and 3).
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
The interim statements have been prepared in accordance with the accounting
policies set out in the Group's Annual Report for 2001 except for the adoption
of Financial Reporting Standard 19 'Deferred Taxation' (FRS19). Deferred
taxation is now provided on all non-permanent timing differences which have
originated but not reversed by the balance sheet date. Deferred taxation
provisions at 26 January 2001 and 3 August 2001 have been restated by a prior
year adjustment to reserves with a consequent tax credit in the profit and loss
account of prior periods to reflect this change in policy. As permitted by
FRS19, the group has adopted an accounting policy of not discounting deferred
taxation provisions to reflect the time value of money. Deferred taxation is not
provided on gains on sales of assets deferred by rollover relief, or taxation
arising on the distribution of retained earnings of overseas subsidiaries.
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-three weeks to 3 August 2001 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 53 weeks to
1 February 26 January 3 August
2002 2001 2001
------------------ ------------------ ------------------
£'000 £'000 £'000
Turnover
United Kingdom 152,465 171,063 340,875
United States of America 76,523 48,024 130,878
Rest of the World 12,136 14,222 26,401
---------------- ---------------- ----------------
241,124 233,309 498,154
========== ========== =========
Operating profit/(loss)
United Kingdom 7,448 25,806 53,976
United States of America 1,760 2,651 6,962
Rest of the World (1,774) 855 (332)
------------------ ------------------ -----------------
7,434 29,312 60,606
Goodwill amortisation - USA (1,096) (394) (1,546)
----------------- ----------------- -----------------
6,338 28,918 59,060
========== ========== ==========
Operating profit/(loss) before exceptional
items and goodwill amortisation
United Kingdom 16,054 25,806 53,976
United States of America 1,815 2,651 6,962
Rest of the World (1,006) 855 (332)
------------------ ----------------- -----------------
16,863 29,312 60,606
=========== =========== ==========
The directors consider that the Group has only one class of business and
consequently no further analysis of turnover or profit is given.
3. Taxation
The tax charge is analysed below:
26 weeks to 26 weeks to 53 weeks to
1 February 26 January 3 August
2002 2001 2001
(Restated) (Restated)
---------------- -------------------- -------------------
£'000 £'000 £'000
United Kingdom taxation 2,901 9,004 17,697
Overseas taxation (781) 474 931
--------------- -------------- ---------------
2,120 9,478 18,628
---------------- ----------------- ----------------
The taxation charge for the period ended 1 February 2002 is based on the
estimated charge for the fifty-two weeks to 2 August 2002.
The effect of adopting FRS19, and therefore providing taxation on non-permanent
timing differences, is to increase last year's interim profit after tax by
£88,000 and final profit after tax by £175,000. The adoption of FRS19 also
increases deferred taxation provisions by £627,000, £714,000 and £802,000 at 3
August 2001, 26 January 2001 and 30 July 2000 respectively. The profit after tax
for the twenty-six weeks ended 1 February 2002 would have been materially
unchanged if FRS19 had not been adopted.
4. Dividends
The directors have declared an interim dividend of 5.00p (2001 - 5.00p) net per
share. The payment date will be 5 June 2002 and the record date will be 3 May
2002.
5. 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 £3,971,000 (2001:
January £20,794,000; July £41,831,000). Earnings per share before exceptional
items and goodwill amortisation is calculated by adding back exceptional items
and goodwill amortisation, as adjusted for taxation, to the profit after
taxation. Basic earnings per share and earnings per share before exceptional
items and goodwill amortisation are calculated on a weighted average of 102.6
million (2001: January - 104.1 million; July - 104.1 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 103.0 million (2001: January - 104.8 million; July - 104.6 million)
shares during the period.
6. Exceptional items and goodwill amortisation
Goodwill amortisation of £1,096,000 was charged in the twenty-six weeks ended
1 February 2002. The exceptional items of £9,429,000, before taxation, relate to
rationalisation measures completed or announced throughout the Group. They
include redundancy costs, losses and provisions for losses on asset disposals
less realised gains, and provision for lease termination.
No exceptional items arose in the twenty-six weeks ended 26 January 2001 or in
the fifty-three weeks ended 3 August 2001.
7. A copy of the interim statement will be sent to all shareholders.
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