Final Results

St. Ives PLC 12 October 2004 EMBARGOED FOR RELEASE 07:00 12 OCTOBER 2004 12 October 2004 ST IVES plc Preliminary Results for the 52 weeks ended 30 July 2004 St Ives plc, the UK's leading printing group, announces preliminary results for the 52 weeks ended 30 July 2004. Key Points â€¢ Turnover Â£410.3m (2003: Â£437.2m) â€¢ Pre tax profit Â£14.9m (2003: Â£34.6m) â€¢ Underlying* pre tax profit Â£39.7m (2003: Â£36.9m) â€¢ Basic earnings per share 2.92p (2003: 21.82p) â€¢ Underlying* earnings per share 25.08p (2003: 23.45p) â€¢ Final dividend maintained at 12.15p per share * pre exceptional items and goodwill amortisation and impairment Commenting on the results, Chairman, Miles Emley said: 'The results for this year are a creditable performance, achieved in spite of continued challenging conditions in most of our markets, and reflect the benefits of the actions we have taken to reduce costs over recent years. The business remains strongly cash generative and our financial position is robust. 'We believe that St Ives is well placed to emerge strengthened from the current turbulent conditions.' For further information contact: St Ives plc Miles Emley, Chairman Brian Edwards, Managing Director 020 7928 8844 Smithfield John Antcliffe Anna Rainbow 020 7360 4900 Results The results for the 52 weeks ended 30 July 2004 show turnover of Â£410.3 million (2003 - Â£437.2 million) and underlying profit before exceptional items, goodwill amortisation and impairment and taxation of Â£39.7 million (2003 - Â£36.9 million). Profit before taxation was Â£14.9 million (2003 - Â£34.6 million). Underlying earnings per share were 25.08 pence (2003 - 23.45 pence). Basic earnings per share were 2.92 pence (2003 - 21.82 pence). This is a creditable result, representing an increase of 7.5 per cent in underlying profit as compared with the previous year, which has been achieved despite the continuation of extremely challenging conditions in most of our markets. It reflects the benefits of the actions which we have taken to reduce our cost base over the last several years. The exceptional charge of Â£9.9 million (excluding goodwill impairment of Â£13 million) mainly represents the costs of the closures at Rochester and Marlton in the USA and of transferring manufacturing operations from Tunbridge Wells to Crayford, together with redundancy costs arising from restructuring as a result of investment or consolidation of operations in other parts of our Group. Dividends The Board is recommending the payment of a final dividend of 12.15 pence per share, making total dividends of 17.15 pence per share, the same as last year. If approved, the final dividend will be paid on 3 December 2004 to shareholders on the register on 5 November 2004. Trading Conditions Underlying demand for books remained robust. In our other markets, we grew sales of more specialist, shorter-run product. However web offset markets in all the geographic areas in which we operate continue to be characterised by over-capacity and fluctuating demand. Pricing for longer-run, non-time-sensitive products was especially competitive. While there was a modest improvement in levels of corporate finance activity in the USA, this market remained very quiet in Europe and the UK and pricing was extremely competitive in both corporate financial and Annual Reports markets. In these circumstances it became necessary to take further actions to reduce our cost base. Books While sales of books were lower than in the previous year, underlying levels of demand remained resilient. Paperback sales were particularly strong. We produced a high proportion of best selling titles, which we were able to win because of our ability to provide initial orders on very short lead-times and to deliver quick reprints when required. We increased the volume of books for which we provide direct delivery to retail chains and other ancillary services. Our continuing investment in systems and equipment has enabled us to reduce cost as well as enhance service. As a result, we made further progress in financial terms. Direct Response and Commercial UK We again grew sales of specialist, personalised direct mail pieces, particularly for the financial and government sectors of the market, as we continued to concentrate on customers with demanding service requirements. Winning longer-run catalogue and brochure work at prices which generated an economic return proved challenging in the face of continuing over-capacity. However, as a result of changes in our mix of work, we were able to improve profitability. Germany Commercial markets remained subdued in Germany. At Johler Druck we reduced losses through improvements in the work mix and more concentration on parts of the market with a greater requirement for more specialist print. Utilisation improved modestly. USA In these markets in the USA demand was weak and pricing pressure continued. Following the closure of St Ives Inc Case-Hoyt, which was announced in January, we have been able to retain a proportion of its work for production at our other facilities, thereby improving utilisation. We also produced increased volumes of work requiring additional fulfilment and logistics, which helped to improve returns in our continuing business. Financial A slight improvement in activity levels in corporate finance markets in the USA was sustained through the second half of the year. By contrast, UK and European corporate finance markets were flat and extremely competitive in pricing. The market for company Annual Reports also became more competitive, as a number of customers reduced product specifications and non-specialist commercial printers sought to enter the market. In the USA, as a result of more short-run work and increasing use of digital printing, as well as electronic distribution, there has been no increase in demand for offset printing, despite the underlying increase in activity. Accordingly at the end of the year we regrettably took the decision to close our facility at Marlton. Magazines UK In the UK, magazine paginations were volatile but generally subdued with no evidence of a recovery in advertising expenditure. This, coupled with over-capacity, has led to continuing pricing pressure, especially in the longer-run, less time-sensitive part of the market, with the result that our longer-run equipment was under-utilised. Shorter-run titles were generally more resilient. We have taken steps to reduce cost and improve productivity at our longer-run plants. USA The magazine market in the USA faced similar conditions to those in the UK, with fierce price competition prevailing for longer-run titles in particular. Multimedia Greater concentration on specialist packaging and DVD related products offset reduced demand for standard music CD products. As already announced, the lack of growth in our markets made it necessary to transfer operations from Tunbridge Wells to our modern facility at Crayford, so as to achieve improved utilisation and to reduce cost. The move was completed at the year end. Balance Sheet The business remains strongly cash generative and our financial position is robust. During the year we strengthened the position of the Company's defined benefits pension scheme (which was closed to new members in April 2002), by making an additional contribution of Â£25 million as well as through a reduction in the rate of future accrual for active members. This action will help to contain future pension costs. Capital expenditure during the year, directed at reducing our cost of production, was Â£16 million. We finished the year with net assets of over Â£222 million and net cash of Â£26 million. Acquisition Since the year end we have acquired the whole of the issued share capital of SP Group, a Midlands based company which supplies a full range of point-of-sale material and services to multiple retail chains and major brand companies. SP's product range and emphasis on service make it an excellent fit with those of our existing businesses which serve these customers and markets. The acquisition will add significantly to our ability to supply point-of-sale material to a broad range of blue chip customers with requirements extending beyond the supply of print. The initial consideration of Â£33 million was satisfied as to Â£29.5 million in cash and as to the balance through the issue of floating rate loan notes. Further consideration of up to Â£3.92 million will become payable if SP achieves operating profit of Â£4.9 million for the year to 31 March 2005. Outlook The prospects for our book business are good. While the modest increase in levels of activity in corporate finance markets in the USA has been sustained, we have yet to see a corresponding pick-up in the UK and Europe, where pricing is exceedingly competitive. Demand for the shorter-run, time-sensitive products on which we concentrate remains steady. Markets for longer-run, less time-sensitive work continue to be fiercely competitive in the face of over-capacity and accordingly our cost base remains under constant review. We shall continue to concentrate on supplying the parts of our market where we can add value to our customers' businesses and where we are able to generate a satisfactory return to our shareholders; but we will not pursue volume or market share for its own sake. We will invest where investment can be justified by the prospective returns, but not otherwise. We believe that our Group is well placed to emerge strengthened from the current turbulent conditions. CONSOLIDATED PROFIT AND LOSS ACCOUNT 52 weeks to 30 July 2004 52 weeks to 1 August 2003 ______________________________________ _______________________________________ Before Exceptional Total Before Exceptional Total exceptional items and exceptional items and items and goodwill items and goodwill goodwill amortisation goodwill amortisation amortisation (note 7) amortisation (note 7) ___________ ___________ ________ ____________ _____________ _________ Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Turnover (note 2) 410,304 - 410,304 437,211 - 437,211 Cost of sales (300,931) (5,265) (306,196) (328,150) (456) (328,606) ___________ ___________ ________ ____________ _____________ _________ Gross profit 109,373 (5,265) 104,108 109,061 (456) 108,605 Sales and distribution costs (25,628) (377) (26,005) (28,635) (292) (28,927) Administrative expenses ___________ ___________ ________ ____________ _____________ _________ Goodwill amortisation - (1,810) (1,810) - (2,195) (2,195) Goodwill impairment - (13,000) (13,000) - - - Exceptional items - (2,913) (2,913) - 404 404 Other administrative expenses (45,578) - (45,578) (44,829) - (44,829) ___________ ___________ ________ ____________ _____________ _________ Total administrative expenses (45,578) (17,723) (63,301) (44,829) (1,791) (46,620) Other operating (costs)/income 292 (1,390) (1,098) 784 225 1,009 ___________ ___________ ________ ____________ _____________ _________ Operating profit (note 2) 38,459 (24,755) 13,704 36,381 (2,314) 34,067 Interest receivable 1,645 - 1,645 1,142 - 1,142 Interest payable (450) - (450) (620) - (620) ___________ ___________ ________ ____________ _____________ _________ Profit on ordinary activities before taxation 39,654 (24,755) 14,899 36,903 (2,314) 34,589 Tax on profit on ordinary activities (note 3) (13,879) 1,980 (11,899) (12,739) 633 (12,106) ___________ ___________ ________ ____________ _____________ _________ Profit on ordinary activities after taxation 25,775 (22,775) 3,000 24,164 (1,681) 22,483 Equity dividends (note 5) (17,637) - (17,637) (17,643) - (17,643) ___________ ___________ ________ ____________ _____________ _________ Retained (loss)/profit for the financial period transferred (from)/to reserves 8,138 (22,775) (14,637) 6,521 (1,681) 4,840 =========== =========== ======== ============ ============= ========= Basic earnings per share (note 6) 2.92p 21.82p ======== ========= Diluted earnings per share (note 6) 2.92p 21.81p ======== ========= Earnings per share before exceptional items and goodwill amortisation (note 6) 25.08p 23.45p ========== ============ Equity dividend per ordinary share 17.15p 17.15p ======== ========= All transactions are derived from continuing activities. CONSOLIDATED BALANCE SHEET 30 July 2004 1 August 2003 (Restated - note 1) ________________________ ________________________ Â£'000 Â£'000 Â£'000 Â£'000 Fixed assets Intangible assets 22,814 38,644 Tangible assets 163,165 185,293 __________ __________ 185,979 223,937 Current assets Stocks 11,554 12,437 Debtors - due within one year 67,924 70,724 Debtors - due after one year 22,896 44 Cash at bank and in hand 47,455 50,871 __________ __________ 149,829 134,076 Creditors: due within one year (92,833) (104,834) __________ __________ Net current assets 56,996 29,242 __________ _________ Total assets less current liabilities 242,975 253,179 Creditors: due after one year (992) (1,043) Provisions and deferred taxation (18,519) (11,586) Deferred income (706) (1,113) __________ __________ (20,217) (13,742) __________ _________ Net assets 222,758 239,437 ========== ========= Capital and reserves Called up share capital 10,331 10,323 Share premium account 45,909 45,645 Capital redemption reserve 1,238 1,238 ESOP reserve (1,913) (1,913) Profit and loss account 167,193 184,144 __________ _________ Equity shareholders' funds 222,758 239,437 ========== ========= SUMMARISED CONSOLIDATED CASH FLOW STATEMENT 52 weeks to 52 weeks to 30 July 1 August 2004 2003 (Restated - note 1) ____________ ____________ Â£'000 Â£'000 Net cash inflow from operating activities before one-off pension payment 65,175 59,959 One-off pension payment (25,000) - ____________ ____________ Net cash inflow from operating activities 40,175 59,959 Returns on investments and servicing of finance 1,289 400 Taxation (12,061) (7,804) Capital expenditure and financial investment (14,935) (20,520) Acquisitions Subsequent cash inflow in respect of prior year 1,020 - acquisition Equity dividends paid (17,628) (17,697) ____________ ____________ Cash (outflow)/inflow before financing (2,140) 14,338 Financing Issue of ordinary share capital 272 196 Decrease in debt and lease financing (526) (1,282) Purchase of own shares held by ESOP trusts - (1,913) ____________ ____________ (Decrease)/increase in cash in the year (2,394) 11,339 ============ ============ NOTES TO THE SUMMARISED CONSOLIDATED CASH FLOW STATEMENT 2004 2003 Â£'000 Â£'000 Reconciliation of operating profit to net cash inflow from operating activities Operating profit 13,704 34,067 Depreciation 31,769 34,390 Goodwill amortisation 1,810 2,195 Goodwill impairment 13,000 - Charge in respect of long term incentive schemes 633 633 Net non-cash provisions movement 7,996 (1,738) Loss/(profit) on disposal of tangible fixed assets 1,098 (1,009) Other non-cash movements (407) (455) Changes in working capital (1,977) (7,003) Other items (2,451) (1,121) One-off pension payment (25,000) - ____________ ____________ Net cash inflow from operating activities 40,175 59,959 ============ ============ 2004 2003 Â£'000 Â£'000 Reconciliation of net cash flow to movement in net funds (Decrease)/increase in cash in the year (2,394) 11,339 Cash outflow from decrease in debt and lease financing 526 1,282 ____________ ____________ Change in net funds resulting from cash flows (1,868) 12,621 Exchange adjustments 1,597 306 ____________ ____________ Movement in net funds in the year (271) 12,927 Opening net funds 26,277 13,350 ____________ ____________ Closing net funds 26,006 26,277 ============ ============ 2 August Cash flow Exchange 30 July 2003 movement 2004 Â£'000 Â£'000 Â£'000 Â£'000 Analysis of net funds Cash at bank and in hand 50,871 (2,394) (1,022) 47,455 Debt due within one year (24,212) 144 2,619 (21,449) Finance leases (382) 382 - - __________ __________ _________ ________ 26,277 (1,868) 1,597 26,006 ========== ========== ========= ======== CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 52 weeks to 52 weeks to 30 July 1 August 2004 2003 ____________ ____________ Â£'000 Â£'000 Profit after taxation 3,000 22,483 Exchange differences (4,520) 801 Related taxation 1,573 63 ____________ ____________ Total recognised gains and losses relating to the year 53 23,347 ============ Prior year adjustment (note 1) 633 ____________ Total gains and losses recognised since last Annual Report and Accounts 686 ============ MOVEMENTS IN CONSOLIDATED SHAREHOLDERS' FUNDS 52 weeks to 52 weeks to 30 July 1 August 2004 2003 (Restated - note 1) ____________ ____________ Â£'000 Â£'000 Opening shareholders' funds (as previously reported) 240,717 234,817 Prior year adjustment (note 1) (1,280) - ____________ ____________ Opening shareholders' funds (as restated) 239,437 234,817 Total recognised gains and losses 53 23,347 Equity dividends (17,637) (17,643) Issue of ordinary shares 272 196 Purchase of own shares held by ESOP trusts - (1,913) Credit in respect of long term incentive schemes 633 633 ____________ ____________ Closing shareholders' funds 222,758 239,437 ============ ============ NOTES TO THE FINANCIAL STATEMENTS 1. Basis of preparation The preliminary financial statements have been prepared in accordance with the accounting policies set out in, and are consistent with, the Group's Annual Report for 2003 except for Urgent Issues Task Force abstract 38 'Accounting for ESOP trusts' ('UITF38') which has been adopted and prior year comparatives have been restated. In accordance with UITF38, shares in St Ives plc held by the Employees' Benefit Trusts are now deducted within consolidated shareholders' funds. Previously, such shares were included within fixed asset investments. Within the consolidated cash flow statement, the purchase of such shares is now presented as a financing transaction and not as a purchase of fixed asset investments. NOTES TO THE FINANCIAL STATEMENTS continued 1. Basis of preparation continued 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 30 July 2004 and for the fifty two weeks to 1 August 2003 has been extracted from the Group's statutory accounts for the respective years. The Group's statutory accounts for the fifty two weeks to 1 August 2003 have been filed with the Registrar of Companies. The Group's statutory accounts for the fifty two weeks to 30 July 2004 will be sent to all shareholders before 1 November 2004. 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. Analyses of turnover and operating profit The geographical analysis of turnover by destination is stated below: 2004 2003 Â£'000 Â£'000 United Kingdom 283,335 285,923 United States of America 95,650 122,685 Rest of the World 31,319 28,603 _________ _________ 410,304 437,211 ========= ========= The geographical analysis of turnover and operating profit/(loss) by origin is stated below: Turnover Operating profit/(loss) _______________________ _______________________ 2004 2003 2004 2003 Â£'000 Â£'000 Â£'000 Â£'000 United Kingdom 288,052 291,282 33,838 39,279 United States of America 94,840 120,553 (4,506) (1,066) Rest of the World 27,412 25,376 (818) (1,951) _________ _________ _________ ________ 410,304 437,211 28,514 36,262 Goodwill amortisation - USA - - (1,810) (2,195) Goodwill impairment - USA - - (13,000) - _________ _________ _________ ________ 410,304 437,211 13,704 34,067 ========= ========= ========= ======== NOTES TO THE FINANCIAL STATEMENTS continued 2. Analyses of turnover and operating profit continued The geographical analysis of operating profit/(loss) before exceptional items and goodwill amortisation is stated below: 2004 2003 Â£'000 Â£'000 United Kingdom 36,704 39,260 United States of America 2,573 (703) Rest of the World (818) (2,176) _________ ________ 38,459 36,381 ========= ======== The segmental analysis of turnover is stated below: 2004 2003 Â£'000 Â£'000 Books 66,042 70,145 Direct Response and Commercial 181,990 192,342 Financial 33,810 34,968 Magazines 104,033 113,163 Multimedia 24,429 26,593 _________ ________ 410,304 437,211 ========= ======== The directors consider that an analysis of profit on a segmental basis would be seriously prejudicial to the interests of the Group and, as permitted by Statement of Standard Accounting Practice 25 'Segmental Reporting', no further disclosure is given. 3. Taxation The taxation charge is analysed below: 2004 2003 Â£'000 Â£'000 United Kingdom taxation 12,602 13,134 Overseas taxation (703) (1,028) _________ ________ 11,899 12,106 ========= ======== NOTES TO THE FINANCIAL STATEMENTS continued 4. Pensions (a) Statement of Standard Accounting Practice 24 'Accounting for Pension Costs' ('SSAP24') The Group has continued to account for pensions in accordance with SSAP24. The Group operates a defined benefits pension scheme in which the majority of its UK employees participate, with assets held in separate trustee administered funds. This scheme was closed to new entrants from 6 April 2002, but benefits continue to accrue for existing active members. A defined contribution scheme has been established for joiners after 6 April 2002, to which the Group contributes at the rate of 4 per cent of pensionable pay. The pension cost for the Group's UK schemes was Â£3,400,000 (2003 - Â£3,757,000). A triennial valuation of the defined benefits scheme was carried out as at 6 April 2002, using the projected unit method, by Jonathan Punter, Fellow of the Institute of Actuaries, Punter Southall & Co Ltd ('the defined benefits scheme's actuary'), who is independent of the Group. The principal actuarial assumptions adopted for the purposes of both SSAP24 and determining the funding rate in the valuation were: a long term interest rate of 7.0 per cent per annum before Normal Retirement Age ('NRA') and 6.0 per cent after NRA; salary increases of 3.5 per cent per annum and limited price indexation of 2.5 per cent per annum. Pension increases were allowed for in accordance with the rules of the defined benefits scheme and past practice. At the valuation date, the actuarial value of the assets on this basis was sufficient to cover 88 per cent of the benefits that had accrued to members equivalent to a deficit of Â£12.6 million. The market value of the defined benefits scheme's assets as at 6 April 2002 was Â£98.6 million. For the purpose of the actuarial valuation, assets were taken at 97.7 per cent of the market value. The defined benefits scheme's actuary recommended that the contribution rate of 8.25 per cent of pensionable pay was appropriate. This recommendation was accepted by the Company and the Trustee. After extensive discussions between the Company and the Trustee, the level of benefits accruing to members of the defined benefits scheme was reduced and the contribution rate paid by the Company increased to 10.6 per cent of pensionable pay with effect from 25 May 2004. In addition a one-off amount of Â£25 million was paid by the Company into the scheme at the same time. As a result a prepayment of Â£25,068,000 (2003 - creditor of Â£186,000), inclusive of interest accrued, is included in debtors in respect of the defined benefits scheme. (b) Financial Reporting Standard 17 'Retirement Benefits' ('FRS17') The actuarial valuation, adjusted for FRS17 and updated at 30 July 2004, showed a deficit of Â£44.9 million. Contributions for the year were paid at the recommended rate of 8.25 per cent of pensionable pay to 24 May 2004 and 10.6 per cent of pensionable pay thereafter. In addition a one-off amount of Â£25 million was paid in May 2004. The contribution rate will be reviewed at the next formal valuation of the defined benefits scheme, which is due no later than as at 6 April 2005. This scheme was closed to new entrants with effect from 6 April 2002. As a result, the current service cost calculated using the projected unit method will increase over time (expressed as a percentage of pensionable pay) but will be applied to a shrinking pensionable payroll. NOTES TO THE FINANCIAL STATEMENTS continued 4. Pensions continued (c) Other The pension cost relating to foreign schemes was Â£1,680,000 (2003 - Â£1,165,000). The foreign schemes are defined contribution schemes and are principally Section 401(k) Plans in the USA. 5. Equity dividends The directors propose a final equity dividend of 12.15p for each ordinary share payable to holders on the register on 5 November 2004. If approved, the final dividend will be paid on 3 December 2004. 6. Earnings per share The calculation of basic earnings per share is based on profit after taxation as disclosed in the profit and loss account of Â£3,000,000 (2003 - Â£22,483,000). Adjusted earnings per share is calculated by adding back exceptional items and goodwill amortisation, as adjusted for taxation, to the profit after taxation. Basic earnings per share and adjusted basic earnings per share are calculated on a weighted average of 102,783,290 (2003 - 103,062,130) 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 102,888,405 (2003 - 103,101,320) shares during the year. The difference between the number of shares used in the basic and diluted earnings per share calculation is 105,115 (2003 - 39,190) 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 390.24p (2003 - 344.03p). 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: 2004 2003 ________________________ _______________________ Earnings Earnings Earnings Earnings per share per share Â£'000 pence Â£'000 pence Earnings and basic earnings per share 3,000 2.92 22,483 21.82 Exceptional items and goodwill amortisation 22,775 22.16 1,681 1.63 ________ _________ ________ ________ Adjusted earnings and adjusted earnings per share 25,775 25.08 24,164 23.45 ======== ========= ======== ======== All the above calculations exclude 500,000 (2003 - 500,000) ordinary shares which are held on behalf of the Company by Employees' Benefit Trusts. NOTES TO THE FINANCIAL STATEMENTS continued 7. Exceptional items and goodwill amortisation 2004 2003 ________________________ _______________________ Total Related Total Related taxation taxation Â£'000 Â£'000 Â£'000 Â£'000 Exceptional items - rationalisation measures 9,945 1,879 119 532 - goodwill impairment 13,000 - - - Goodwill amortisation 1,810 101 2,195 101 ________ _________ ________ ________ 24,755 1,980 2,314 633 ======== ========= ======== ======== Rationalisation measures of Â£9,945,000 includes Â£5,494,000 relating to the closure of St Ives Inc Case-Hoyt, Â£2,202,000 relating to the closure of our print plant in Marlton, New Jersey and Â£1,732,000 for the merger of the Crayford and Tunbridge Wells businesses. The remaining Â£517,000 relates to other rationalisation measures completed or announced throughout the Group. Following a review of the goodwill attaching to our US division as a whole, an impairment charge of Â£13,000,000 has been made in the period. The impairment charge has been calculated by taking management's best estimate of the future cash flows, including growth in line with US long term growth rates, discounted at 13.7 per cent. Goodwill amortisation of Â£1,810,000 (2003 - Â£2,195,000) was charged in the fifty two weeks ended 30 July 2004. 2004 2003 Â£'000 Â£'000 Cashflows in respect of exceptional items: Net cash outflow from operating activities - current year (2,731) (804) - prior year (182) (1,121) Disposal of tangible fixed assets 166 340 ________ ________ (2,747) (1,585) ======== ======== 8. Post balance sheet event On 13 September 2004 the whole of the issued share capital of SP Group Holdings Limited ('SP Group') was acquired. SP Group is a leading independent supplier of point-of-sale material and services to multiple retail chains and major brand companies. Its services include complete project management and fulfilment operations in addition to its own digital, silk-screen and lithographic printing facilities. Its operations are based at sites in Redditch and Birmingham. In its financial year ended 31 March 2004, SP Group generated profit before interest, exceptional items and goodwill amortisation of Â£3.9 million on turnover of Â£35.4 million. Profit before interest, exceptional items and goodwill amortisation for the period was Â£4.3 million, after adding back certain non-recurring items. At the date of acquisition, net assets were approximately Â£6.5 million, and SP Group was acquired on a debt free basis. NOTES TO THE FINANCIAL STATEMENTS continued 8. Post balance sheet event continued The initial consideration for the acquisition is Â£33 million, payable as to Â£29.5 million in cash and as to the balance through the issue of floating rate loan notes. Additional consideration of up to Â£3.92 million will become payable in cash or loan notes in the early summer of 2005, if the profit before interest and goodwill amortisation of SP Group for the year ending 31 March 2005 is Â£4.9 million. Reduced additional consideration will be payable if the profit before interest and goodwill amortisation for the year ending 31 March 2005 is more than Â£4.3 million, but less than Â£4.9 million. The cash consideration has been financed out of the cash resources and available bank facilities of the Group. END This information is provided by RNS The company news service from the London Stock Exchange

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