Interim Results

RNS Number : 8011W

4imprint Group PLC

04 August 2009

 



4 August 2009

4imprint Group plc

Interim Results for the period ended 27 June 2009.

4imprint Group plc announces today its interim results for the period ended 27 June 2009.

Summary

• Group revenue increased to £80.96m, up 4% on half year 2008 

• Direct Marketing Division revenue was £53.71m (half year 2008: £43.03m)

• Operating profit before pensions, share options and exceptional items was £1.52m (half year 2008: £4.82m)

• Operating profit was £0.47m (half year 2008: £3.85m) 

• Net debt at 27 June 2009 was £7.91m (half year 2008: £7.01m)

• Interim dividend maintained at 4.25p per share 

- Ends -

For further information, please contact:

Ken Minton

Chairman

4imprint Group plc

Tel. + 44 (0) 20 7299 7201

Gillian Davies

Group Finance Director

4imprint Group plc

Tel. + 44 (0) 20 7299 7201

Executive Chairman's Statement 

Group Summary

Group sales for the first half of 2009, at £80.96m, were 4% ahead of the same period last year. Group operating profit before pension charge, share option charge and exceptional items at £1.52m compares with £4.82m for the same period last year. 

Pre tax profit at £0.29m compares with £3.41m last year. The Board has declared a maintained dividend of 4.25p per share, to be paid on 15 September 2009. Net debt at 27 June 2009 was £7.91m. 

As Shareholders will be aware from the quarterly trading statements issued by the Group, the first quarter of 2009 was particularly weak, as the depressed economic climate adversely impacted sales in all three Divisions. However, sales in quarter two were higher than quarter one in all three Divisions, but particularly Direct Marketing in the USA where more stable market conditions seem to be emerging. 

Group operating profit was also depressed in quarter one though cost reduction programmes implemented across all Divisions partly mitigated the impact on profitability of the lower sales volume. In quarter two, these costs reduction measures made a stronger impact and thus together with an improved sales performance, quarter two Group operating profit was stronger than quarter one though below the level achieved in quarter two 2008. 

The first half was characterised by a tight control of costs, working capital and debt and at the end of the first half of 2009 net debt was £7.91m. 

Divisional Performances - Summary

(a) Direct Marketing Division

Sales for the first half of 2009 at £53.71m were 25% ahead of the £43.03m achieved in the first half of 2008. In US dollars sales were 6% below the first half of 2008. 

Sterling operating profit for the first half of 2009 was £1.08m, 66% below the same period prior year. The weaker performance was a reflection of the following factors:

(i)	Although total orders achieved in the first half of 2009 were very similar in numbers to the first half of 2008, the average order value was 7% below 2008.

(ii)	The yield of new customers from investment in catalogue prospecting was lower than 2008.

(iii)

Gross margin percentage was slightly below that of 2008 reflecting market weakness and general trading pressure.

The effect of these factors was particularly felt in the first quarter which made a loss of £0.76m. However, in quarter two profitability was significantly stronger and the Division delivered operating profit of £1.84m. Furthermore, tight control of costs helped to offset weaker trading. 

(b) End User Division 

Total Division sales in the first half of 2009 were 23% below the same period 2008 and operating profit before exceptional items at £1.36m was 37% below. 

The three businesses in this Division all traded profitably in the first half, but at lower levels than 2008, reflecting the difficult environment (particularly in Germany). However, early implementation of substantial cost reduction initiatives have offset to a significant degree the impact of weak trading on operating profit.

(c) Trade Division 

The Trade Division delivered a first half loss of £0.16m compared to £0.24m profit before exceptional items in the same period in the prior year. However, sales were 19% below 2008 reflecting the weakness of the UK market. The impact of lower sales on profitability was offset by significant overhead cost reduction which should equip the Division to take advantage of any upturn in demand.

Outlook

While uncertainty in the markets served by the Group remains, the Board believes that the measures implemented at the start of the year to control costs and cash flow, together with initiatives underway to develop sales, should underpin progress in the second half. 

Ken Minton

Executive Chairman

4 August 2009

Finance Director's Report

Group results

	Half year 2009	Half year 2008
	£m	£m
Group revenue	80.96	78.12
Group operating profit before pension, share options and exceptional items	1.52	4.82
Group operating profit	0.47	3.85
Group profit before tax	0.29	3.41

Revenue for the Group is 4% ahead of prior year, however at constant currency revenue is 14% below prior year. Revenue is below prior year (in currency) in all Divisions.

Operating profit before defined benefit pension charge, share option charge and exceptional items is £1.52m, compared to £4.82m in half year 2008. 

Operating profit before exceptional items in all Divisions is below prior year. In the End User and Trade Divisions the impact of lower sales revenue is partly mitigated by cost savings. In the Direct Marketing Division the reduction is principally due to the impact of lower sales and an increased cost of marketing with lower yield than prior years. 

Head office costs at £0.75m were in line with prior year.

Share option charge

The Group charged £0.29m (half year 2008: £0.19m) to operating profit in accordance with IFRS 2 'Share-based payments'.

The charge is mainly a non cash item and principally relates to the Executive Chairman and Senior Management LTIP schemes which are unlikely to meet their vesting condition. 

Pensions

The pension deficit on the defined benefit scheme increased to £22.07m in the period (half year 2008: £12.66m; full year 2008: £16.94m). 

The assets at 27 June 2009 were £66.00m, a reduction of £0.23m since the year end. There was an increase in liabilities of £4.90m to £88.07m, principally due to a change in discount rate. 

The defined benefit pension charge was £0.62m (half year 2008: £0.06m credit). The IAS 19 charge for 2009 is calculated with reference to asset and liability values at 27 December 2008. The expected return on assets has reduced (half year 2009: £2.03m; half year 2008: £2.82m) due to lower asset values and lower expected return on assets, the interest charge on liabilities (half year 2009: £2.63m; half year 2008: £2.72m) has decreased only marginally as at 27 December 2008 the decrease in the value of the liability was offset by an increase in the discount rate. 

Cash paid into the scheme was £1.22m (half year 2008: £1.00m).

Exceptional items

The exceptional charge of £0.14m in the End User Division related to a further reduction of the cost base due to the worsening of economic conditions at the start of 2009.

  Taxation 

The taxation charge for the period was £86,000 at a rate of 30% (half year 2008: 32%, full year 2008: 30%).

Net cash tax refund in the period was £85,000.

Earnings per share

Basic earnings per share were 0.79p (half year 2008: 9.22p; full year 2008: 14.06p) (see note 7).

Dividend 

The Board has declared a dividend of 4.25p (half year 2008: 4.25p). 

Cash flow

The Group's net debt at 27 June 2009 was £7.91m (28 June 2008: £7.01m, 27 December 2008: £4.19m). The principal components of the cash flow movement are as follows:

	£m
Cash generated from operating profit before exceptional items	2.55
Defined benefit pension contribution	(1.21)
Cash exceptional items	(0.52)
Operating working capital	0.01
Capital investment	(1.69)
Finance lease funded capital investment	(0.70)
Tax, dividends and interest	(2.13)
Exchange	(0.03)
Movement in net debt for the half year	(3.72)

Net debt of £7.91m included a loan of £2.18m relating to the construction of the new US distribution centre, which became fully operational in quarter one 2009, and a finance lease of £0.59m for a new US telephone system, also implemented in quarter one 2009.

Therefore, at 27 June 2009, the Group had available headroom on its UK and US facilities of £6.84m, together with cash balances of £1.95m; in total funding available of £8.79m. 

The £10m facilities with the Group's UK banker, Lloyds TSB Bank plc, which are due to expire on 31 December 2009 have been extended to 30 September 2010 on the same terms. Discussions will conclude before the end of  the year to agree new longer term facilities. 

Balance sheet and Shareholders' funds

Equity Shareholders' funds decreased by £7.15m to £14.41m, profit for the period was £0.20m and dividends paid were £2.02m. The after tax movement in the pension deficit decreased Shareholders' funds by £4.12m and further decreases in Shareholders' funds from other items, principally exchange, totalled £1.21m.

Exchange rates

The average US dollar exchange rate for the period for translating US profits was $1.4902 (half year 2008: $1.9859) and for Euros was €1.1664 (half year 2008: €1.2876) to the pound.  The exchange rate at the balance sheet date, used to translate assets and liabilities in US dollars, was $1.6516 (June 2008: $1.9916) and for Euros was €1.1739 (June 2008: €1.2645).

Critical accounting policies

Critical accounting policies are those that require significant judgements or estimates and potentially result in materially different results under different assumptions or conditions. It is considered that the Group's critical accounting policies are limited to pensions, deferred taxation, share-based payments, inventory provisions, trade receivables provisions and exceptional items. Full details are given in the Group's published Annual Report for the year ended 27 December 2008.

Principal risks

The Group reported in its Annual Report for the period ended 27 December 2008 that its activities expose it to a number of operational and financial risks. These principal risks, as set out in the Directors' Report and note 20 of the 2008 Annual Report, remain unchanged at the date of the interim report.

The principal risks are: macroeconomic conditions; market competitors and new products; operational risks; purchase of material and services; potential litigation and complaints; changes in law or regulation; and changes in accounting standards. 

Gillian Davies

Group Finance Director

4 August 2009

  Operating Review 

Direct Marketing Division

	Half year 2009	Half year 2008	Full year 2008
	£'000	£'000	£'000
External revenue	53,712	43,030	96,663
Operating profit	1,077	3,183	6,466

The Direct Marketing Division provides promotional products to customers in the USA and Canada from its Oshkosh, Wisconsin location and to the UK and Ireland from Manchester, UK. 

In North America, the Division's total revenue in US dollars in the first half of 2009 was $76.1m, compared to $80.6m in 2008. Direct Marketing sales, which comprise 96% of that total revenue, were 4% lower than prior year, whereas the small Corporate Programmes business saw its sales decline by a third over the same timeframe.

In the Direct Marketing business the sales decline against prior year was caused by lower average order values, which are to be expected in a difficult economy. Encouragingly, however, the number of orders received were up 1% over a particularly robust, pre-downturn first half in 2008. This compares to industry surveys indicating that promotional product sales in the United States were down by more than 20% in the first quarter of 2009. This validates the strategy outlined by the Board to continue to invest in prospecting to capture market share in a difficult trading environment, thereby positioning the business for strong future growth when the economy improves.

Prospecting for new customers in the current climate produces a yield that is well below historical levels, due to a decrease in response rates and average order values as customers are cautious with their own spending. However, the prospecting investment continues to generate a profit in the year in which it is incurred. In the first half of 2009 over 45,000 new customers were acquired, and the sharp reductions in response rate and average order value that were seen late in 2008 and in early 2009 have since stabilised.

Orders from customers who have ordered from us previously were up 6.4% over the first half of 2008, driven by our Blue Box™ marketing programme and an expanding product range marketed via the web and speciality catalogues. At the end of the first quarter of 2009 orders from this segment were up 5.4% over the same period in 2008, indicating an improving trend in the second quarter.

In February 2009, construction was completed of a new 100,000 sq. ft. distribution/fulfilment centre for the US business. This multi-functional facility provides significantly increased capacity to support a broad range of initiatives complementary to the growth plans of the business, including the development of our in-house embroidery operation, fulfilment of our expanding Blue Box™ mailings and other marketing plans, and enhancement of our existing Corporate Programme and sample fulfilment capabilities. 

The UK Direct Marketing business is in its second full year of operating independently, working to develop market share and build a platform for future growth. Orders received in the first half of 2009 ended 5.3% above prior year. The Manchester team launched its first 'Euro-based' web presence, serving Ireland, in early July 2009.

The reduction in operating profit for the Direct Marketing Division at the half year was principally a consequence of the decreased yield on our prospecting investment in the North American market. However, the continued expansion of the customer file and our ability to retain customers gives us confidence that the business is outperforming the industry in general. The working capital and cash generation characteristics of the business remain favourable, and management is actively managing costs, leaving the Direct Marketing Division well positioned for future growth when the economy improves.

  Operating Review (continued)

End User Division 

	Half year 2009	Half year 2008	Full year 2008
	£'000	£'000	£'000
External and inter divisional revenue	20,389	26,484	54,968
External revenue	20,103	26,286	54,647
Operating profit before exceptional items	1,356	2,139	4,721
Operating profit	1,216	2,139	4,138

The End User Division comprises three businesses, which supply promotional products for use in consumer promotions and corporate marketing programmes. The Division provides product design, logistic and other value added services to a target market of medium to large corporate enterprises, principally through contracted or preferred supplier relationships.

Total sales in the first half of 2009 were 23% below prior year and operating profit before exceptional items was £1.36m, 37% below prior year. This has been achieved in a difficult trading environment by focussing on three core objectives:

1.	Retaining current customers and adding to the customer portfolio
2.	Continuing to adapt the cost base to any significant change in sales levels
3.	Developing skills and services to position the Division for future growth.

Taking each business in turn:

Brand Addition (Manchester)

Sales in the period were 31% below prior year due to lower sales to the same principal customers. Further cost reductions were implemented in the first quarter and this has mitigated the impact of the lower sales on profitability. Operating profit before exceptional items was 32% below prior year. New customers have been added during 2009. 

Product Plus International (London)

Sales in the period were 10% below prior year, with lower activity from existing customers offset by sales to new customers gained at the end of 2008. Operating profit was 33% below prior year due to lower sales and the impact, in the first two months, of the strengthening of the US dollar on the cost of imported goods ordered in the prior quarter.

Kreyer (Hagen, Germany)

In Sterling, sales in the period were 22% below prior year as a result of lower volumes across all major customers. Operating profit was 53% below prior year due to a combination of the lower sales and pressure on margins which were partly mitigated by a cost reduction exercise in the first quarter. 

Each business has remained cash generative and in total, cash generated was more than double operating profit as a result of working capital control.

To allow the Division to strengthen its customer proposition and to develop business opportunities, it will operate under the single brand name of Brand Addition from 1 January 2010. 

  Operating Review (continued)

Trade Division 

	Half year 2009	Half year 2008	Full year 2008
	£'000	£'000	£'000
External and inter divisional revenue	8,347	10,347	19,764
External revenue	7,146	8,799	16,775
Operating (loss)/profit before exceptional items	(164)	239	(38)
Operating loss	(164)	(607)	(2,831)

The Trade Division is based in Blackpool. It is one of the largest promotional and advertising product trade supply companies in the UK, utilising its capabilities in specialist manufacturing, printing and worldwide sourcing of products.

During the first half of 2009, the Division has continued to be adversely affected by the significant economic downturn which commenced during the fourth quarter of 2008. This has resulted in lower levels of business activity and increased competitiveness in pricing and service levels. Although the improvements implemented by the Division during 2008 have enabled it to respond to these pressures, the market remains challenging.

As a result of these factors, total sales in the Division were 19% below prior year in the first half. 

The Division made a loss in the half year of £0.16m However, following a loss in the first quarter, it achieved a modest profit in the second quarter due to higher levels of sales. The impact of cost reduction undertaken in 2008 has mitigated the impact of lower sales and total overhead costs were £0.84m below half year 2008. 

Divisional management continues to focus on driving through improvements in sales, marketing and production to build on the progress made in 2008.

A modest of amount of cash was absorbed into working capital at the half year, in line with the seasonality of the business. 

  Condensed Consolidated Income Statement (unaudited)

		Half year 2009	Half year 2008	Full year 2008
	Note	£'000	£'000	£'000
Revenue	4	80,961	78,115	168,085
Operating expenses		(80,495)	(74,269)	(162,296)
Operating profit	4	466	3,846	5,789
Operating profit before exceptional items	4	606	4,692	9,342
Exceptional items	5	(140)	(846)	(3,553)
Operating profit	4	466	3,846	5,789
Finance income		1	12	37
Finance costs		(181)	(445)	(756)
Profit before tax		286	3,413	5,070
Taxation	6	(86)	(1,092)	(1,520)
Profit attributable to equity Shareholders		200	2,321	3,550
Earnings per share
Basic	7	0.79p	9.22p	14.06p
Diluted	7	0.78p	8.98p	13.67p

Dividends			£'000	£'000	£'000
Dividends paid in the period			2,025	2,020	3,090
Dividends per share declared - Interim		8	4.25p	4.25p	4.25p
- Final		8	-	-	8.00p

All operations are continuing operations in the current and prior periods. 

Condensed Statement of Recognised Income and Expense (unaudited)

		Half year 2009	Half year 2008	Full year 2008
		£'000	£'000	£'000
Profit for the period		200	2,321	3,550
Exchange (losses)/gains offset in reserves net of tax		(1,425)	199	2,841
Actuarial losses taken to reserves net of tax		(4,123)	(2,286)	(6,336)
Net losses not recognised in income statement		(5,548)	(2,087)	(3,495)
Total recognised (expense)/income for the period		(5,348)	234	55

Condensed Consolidated Balance Sheet (unaudited)

		At 27 June  2009	At 28 June  2008	At 27 Dec 2008
	Note	£'000	£'000	£'000
Non current assets
Property, plant and equipment		13,321	10,205	12,548
Goodwill		9,084	9,084	9,084
Intangible assets		1,707	1,511	1,630
Investments		9	8	11
Deferred tax assets		7,319	4,653	5,861
		31,440	25,461	29,134
Current assets
Inventories		8,248	10,219	8,449
Trade and other receivables		24,353	30,265	28,854
Cash and cash equivalents	10	1,948	6,632	4,411
		34,549	47,116	41,714
Current liabilities
Trade and other payables		(19,503)	(21,873)	(23,601)
Current tax		(150)	(690)	(151)
Deferred consideration		-	(1,090)	-
Finance leases	10	(118)	-	-
Borrowings	10	(6,307)	(7,644)	-
		(26,078)	(31,297)	(23,752)
Net current assets		8,471	15,819	17,962
Non current liabilities
Retirement benefit obligations	9	(22,071)	(12,662)	(16,937)
Finance leases	10	(468)	-	-
Borrowings	10	(2,967)	(6,000)	(8,600)
		(25,506)	(18,662)	(25,537)
Net assets		14,405	22,618	21,559
Shareholders' equity
Share capital	11	9,939	9,846	9,846
Share premium reserve	11	38,016	38,016	38,016
Capital redemption reserve	11	208	208	208
Cumulative translation differences	11	(274)	(1,491)	1,151
Retained earnings	11	(33,484)	(23,961)	(27,662)
Total equity		14,405	22,618	21,559

  Condensed Consolidated Cash Flow Statement (unaudited)

		Half year	Half year	Full year
		2009	2008	2008
	Note	£'000	£'000	£'000
Cash flows from operating activities
Cash generated from operations	12	822	4,203	12,563
Tax refund/(paid)		85	(267)	(960)
Finance income		1	12	37
Finance costs		(191)	(393)	(761)
Net cash generated from operating activities		717	3,555	10,879
Cash flows from investing activities
Acquisition of subsidiary		-	-	(1,090)
Purchases of property, plant and equipment		(1,438)	(625)	(2,809)
Purchases of intangible assets		(249)	(352)	(623)
Proceeds from sale of property, plant and equipment		-	22	24
Net cash used in investing activities		(1,687)	(955)	(4,498)
Cash flows from financing activities
Proceeds from borrowings		797	-	2,600
Capital element of finance lease payments		(52)	-	-
Proceeds from issue of ordinary shares		-	96	96
Purchase of own shares		-	(652)	(652)
Dividends paid to Shareholders		(2,025)	(2,020)	(3,090)
Net cash used in financing activities		(1,280)	(2,576)	(1,046)
Net movement in cash, cash equivalents and bank overdrafts		(2,250)	24	5,335
Cash, cash equivalents and bank overdrafts at beginning of the period		4,411	(1,077)	(1,077)
Exchange (losses)/gains on cash, cash equivalents and bank overdrafts		(452)	41	153
Cash, cash equivalents and bank overdrafts at end of the period		1,709	(1,012)	4,411
Analysis of cash, cash equivalents and bank overdrafts
Cash at bank and in hand	10	1,948	6,632	4,411
Bank overdrafts	10	(239)	(7,644)	-
		1,709	(1,012)	4,411

Notes to the Interim Financial Statements

for the period ended 27 June 2009

1 General information

4imprint Group plc is a public limited company incorporated and domiciled in the UK and listed on the London Stock Exchange. Its registered office is 7/8 Market Place, London, W1W 8AG.

The condensed consolidated interim financial statements were authorised for issue in accordance with a resolution of the Directors on 3 August 2009.

These condensed consolidated interim financial statements do not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 27 December 2008 were approved by the Board of Directors on 25 February 2009 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006. 

The financial information contained in this report is unaudited.

2 Basis of preparation 

These condensed consolidated interim financial statements for the half year ended 27 June 2009 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and IAS 34 'Interim Financial Reporting', as adopted by the European Union, and should be read in conjunction with the Group's financial statements for the year ended 27 December 2008, which were prepared in accordance with International Financial Reporting Standards as adopted by the European Union. 

3 Accounting policies

The accounting policies applied in these condensed consolidated interim financial statements are consistent with those of the annual financial statements for the year ended 27 December 2008, as described in those annual financial statements. The adoption of standards, amendments and interpretations effective for the accounting period beginning on 28 December 2008 has not led to any changes in the Group's accounting policies. A list of standards yet to be adopted by the Group and the date from which they are effective is listed on page 37 of the 2008 Annual Report and Accounts. The new standards and amendments to standards that are mandatory for the first time for financial years beginning on or after 1 January 2009, will be applied in the Group's 2010 financial year, as the current financial year began before 1 January 2009.

4 Segmental analysis

At 27 June 2009, the Group is reported in three primary business segments: 

Revenue	Gross revenue			Inter segment revenue			External revenue
	Half year 2009 £'000	Half  year 2008  £'000	Full Year  2008 £'000	Half year  2009 £'000	Half  year 2008  £'000	Full  year  2008 £'000	Half  year  2009 £'000	Half  year 2008  £'000	Full  year  2008 £'000
Direct Marketing Division	53,712	43,030	96,663	-	-	-	53,712	43,030	96,663
End User Division	20,389	26,484	54,968	(286)	(198)	(321)	20,103	26,286	54,647
Trade Division	8,347	10,347	19,764	(1,201)	(1,548)	(2,989)	7,146	8,799	16,775
	82,448	79,861	171,395	(1,487)	(1,746)	(3,310)	80,961	78,115	168,085

Inter segment revenues are on an arms-length basis. 

  Notes to the Interim Financial Statements

for the period ended 27 June 2009

4 Segmental analysis (continued)

Operating profit	Operating profit/(loss) before exceptional items			Exceptional items			Operating profit/(loss)
	Half  year 2009 £'000	Half  year 2008 £'000	Full  Year  2008 £'000	Half  year  2009 £'000	Half  year 2008 £'000	Full  year  2008 £'000	Half  year  2009 £'000	Half year  2008 £'000	Full year  2008 £'000
Direct Marketing Division	1,077	3,183	6,466	-	-	-	1,077	3,183	6,466
End User Division	1,356	2,139	4,721	(140)	-	(583)	1,216	2,139	4,138
Trade Division	(164)	239	(38)	-	(846)	(2,793)	(164)	(607)	(2,831)
Head office	(747)	(743)	(1,587)	-	-	(177)	(747)	(743)	(1,764)
Operating profit before defined benefit pension and share option charges	1,522	4,818	9,562	(140)	(846)	(3,553)	1,382	3,972	6,009
Defined benefit pension (charge)/credit	(624)	64	150	-	-	-	(624)	64	150
Share option charge	(292)	(190)	(370)	-	-	-	(292)	(190)	(370)
	606	4,692	9,342	(140)	(846)	(3,553)	466	3,846	5,789

Net finance costs totalling £180,000 (half year 2008: £433,000, full year 2008: £719,000), and taxation charge of £86,000 (half year 2008: £1,092,000, full year 2008: £1,520,000) cannot be separately allocated to individual segments. 

5 Exceptional items

	Half year	Half year	Full year
	2009	2008	2008
	£'000	£'000	£'000
End User Division reorganisation costs	(140)	-	(583)
Trade Division integration costs	-	(846)	(2,793)
Onerous leases	-	-	(177)
	(140)	(846)	(3,553)

The End User Division reorganisation costs in 2009 related to a cost reduction exercise, due to the worsening economic conditions in early 2009, and in 2008 related to the restructuring of the UK operations across the London and Manchester businesses and the closure of a small, unprofitable overseas office.

The Trade Division exceptional costs in 2008 represented the finalisation of a major reorganisation. These costs principally comprised £409,000 (half year 2008: £181,000) relating to headcount reduction; £1,719,000 (half year 2008: £200,000) inventory write down and £665,000 (half year 2008: £465,000) provision for irrecoverable trade receivables. 

The onerous lease costs in 2008 related to leases on properties which have not been used by the Group since the disposal of businesses in 2000. They are sublet if possible. These charges related to excess costs incurred in 2008 and the net costs which will be incurred by the Group for the remainder of the lease periods. The final lease expires in 2011. 

Cash expenditure on exceptional items in 2009 was £522,000 (half year 2008: £861,000, full year 2008: £1,411,000) including £413,000 in respect of prior years' exceptional items. Non cash items were £nil and £306,000 of cash items are included in accruals at 27 June 2009.

  Notes to the Interim Financial Statements

for the period ended 27 June 2009

6 Taxation

The taxation charge for the period to 27 June 2009 has been calculated at 30% (half year 2008: 32%; full year 2008: 30%) of the profit before tax for the period

7 Earnings per share

Basic and diluted

The basic and diluted earnings per share are calculated based on the following data:

	Half year	Half year	Full year
	2009	2008	2008
	£'000	£'000	£'000
Profit for the financial period	200	2,321	3,550
	Number 000's	Number 000's	Number 000's
Basic weighted average number of shares	25,390	25,187	25,251
Dilutive potential ordinary shares - employee share options	220	675	715
Diluted weighted average number of shares	25,610	25,862	25,966
Basic earnings per share	0.79p	9.22p	14.06p
Diluted earnings per share	0.78p	8.98p	13.67p

The basic weighted average excludes shares held in the employee share trust. The effect of this is to reduce the average by 254,000 (half year 2008: 400,000; full year 2008: 343,000).

8 Dividends

The interim dividend for 2009 of 4.25p per ordinary share (interim 2008: 4.25p; final 2008: 8.00p) will be paid on 15 September 2009 to ordinary Shareholders on the register at the close of business on 14 August 2009.

9 Employee pension schemes

The Group operates defined contribution plans for the majority of its UK and US employees. The regular contributions are charged to the income statement as they are incurred.

The Group also operates a defined benefit pension scheme which is closed to new members. The funds of the scheme are administered by a trustee company and are independent of the Group's finances.

During the period the financial position of the defined benefit pension scheme has been updated in line with the anticipated annual cost for current service, the expected return on scheme assets, the interest on scheme liabilities and cash contributions made to the scheme. The last full actuarial valuation was carried out by a qualified independent actuary as at 5 April 2007 and this has been updated on an approximate basis to 27 June 2009.

The principal assumptions made by the actuaries at 27 June 2009 were:

	Half year	Half year	Full year
	2009	2008	2008
Rate of increase in pensionable salaries	4.2%	5.0%	3.8%
Rate of increase in pensions in payment and deferred pensions	3.2%	4.0%	2.8%
Discount rate	6.3%	6.7%	6.5%
Inflation assumption	3.2%	4.0%	2.8%
Expected return on scheme assets	6.5%	7.4%	6.3%

The mortality assumptions adopted at 27 June 2009 have not changed from those at 27 December 2008.

  Notes to the Interim Financial Statements

for the period ended 27 June 2009

9 Employee pension schemes (continued)

The amounts recognised in the income statement are:

	Half year	Half year	Full year
	2009	2008	2008
	£'000	£'000	£'000
Current service cost	31	36	68
Interest cost on scheme liabilities	2,627	2,715	5,366
Expected return on scheme assets	(2,034)	(2,815)	(5,584)
	624	(64)	(150)

Analysis of the movement in the balance sheet liability:

	Half year	Half year	Full year
	2009	2008	2008
	£'000	£'000	£'000
At start of period	16,937	10,549	10,549
Total charged/(credited) in the income statement	624	(64)	(150)
Contributions paid	(1,216)	(998)	(2,261)
Actuarial loss/(gain) on the scheme liabilities	4,361	(5,919)	18,309
Actuarial loss/(gain) on scheme assets	1,365	9,094	(9,510)
At end of period	22,071	12,662	16,937

10 Borrowings

Analysis of net debt

	Half year	Half year	Full year
	2009	2008	2008
	£'000	£'000	£'000
Cash at bank and in hand	1,948	6,632	4,411
Current bank overdrafts	(239)	(7,644)	-
Cash, cash equivalents and bank overdrafts	1,709	(1,012)	4,411
Finance leases	(586)	-	-
Current bank loans	(6,068)	-	-
Non current bank loans	(2,967)	(6,000)	(8,600)
Net debt	(7,912)	(7,012)	(4,189)

The Group had the following undrawn committed borrowing facilities available at 27 June 2009:

		Floating rate
		Half year  2009	Half year  2008	Full Year 2008
Borrowing facilities		£'000	£'000	£'000
Expiring within one year		4,613	791	4,956
Expiring in more than one year		3,083	4,256	4,294
		7,696	5,047	9,250

The £6m bank loan and £4m overdraft facility with the Group's UK banker, Lloyds TSB Bank plc, which are due to expire on 31 December 2009 have been extended to 30 September 2010 on the same terms. 

  Notes to the Interim Financial Statements

for the period ended 27 June 2009

11 Consolidated statements of changes in Shareholders' equity 

	Share Capital	Share Premium reserve	Capital Redemption reserve	Cumulative Translation differences	Retained earnings
					Own shares	Profit and loss	Total  Equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 28 December 2008	9,846	38,016	208	1,151	(519)	(27,143)	21,559
Profit for the period						200	200
Exchange adjustments net of tax				(1,425)			(1,425)
Shares issued	93				(93)		-
Own shares utilised					452	(452)	-
Employee share options taken to reserves						233	233
Deferred tax on employee share options taken to reserves						(14)	(14)
Actuarial losses taken to reserves						(5,726)	(5,726)
Deferred tax on actuarial losses taken to reserves						1,603	1,603
Dividends						(2,025)	(2,025)
At 27 June 2009	9,939	38,016	208	(274)	(160)	(33,324)	14,405

During the period 240,000 shares were issued at par value to meet the requirements of share option exercises.

	Share capital	Share Premium reserve	Capital Redemption reserve	Cumulative Translation differences	Retained earnings
					Own shares	Profit and loss	Total Equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30 December 2007	9,823	37,943	208	(1,690)	(751)	(20,815)	24,718
Profit for the period						2,321	2,321
Exchange adjustments net of tax				199			199
Shares issued	23	73					96
Own shares utilised					701	(701)	-
Own shares purchased					(469)		(469)
Employee share options taken to reserves						168	168
Deferred tax on employee share options taken to reserves						(109)	(109)
Actuarial losses taken to reserves						(3,175)	(3,175)
Deferred tax on actuarial losses taken to reserves						889	889
Dividends						(2,020)	(2,020)
At 28 June 2008	9,846	38,016	208	(1,491)	(519)	(23,442)	22,618

  Notes to the Interim Financial Statements

for the period ended 27 June 2009

12 Cash generated from operations

	Half year	Half year	Full year
	2009	2008	2008
	£'000	£'000	£'000
Operating profit	466	3,846	5,789
Adjustments for:
Depreciation charge	761	653	1,298
Amortisation of intangibles	324	292	661
Loss on disposal of property, plant and equipment	-	-	19
Exceptional non cash items	-	665	2,432
Decrease in exceptional accrual	(382)	(688)	(290)
Share option charge	233	190	370
IAS 19 pension charge/(credit) for defined benefit scheme	624	(64)	(150)
Contributions to defined benefit pension scheme	(1,216)	(998)	(2,261)
Changes in working capital:
Increase in inventories	(63)	(997)	(267)
Decrease in trade and other receivables	2,724	568	5,614
(Decrease)/increase in trade and other payables	(2,649)	736	(652)
Cash generated from operations	822	4,203	12,563

13 Capital commitments

The Group had capital commitments of £190,000 contracted but not provided for in these financial statements 

(28 June 2008: £104,000, 27 December 2008: £467,000).

14 Related party transactions

The Group did not participate in any related party transactions that require disclosure. 

Statement of Directors' Responsibilities

The Directors' confirm that, to the best of their knowledge, this condensed consolidated set of interim financial statements has been prepared in accordance with IAS 34 as adopted by the European Union and that the interim management report includes a fair review of the information required by rules 4.2.7 and 4.2.8 of the Disclosure Rules and Transparency Rules of the United Kingdom's Financial Services Authority, namely:

• An indication of the important events that have occurred during the first six months and their impact on the condensed consolidated interim financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year. 

• Disclosure of material related party transactions and changes therein.

The names of the Directors of 4imprint Group plc are as listed in the Group's Annual Report for 27 December 2008. A list of current Directors of 4imprint Group plc is maintained on the Group website: www.4imprint.co.uk, in the investor relations section.

By order of the Board

Ken Minton		Gillian Davies
Executive Chairman		Group Finance Director

4 August 2009

 

END

 

 

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