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