Final Results

RNS Number : 5703L

St. Ives PLC

04 October 2016

 

4 October 2016

                                                                        ST IVES plc

Full Year Results for the 52 weeks ended 29 July 2016.

St Ives plc, the international marketing services group, announces preliminary results for the

52 weeks ended 29 July 2016.

Financial Highlights

	52 weeks to 29 July 2016	52 weeks to 31 July 2015	%age change
Revenue	£367.5m	£344.6m	+7%
Adjusted* profit before tax	£30.4m	£33.0m	-8%
Adjusted* basic earnings per share	17.61p	20.32p	-13%
Statutory (loss)/profit before tax	£(5.7)m	£8.7m	-
Basic (loss)/earnings per share	(5.93)p	4.35p	-
Full year dividend	7.80p	7.80p	-
Net debt	£80.8m	£62.8m

* Adjusted profit before tax and adjusted basic earnings exclude Adjusting Items. Adjusting Items comprise of redundancies, empty property and restructuring costs; impairments, gain or loss on disposal of properties; costs related to the acquisitions or setting up of new subsidiaries; impairment or amortisation charges related to goodwill and intangible assets; contingent consideration required to be treated as remuneration; movements in deferred consideration; costs related to the St Ives Defined Benefits Pension Scheme and accelerated bank amortisation fees.

Operational Highlights

·     Further strong revenue growth of 30% in Strategic Marketing segment: 11% organic, 19% acquisitive growth

·     3% revenue increase in Books offset by 7% decline in Marketing Activation

·     Strategic Marketing now contributing 39% of Group revenue (2015: 32%) and 58% of adjusted operating profit (2015: 46%)          

·     Important strategic progress across all three drivers of growth:

·     Enhanced collaboration, with over 150 clients using services of more than one Group business        (2015: 106), including Universal Pictures, Whitbread, Jaguar Land Rover, Adidas and Regatta.

·     Continued international growth, with nine Strategic Marketing businesses serving clients on an international basis; over 37% of Strategic Marketing revenue now generated from international client work (2015: 30%).

·     Two further Strategic Marketing acquisitions completed during the year: Fripp, Sandeman and Partners ("FSP"), a specialist retail property consultancy, acquired in August 2015; and The App Business ("TAB"), a mobile-led digital consultancy, acquired in January 2016; both trading in line with expectations.

Matt Armitage, Chief Executive, said:

"We are pleased to confirm that, after some short-term challenges in the final quarter of the Financial Year, trading across our Strategic Marketing segment has stabilised.

"We are excited by the opportunities that the breadth of our marketing services capabilities creates and we are making encouraging progress in bringing in new projects from both existing and new clients.  We see significant opportunities to push ahead with our strategic priorities in the year ahead, particular in further organic growth in our Strategic Marketing segment.

"Whilst we remain alert to the possible impact from Brexit on business confidence, we will continue to invest in the UK, the US and Asia to support our medium term growth plans.  Assuming no marked change to the current market conditions, we are well positioned to make further progress this year."

 

For further information, please contact:

St Ives plc	020 7928 8844
Matt Armitage, Chief Executive Brad Gray, Chief Financial Officer
MHP Communications	020 3128 8100
John Olsen, Giles Robinson, Gina Bell

Notes to Editors

St Ives is an international marketing services group, made up of a number of successful and dynamic businesses serving leading brands internationally, with offices in the UK, North America, China, Singapore and Dubai.

We operate not as a single entity but as a group of market leading businesses, each with its own unique value proposition, offering complementary services and collaborating closely with each other wherever this adds value to clients. We work with a large number of leading, international consumer-facing brands across all major sectors - including retail & FMCG, healthcare & pharma, financial services, media, technology, automotive and charity - helping them determine strategic direction and designing and delivering world-class solutions to match their specific requirements.

Our industry-leading Strategic Marketing businesses have strong capabilities across three specialist high growth areas: Data, Digital and Insight.

Our Marketing Activation businesses, which deliver marketing communications through a combination of print and in-store marketing services, complement our Strategic Marketing offering and collaborate with them where this adds value to clients.

The Group's strategy for further growth for the marketing services businesses is centred around three key priorities:

· organic growth through collaboration and investment in our existing brands;

· internationalisation, often client-led, into large and high growth markets; combined with

· further acquisitions of complementary, ambitious and growing Strategic Marketing businesses that share our common attributes and ethos.

Our separate long-standing Books production business, which is the UK market leader, represents source of profit and cash generation as we pursue our overall growth strategy.

St Ives employs more than 3,000 people in the UK, North America and Asia and is listed on the London Stock Exchange (SIV) with a market capitalisation of £195.2m. 

 

Chief Executive's Review

 

Performance Highlights

Group revenue of £367.5 million was 7% higher than the previous year. This growth was driven by our Strategic Marketing segment, which delivered growth of 11% on an organic basis along with acquisitive growth of 19%. Revenue within our Books Segment was 3% ahead of the prior year. These performances were partially offset by a 7% decline in our Marketing Activation segment, due to continued pressure within the grocery retail sector. 

The Group's statutory loss before tax of £5.7 million (2015: profit of £8.7 million) includes Adjusting Items of £36.1 million (2015: £24.2 million), of which £12.7 million relates to a non-cash impairment charge in the Marketing Activation segment.

The Group's adjusted profit before tax declined to £30.4 million (2015: £33.0 million) and adjusted basic earnings per share decreased by 13% to 17.61 pence (2015: 20.32 pence).

This year saw further growth in our Strategic Marketing segment, which contributed 58% (2015: 46%) of the Group's adjusted operating profit, offset by decline within our Marketing Activation and Books segments. Towards the end of the year, as previously announced, we experienced the cancellation and deferral of a number of large contracts within our Strategic Marketing segment, reflecting greater caution within our customer base over the allocation of budgets.  Whilst we can confirm that this was a short-term challenge and that we have made encouraging progress in replacing those revenues, this nonetheless materially impacted the outturn for the year.

The Board is recommending a final dividend of 5.45 pence, making a full year dividend of 7.80 pence (2015: 7.80 pence), reflecting the Board's confidence in the Group's ability to make further strategic and financial progress during the year ahead.

We are confident in our strategy for further growth, which remains centred around three key priorities:

· organic growth through collaboration and investment in our existing marketing services businesses;

· internationalisation, primarily client-led, into large and high growth markets; combined with

· further acquisitions of complementary, ambitious and growing Strategic Marketing businesses, which share our common attributes and ethos.

Once again, we have made strategic progress in all three areas.

Collaboration

Our approach is based on cross-thinking as opposed to cross-selling, where collaboration is facilitated and supported rather than forced. Over 150 of our clients currently work with more than one business across the Group (2015: 106), collaborating on projects for clients including Universal Pictures, Whitbread, Jaguar Land Rover, Adidas and Regatta.

In addition, we are seeing further evidence of our businesses working together on joint propositions.  Synergies between Solstice, the Chicago-based mobile and emerging technology business bought in 2015 and the recently acquired TAB have resulted in both businesses sharing resources, working practices, growth frameworks and data. They are collaborating on existing clients and exciting new business opportunities.

This has been an important driver of the organic revenue growth achieved in our Strategic Marketing segment.

Internationalisation

Many of our businesses deliver international solutions for clients and where we can identify client-led opportunities, we plan to open additional overseas offices. These opportunities must be in large markets or in markets with the potential for significant and sustainable growth.

During the year we continued to increase our headcount in both the US and Asia to meet client demand, expanding our presence in New York and opening further offices in San Francisco and Dubai.

Now over 37% of our Strategic Marketing revenue comes from clients based outside of the UK (2015: 30%), Nine of our Strategic Marketing businesses, Incite, Pragma, FSP, Hive, Amaze, Realise, Branded3, TAB and Solstice, service clients on an international basis.

Acquisitions

We have made two further acquisitions during the year; Fripp, Sandeman and Partners Limited ("FSP"), a specialist retail property consultancy, which is working closely with our Pragma Consulting business to secure new business wins and TAB, a mobile-led consultancy which has provided the Group with additional scale and deeper strategy and development capabilities within the fast growing mobile technology sector. Both acquisitions have integrated well into the Group.

The acquisition of further complementary marketing services businesses, which add value to our existing portfolio and operate in our chosen growth areas of data, digital and insight services, will continue to be an important element of our overall growth strategy. 

Given the challenges experienced in the latter months of the financial year however, in the year ahead we will be prioritising organic growth, through increased collaboration and leveraging the investments we have made in existing propositions and in new offices.

While the Group's strategic focus is on expanding our Strategic Marketing offering, we also recognise the importance of continued investment and innovation in our complementary Marketing Activation segment and separate, long-standing and market leading Books business. These separate segments represent an additional source of profit and cash generation as we pursue our overall growth strategy.

Segment Overview

Strategic Marketing

Our Strategic Marketing operations, which represent 39% of Group revenue (2015: 32%), are organised around three high-growth sectors: Data, Digital and Insight.

	2016 £'m	2015 £'m
Data Marketing	36.2	33.2
Digital Marketing	71.2	45.5
Insight	36.7	32.0
Strategic Marketing revenue	144.1	110.7
Strategic Marketing adjusted operating profit	19.4	16.3

Despite the cancellation and deferral of a number of large projects during the second half of the financial year (as reported in our 25 April trading statement), trading across our Strategic Marketing segment has continued to be positive and ahead of the prior year.

We are encouraged with the progress that is being made to replace the projects which were cancelled.

Data Marketing

Our Data businesses represented 25% of Strategic Marketing revenue at £36.2 million (2015: £33.2 million).

Over the course of the year, the Data businesses have continued to diversify their propositions to take advantage of new revenue streams, whilst increasing their collaboration with other businesses within the Group.

New propositions have included the introduction of a specialist marketing technology offering, myBench and the continued development of the CRM business, Amaze One.  Both offerings have benefitted from significant client wins throughout the year including being appointed by Ryanair to implement a new marketing platform and the delivery of a CRM solution for Morrisons.

In addition, collaboration between our Data and Digital businesses has resulted in a number of new client wins including Vue Cinemas and Universal Pictures.

Digital Marketing

The Digital businesses represented 49% of Strategic Marketing revenue at £71.2 million (2015: £45.5 million).

Our Digital businesses offer services across the entire digital spectrum including the high growth areas of customer experience, eCommerce, mobile and digital technology innovation, including The Internet of Things and is therefore benefitting from the trend of continued investment in digital services internationally.

This has resulted in a number of significant new business wins. Most notably, we have recently been appointed as one of two long term digital partners to the English Football League (EFL). This is an important and valuable long term partnership, involving designing and developing EFL's new digital platforms, including new websites for over 60 EFL clubs and providing integrated solutions across what is the world's largest sporting digital network.

During the year, we were also appointed as global digital partner for Emirates Airline, which has resulted in us building a presence in Dubai. In addition, the division has won projects with Electrolux, the BBC, McDonalds, the Met Office, Walmart and confused.com.

As stated above, in January 2016 we acquired TAB, a mobile-led consultancy specialising in strategy, product development and business transformation. The acquisition further strengthens our digital capabilities particularly in the high growth area of mobile sector.

Insight

Our Insight businesses represented 26% of Strategic Marketing revenue at £36.7 million (2015: £32.0 million).

We have continued to expand our international reach within our Insight division, with the opening of an office in San Francisco and expansion of headcount in New York, Singapore and Shanghai to meet increased client demand.

Our airports and commercial spaces proposition continues to be a high-growth area for the division. One of this year's most high profile projects has been advising on the commercial strategy for La Guardia International Airport in the US.

In addition, we are continuing to see our retail consultancy business Pragma and the newly acquired specialist retail property consultancy, FSP, working closely together. Their combined services are gaining traction with both existing and new clients.

Marketing Activation

Our Marketing Activation segment represented 42% of Group revenue for the year (2015: 48%).

	2016 £'m	2015 £'m
Marketing Activation revenue	154.8	167.0
Marketing Activation adjusted operating profit	8.1	10.9

Trading conditions within this segment have continued to be challenged, due in large part to the ongoing pressures within the grocery retail market.

Whilst our expertise in grocery retail remains an important strength, diversification of the client base beyond this sector remains a priority.

We were recently appointed as print and fulfilment partner for Whitbread on a long term contract to support all of their brands. Whilst we incurred some transition costs in the final quarter, this contract, along with additional services now being provided under our contract with HSBC, will help to reduce our dependency on the grocery retail sector in the long term.

In addition to the above, the segment has had a number of new wins and project extensions throughout the year for clients including Royal Mail, The Conservative Party, Adidas, Footlocker, Revlon, Informa and Duracell. We continue to target other contracts of this nature although we recognise that it will take time and investment to win and transition such work.

Moving forward our focus is on strategic growth opportunities in markets that value service and innovation and further reduce the over-reliance on grocery retail.  This will include delivering a wider portfolio of goods and services that cover the whole of the marketing operations sphere of brands and retailers.  We will also continue to focus on protecting margins through driving efficiency improvements and cost reductions and by differentiating our competitive offering through targeted investment in new service lines and further cross sales initiatives.

Books

Our market-leading Books business, represented 19% (2015: 20%) of Group revenue for the year.

	2016 £'m	2015 £'m
Books revenue	68.6	66.9
Books adjusted operating profit	5.8	8.1

Revenue was some 3% higher than the prior year at £68.6million (2015: £66.9 million).

During the year, the business has worked on a number of exciting projects, most recently the new J.K. Rowling title, Harry Potter and The Cursed Child. Books were distributed to over 50 retail destinations in the week ahead of publication to support what was the biggest single book launch in the UK and the US for ten years. Since publication over 1,200,000 copies have been sold in the UK, making it the largest selling book of 2016.

Clay's has also benefitted from a number of new business wins and from growth in self-publishing.

Although incremental volume was secured through the Penguin Random House contract, this was offset by publishers' destocking, as previously reported. This appears to have now run its course but, coupled with costs associated with the transitioning of the Penguin Random House contract, it adversely affected the segment's adjusted operating profit.

We continue to adapt to suit the evolving needs of clients, with further investment in digital print technology to provide a broader product range and greater capacity to support fast lead-times and lower stock-holding and with continued focus on extending supply-chain solutions to reduce the overall cost of the books supply-chain.

Outlook

Trading in the new financial year has started in line with our expectations.

Following the short-term challenges during the final quarter of last year, trading across our Strategic Marketing segment has stabilised. We are pleased by the progress being made in bringing in new projects from existing and new clients and are excited by the opportunities that the breadth of our capabilities create.

Trading conditions within our Marketing Activation segment continue to be challenging, due in large part to the ongoing pressures within the grocery retail market, but we are focused on diversifying into other higher growth sectors and expect to build on the success we have seen in this regard in recent months. 

Within our Books business, having finalised the transition of the additional work won from Penguin Random House, we will focus on volume growth and targeting additional work from new and existing clients. 

We see considerable opportunities to progress our strategic priorities in the year ahead, particularly through further collaboration between businesses within the Group and through ongoing internationalisation that matches client demand.  Our particular focus will be on organic growth within our Strategic Marketing segment.  Whilst remaining alert to the possible impact from Brexit on business confidence, we will continue to invest in the UK and in the US and Asia, to support our plans for growth over the medium term. 

We remain clear on our long-term growth priorities and have the financial strength to support our strategic ambitions.  Our balance sheet is sound and we have the necessary cashflow capabilities both to support our dividends and to reduce debt. Assuming no marked change to current market conditions, we are confident of making further strategic and financial progress during the current year.

Matt Armitage

Chief Executive

4 October 2016

 

Financial Overview

 

Overview

Although the Group delivered strong revenue growth largely within the Strategic Marketing segment the Group's operating profit declined due to revenue decline within Marketing Activation and margin pressures within both Marketing Activation and Books.

The Group's statutory results are set out in the table below:

	52 weeks to 29 July 2016	52 weeks to 31 July 2015
Revenue	£367.5m	£344.6m
Statutory (loss)/profit before interest and tax	£(1.8)m	£11.7m
Statutory (loss)/profit before tax	£(5.7)m	£8.7m
Basic (loss)/earnings per share	(5.93)p	4.35p

The Group prepares adjusted results, which, in management's view reflect how the business is managed and show the performance in a manner consistent with the previous year. Adjusted results exclude items such as costs related to restructuring activities, acquisitions made in current and prior periods, disposal of sites and St Ives Defined Benefits Pension Scheme charges. The analysis of adjusting items is set out below:

	52 weeks to 29 July 2016 £'m	52 weeks to 31 July 2015 £'m
Statutory (loss)/profit from operations*	(1.8)	11.7
Adjusting Items:
Expenses related to restructuring items	2.6	3.2
Loss/(profit) on disposal of property, plant and equipment	1.7	(0.5)
Amortisation of acquired intangibles	9.2	7.8
Impairment of available for sale asset	-	1.5
Impairment of goodwill and acquired intangible assets	12.7	1.5
Costs associated with the acquisition and setup of subsidiaries	0.8	0.7
Contingent consideration required to be treated as remuneration	8.2	6.2
(Decrease)/increase in deferred consideration	(0.8)	2.5
Administrative expenses related to St Ives Defined Benefits Pension Scheme	0.7	0.8
Adjusted profit from operations*	33.3	35.4

*Profit from operations is stated as operating profit plus share of results of joint ventures and other operating income/(expense)

A non-cash impairment charge of £12.7 million was recorded in the Marketing Activation segment against goodwill and acquired intangibles. An impairment charge of £10.2m has been made against the goodwill allocated to SP Group Limited. This reflects the reduction in operating profits and expected future growth rates resulting from lower promotional activity levels within grocery retail and the wider retail sector. An impairment charge of £2.5m has been made against the goodwill and customer relationship asset of Tactical Solutions UK Limited due to the loss of a customer and a decline in operating profit.

Other non-cash adjusting items include contingent consideration required to be treated as remuneration of £8.2m, amortisation of acquired intangibles of £9.2m, offset by a decrease in deferred consideration of £0.8m.

Revenue

Revenue increased by £23.0 million (7%) to £367.5 million. Acquisitive growth was 6% with organic growth of 1%. Strong organic growth in Strategic Marketing and Books was largely offset by a decline in Marketing Activation.

Revenue generated from overseas business increased from £35 million to £53 million and represented 15% of revenue (2015: 10%).

Revenue from our Strategic Marketing segment increased from £110.7 million to £144.2 million as a result of recent acquisitions and organic growth. The growth of 30% was split between strong organic growth of 11% and acquisition growth of 19%.

Revenue from the Marketing Activation segment decreased from £167.0 million to £154.8 million. The segment suffered from continued pressures within the retail grocery market where our clients reduced spend on promotional activity.

Revenue from the Books segment increased by 3% from £66.9 million to £68.6 million with the transition of the final tranche of the Penguin Random House contract in January 2016.

Adjusted gross profit margin and underlying profitability

The Group's gross profit margin decreased marginally from 33% to 32%. Margin was adversely impacted by differing factors within each segment and is more fully explained below.

Adjusted profit from operations has decreased from £35.4 million (10% of revenue) to £33.3 million (9% of revenue).

Adjusted profit from operations in the Strategic Marketing segment has increased from £16.3 million to £19.4 million with an operating margin of 13% (2015: 15%). This includes a full year contribution from Solstice LLC, Fripp Sandeman and Partners Limited ("FSP" - acquired in August 2015) and six months from The App Business Limited ("TAB"). In the final quarter of the year the segment saw the cancellation and deferral of a number of projects and therefore a reduction in forecast revenue for the year. In order to mitigate the impact of the revenue decline a number of tactical cost reductions were made, although the skilled workforce was broadly maintained and this detrimentally affected the margin in the final quarter.

Adjusted profit from operations in the Marketing Activation segment has decreased from £10.9 million to £8.1 million with an operating margin of 5% (2015: 7%). The action taken in early 2015 of consolidating production sites, with the closure of operations at Burnley, has offset some of the impact on margins of reduced promotional activity from the grocery retailers. In the latter part of the financial year the segment has been successful in partially diversifying its client base with the provision of goods and services to Whitbread plc, although in the short term the segment has incurred additional transition cost.

Adjusted profit from operations in the Books segment decreased from £8.1 million to £5.8 million with an operating margin of 9% (2015: 12%).The margin was adversely impacted by transition costs relating to the Penguin Random House contract and also a change in the mix of client work. This led to a number of personnel positons becoming redundant with an associated redundancy cost of £521,000 recorded as an Adjusting Item.

Acquisitions

On 13 August 2015 the Group acquired FSP a UK-based retail consultancy. The consideration of £2.2 million was payable in the form of cash and St Ives plc shares.

On 29 January 2016 the Group acquired 82.16% of TAB with the remaining 17.84% acquired on 8 February 2016. TAB is a UK based mobile led consultancy specialising in strategy product development and business transformation. The initial consideration of £22.3 million and the consideration of £4.9 million to acquire the remaining equity was payable in the form of cash and St Ives plc shares.

Deferred consideration paid in relation to prior year acquisitions totalled £9.4 million (2015: £15.6 million).

The Group raised £13.4 million, after expenses, through the issue of 6.4 million shares in February 2016.

Tax

The statutory effective tax rate was 33.3% (2015: 36.4%). This rate is impacted by Adjusting Items that were not deductible for taxation purposes. The total tax charge was £2.4 million (2015: £3.2 million).

The Group's tax rate on the adjusted profit before tax was 20.8% (2015: 21.3%) compared to the standard rate of tax of 22.67% (2015: 19.86%) for the Group. The adjusted tax charge was £6.3 million (2015: £7.0 million).

Income tax of £4.3 million (2015: £6.6 million) was paid in the United Kingdom.

Dividend

The Board is recommending a final dividend of 5.45p per ordinary share (2015: 5.55p) giving a total dividend of 7.80p (2015: 7.80p). The dividend, on an adjusted basis, is covered 2.3 times by adjusted earnings and will be paid on 19 December 2016 to shareholders on the register at 25 November 2016, with an ex-dividend date on 24 November 2016.

Pensions

The Group closed its Defined Benefits Pension Scheme (the "Scheme") to new members in 2002 and ceased future accrual within the Scheme in 2008. The Group accounts for post-retirement benefits in accordance with IAS19 Employee Benefits. The Consolidated Balance Sheet reflects the net deficit on the Scheme at 29 July 2016 based on the market value of the assets at that date and the valuation of liabilities using AA non-gilt bond yields.

On an IAS19 basis the net deficit on the Scheme reduced to £26.4 million (2015: £27.6 million) before the related deferred tax asset. The value of the plan assets increased to £344.1 million (2015: £311.0 million). Approximately 65% of the plan assets are invested in return seeking assets providing a higher level of return over the longer period. Plan liabilities increased to £370.5 million (2015: £338.6 million) primarily due to a decrease in the discount rate offset by a fall in the inflation rate and net re-measurement gains of £21.1 million (2015: £1.5 million losses).

The Scheme's actuarial valuation reviews determine any cash deficit payments by the Group. The Scheme's triennial valuation was as at April 2016 and discussions are underway with the Scheme Trustee for future funding levels. The Group currently makes deficit funding contributions of £2.0 million per annum and a contribution of £0.4 million per annum (2015: £0.4 million) towards the costs of administration.

The Group is continuing the process of automatically enrolling eligible UK employees into a qualifying pension scheme. The charge for the year for the Group's defined contribution schemes was £3.9 million (2015: £3.8 million).

Cash Flow

Cash generated from operations was £23.7 million (2015: £35.5 million). The decrease in cash generated from operations is primarily due to an increased working capital requirement of £7.4 million resulting from the growth in Strategic Marketing and an increase in consideration treated as remuneration of £2.6 million.

Total capital expenditure was as follows:

	2016 £'m	2015 £'m
Strategic Marketing	3.1	1.5
Marketing Activation	1.5	1.1
Books	3.0	3.5
Total	7.6	6.1

The expenditure of £3.1 million in Strategic Marketing included the fit-out of new offices for Incite and Solstice and the refurbishment of offices for Amaze. The expenditure of £4.5 million in Marketing Activation and Books related to maintenance capital and the final expenditure relating to the Penguin Random House contract.

Debt

During the year, the Group increased its revolving credit facility, which expires on 23 March 2019 from £115.0 million to £125.0 million. Subsequent to the year end the Group has reduced its revolving credit facility to £95.0m, supplemented by a term loan of £30.0m and increased its maximum leverage covenant condition (net debt to Adjusted EBITDA) for the remaining duration of the facility.

Net debt increased during the year from £62.8 million to £80.8 million. At 29 July 2016, St Ives had drawn £92.6 million on its bank credit facility, leaving an unutilised commitment of £32.4 million. The Group had cash in hand of £11.8 million.

At 29 July 2016, the ratio of net debt to EBITDA before Adjusting Items was 1.96 times (2015: 1.45 times) as shown below:

					2016	2015
					£'m	£'m
Adjusted profit from operations					33.3	35.4
Depreciation and Amortisation					7.9	7.9
EBITDA before Adjusting Items					41.2	43.3
Net Debt					80.8	62.8
Net debt to EBITDA before Adjusting Items					1.96	1.45

Brad Gray

Chief Financial Officer

4 October 2016

 

Consolidated Income Statement

52 weeks to 29 July 2016

52 weeks to 31 July 2015

	Note	Adjusted Results £'000	Adjusting items (note 3) £'000	Statutory Results £'000	Adjusted Results £'000	Adjusting items (note 3) £'000	Statutory Results £'000
Revenue	2	367,546	-	367,546	344,553	-	344,553
Cost of sales		(249,730)	-	(249,730)	(229,654)	-	(229,654)
Gross profit		117,816	-	117,816	114,899	-	114,899
Selling costs		(25,011)	-	(25,011)	(23,569)	(210)	(23,779)
Administrative expenses		(59,570)	(33,472)	(93,042)	(56,047)	(23,993)	(80,040)
Share of results of joint arrangements		(122)	-	(122)	(88)	-	(88)
Other operating income/(expense)		167	(1,651)	(1,484)	180	541	721
Profit/(loss) from operations		33,280	(35,123)	(1,843)	35,375	(23,662)	11,713
Pension finance charge		-	(972)	(972)	-	(373)	(373)
Other finance costs		(2,899)	-	(2,899)	(2,398)	(213)	(2,611)
Profit/(loss) before tax	2	30,381	(36,095)	(5,714)	32,977	(24,248)	8,729
Income tax (charge)/credit	4	(6,322)	3,931	(2,391)	(7,014)	3,841	(3,173)
Net profit/(loss) for the period		24,059	(32,164)	(8,105)	25,963	(20,407)	5,556
Attributable to:
Shareholders of the parent company		24,059	(32,164)	(8,105)	25,963	(20,407)	5,556
Basic earnings/(loss) per share (p)	6	17.61	(23.54)	(5.93)	20.32	(15.97)	4.35
Diluted earnings/(loss) per share (p)	6	17.49	(23.38)	(5.89)	19.82	(15.58)	4.24

Consolidated Statement of Comprehensive Income

	52 weeks to 29 July 2016  £'000	52 weeks to 31 July 2015  £'000
(Loss)/profit for the period	(8,105)	5,556
Items that will not be reclassified subsequently to profit or loss:
Actuarial profit/(loss) on defined benefits pension scheme	83	(19,691)
Tax (charge)/credit on items taken directly to equity	(545)	3,925
	(462)	(15,766)
Items that may be reclassified subsequently to profit or loss:
Transfer of losses on available for sale financial asset - items reclassified to Consolidated Income Statement	-	1,540
Transfers of losses on cash flow hedges to hedged items	127	60
Losses on cash flow hedges	(302)	(127)
Profit on foreign exchange	409	-
	234	1,473
Other comprehensive expense for the period	(228)	(14,293)
Total comprehensive expense for the period	(8,333)	(8,737)
Attributable to shareholders of the parent company	(8,333)	(8,737)

Consolidated Statement of Changes in Equity

	Share capital £'000		Additional paid-in capital** £'000		ESOP reserve £'000		Treasury shares £'000	Share option reserve  £'000	Hedging and translation reserve £'000	Other reserves £'000	Retained earnings £'000	Total £'000
Balance at 1 August 2014	12,517	53,234		(11)		(163)		7,199	(34)	60,225	71,575	144,317
Profit for the period	-		-		-		-	-	-	-	5,556	5,556
Other comprehensive expense	-		-		-		-	-	(67)	(67)	(14,226)	(14,293)
Comprehensive expense	-		-		-		-	-	(67)	(67)	(8,670)	(8,737)
Dividends	-		-		-		-	-	-	-	(9,455)	(9,455)
Acquisitions	213		1,731		-		845	-	-	2,576	(917)	1,872
Transfer of share-based contingent consideration deemed as remuneration	144		249		-		956	(4,437)	-	(3,232)	3,810	722
Exchange differences	-		-		-		-	-	528	528	-	528
Purchase of own shares	160		-		(382)		(2,458)	-	-	(2,840)	-	(2,680)
Recognition of share-based payments	55		307		393		-	4,467	-	5,167	1,204	6,426
Tax on share-based payments	-		-		-		-	(456)	-	(456)	345	(111)
Balance at 31 July 2015	13,089		55,521		-		(820)	6,773	427	61,901	57,892	132,882
Loss for the period	-		-		-		-	-	-	-	(8,105)	(8,105)
Other comprehensive expense	-		-		-		-	-	234	234	(462)	(228)
Comprehensive expense	-		-		-		-	-	234	234	(8,567)	(8,333)
Dividends	-		-		-		-	-	-	-	(10,934)	(10,934)
Issue of shares	775		12,716		(135)		-	-	-	12,581	-	13,356
Acquisitions	365		1,334		-		657	-	-	1,991	(528)	1,828
Recognition of share-based contingent consideration deemed as remuneration	-		-		-		-	5,143	-	5,143	-	5,143
Transfer of share-based contingent consideration deemed as remuneration	-		97		-		-	(3,295)	-	(3,198)	3,382	184
Purchase of own shares	-		-		(395)		-	-	-	(395)	-	(395)
Recognition of share-based payments	-		-		-		-	(236)	-	(236)	-	(236)
Settlement of share-based payments	15		127		530		-	(1,431)	-	(774)	868	109
Tax on share-based payments	-		-		-		-	(231)	-	(231)	255	24
Balance at 29 July 2016	14,244		69,795		-		(163)	6,723	661	77,016	42,368	133,628

** Additional paid-in capital represents share premium, merger reserve and capital redemption reserve. 

Consolidated Balance Sheet

	Note	29 July 2016 £'000	31 July 2015 £'000
Assets
Non-current assets
Property, plant and equipment		35,559	48,242
Investment property		6,203	-
Goodwill		135,633	137,488
Other intangible assets		53,234	45,652
Available for sale		3	3
Investment in joint arrangement		94	109
Deferred tax assets		232	139
Other non-current assets		374	1,086
		231,332	232,719
Current assets
Inventories		7,482	6,579
Trade and other receivables		90,761	75,945
Derivative financial instruments		-	165
Income tax receivable		1,246	-
Asset held for sale		1,481	412
Cash and cash equivalents		11,835	16,392
		112,805	99,493
Total assets		344,137	332,212
Liabilities
Current liabilities
Trade and other payables		76,486	71,070
Derivative financial instruments		535	4
Income tax payable		-	355
Deferred consideration payable		1,772	4,879
Deferred income		6,206	6,976
Provisions		31	408
		85,030	83,692
Non-current liabilities
Loans		92,595	79,225
Retirement benefits obligations	7	26,394	27,597
Deferred consideration payable		-	3,487
Other non-current liabilities		814	698
Provisions		2,185	1,732
Deferred income		-	81
Deferred tax liabilities		3,491	2,818
		125,479	115,638
Total liabilities		210,509	199,330
Net assets		133,628	132,882
Equity
Capital and reserves
Share capital		14,244	13,089
Other reserves		77,016	61,901
Retained earnings		42,368	57,892
Total equity		133,628	132,882

These financial statements were approved by the Board of Directors on 4 October 2016.   

Consolidated Cash Flow Statement

	Note	52 weeks to 29 July 2016  £'000	52 weeks to 31 July 2015  £'000
Operating activities
Cash generated from operations	9	23,650	35,510
Interest paid		(2,899)	(2,398)
Income taxes paid		(6,286)	(6,595)
Net cash generated from operating activities		14,465	26,517
Investing activities
Purchase of property, plant and equipment		(7,124)	(5,542)
Purchase of other intangibles		(488)	(533)
Proceeds on disposal of property, plant and equipment		3,315	4,751
Acquisition of subsidiaries, net of cash acquired	8	(20,937)	(19,854)
Deferred consideration paid for acquisitions made in prior periods		(5,790)	(14,626)
Net cash used in investing activities		(31,024)	(35,804)
Financing activities
Proceeds on issue of shares		13,356	-
Dividends paid	5	(10,934)	(9,455)
Purchase of treasury shares		(395)	(2,680)
Decrease in finance lease obligations		-	(28)
Increase in bank loans		10,000	24,225
Net cash generated from financing activities		12,027	12,062
Net (decrease)/increase in cash and cash equivalents		(4,532)	2,775
Cash and cash equivalents at beginning of the period		16,392	12,336
Effect of foreign exchange rate changes		(25)	1,281
Cash and cash equivalents at end of the period	9	11,835	16,392

Notes to the Consolidated Financial Statements

1. Basis of preparation

The preliminary results have been prepared on the basis of the accounting policies as set out in the Group's Annual Report and Accounts 2016. The financial information set out in the preliminary results does not comprise statutory accounts for the purpose of section 434 of the Companies Act 2006 in respect of the period ended 29 July 2016 and 31 July 2015.

The financial information for the period ended 29 July 2016 has been extracted from the Group's 2016 statutory accounts for that period which have been prepared on a going concern basis and in accordance with the recognition and measurement principles of International Financial Reporting Standards as adopted by European Union ('IFRS') and those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The 2016 statutory accounts will be delivered to the Registrar of Companies following the Company's 2016 Annual General Meeting. The financial information for the period ended 31 July 2015 has been extracted from the Group's statutory accounts for that period which have been delivered to the Registrar of Companies. The Auditor's report on both the Group's 2016 and 2015 statutory accounts were unqualified and did not contain statements under sections 498(2) or 498(3) of the Companies Act 2006 in respect of the 2016 and 2015 statutory accounts.

2. Segment reporting

The Group manages its business on a market segment basis, based on the Group's internal reporting to the Chief Operating Decision Maker ("CODM"). The CODM has been determined to be the Chief Executive Officer and Chief Financial Officer as they are primarily responsible for the allocation of resources to the segments and the assessment of performance of the segments.

The Strategic Marketing segment comprises of the Group's Data, Digital and Insight businesses. The Marketing Activation segment includes businesses, which deliver marketing communications through a combination of print and in-store marketing services. The Books segment comprises of Clays.

Corporate costs are allocated to revenue-generating segments as this presentation better reflects their profitability.

Business segments

52 weeks to 29 July 2016

	Strategic Marketing £'000	Marketing Activation £'000	Books £'000	Total £'000
Revenue
External sales	138,745	159,694	69,107	367,546
Group sales	6,987	10,411	17	17,415
Intercompany eliminations	(1,577)	(15,298)	(540)	(17,415)
Total revenue	144,155	154,807	68,584	367,546
Operating profit before adjusting items	19,354	8,084	5,842	33,280
Adjusting items	(18,140)	(15,752)	(1,231)	(35,123)
Statutory profit/(loss) from operations	1,214	(7,668)	4,611	(1,843)
Pension finance charge				(972)
Other finance costs				(2,899)
Statutory loss before tax				(5,714)
Income tax charge				(2,391)
Statutory net loss for the period				(8,105)

 

52 weeks to 31 July 2015

	Strategic Marketing £'000	Marketing Activation £'000	Books £'000	Total £'000
Revenue
External sales	107,084	170,494	66,975	344,553
Group sales	4,639	9,822	28	14,489
Intercompany eliminations	(1,033)	(13,346)	(110)	(14,489)
Total revenue	110,690	166,970	66,893	344,553
Operating profit before adjusting items	16,340	10,947	8,088	35,375
Adjusting items	(16,983)	(4,719)	(1,960)	(23,662)
Statutory (loss)/profit from operations	(643)	6,228	6,128	11,713
Pension finance charge				(373)
Other finance costs				(2,611)
Statutory profit before tax				8,729
Income tax charge				(3,173)
Statutory net profit for the period				5,556

Geographical segments

The Strategic Marketing, Marketing Activation and Books segments operate primarily in the UK, deriving more than 85% of the total revenue from customers located in the UK and 10% of the total revenue from customers located in the US.

The largest customer of the Group accounted for £25.9 million (2015: £30.9 million) of revenue in the current period.

 

3. Adjusting items

Adjusting items disclosed on the face of the Consolidated Income Statement are as follows:

Expense/(income)	2016 £'000	2016 £'000	2015 £'000	2015 £'000
Restructuring items
Redundancies and other charges	1,612		2,408
Costs associated with empty properties	976		671
		2,588		3,079
St Ives Defined Benefits Pension Scheme costs
Administrative costs	582		562
Curtailment credit	(198)		-
Other	327		268
		711		830
Costs related to acquisitions made in current and prior periods
Amortisation of acquired intangibles	9,237		7,827
Impairment of available for sale asset	-		1,540
Impairment of goodwill and acquired intangible assets	12,712		1,470
Costs associated with the acquisition and setup of subsidiaries	785		686
Contingent consideration required to be treated as remuneration	8,220		6,233
(Decrease)/increase in deferred consideration	(781)		2,538
		30,173		20,294
Adjusting items in administrative expenses		33,472		24,203
Loss/(profit) on disposal of property, plant and equipment		1,651		(541)
Adjusting items before interest and tax		35,123		23,662
Net pension finance charge in respect of defined benefits pension scheme	972		373
Accelerated amortisation of bank arrangement fees	-		213
		972		586
Adjusting items before tax		36,095		24,248
Income tax credit		(3,931)		(3,841)
		32,164		20,407

The restructuring items in the current period include redundancy costs of £521,000 relating to the Books segment, £574,000 relating to the restructure of the former Print Service segment to Marketing Activation segment and £31,000 of costs related to subsidiaries disposed of in prior periods. During the period, redundancy costs of £486,000 were recorded in the Strategic Marketing segment.

Costs relating to empty properties of £976,000 relate to business that the Group disposed or closed in prior periods and are recorded in the Marketing Activation segment.

The loss on disposal of property, plant and equipment of £1,651,000 relates to the sale of the Group's properties at Bradford and Birmingham. These items are recorded in the Marketing Activation segment.

Charges relating to the amortisation of acquired customer relationships, proprietary techniques and software intangibles of £9,031,000 and £206,000 are recorded in the Strategic Marketing and Marketing Activation segments respectively. Contingent consideration of £8,220,000 in respect of acquisitions required to be treated as remuneration rather than consideration and a credit of £781,000 related to the decrease in consideration in respect of past acquisitions are recorded within the Strategic Marketing segment.

The impairment charge of £12,712,000 includes an impairment to SP Group's goodwill of £10,192,000; Tactical Solutions' goodwill of £2,155,000; and to the customer relationship assets of £365,000. This is due to the decline in revenue from the grocery retail sector and the loss of a customer, resulting in a decline in operating profit. These items are recorded in the Marketing Activation segment.

The Group incurred costs related to the acquisitions of FSP and TAB of £135,000 and £496,000 respectively, together with costs of £60,000 related to acquisitions made in the period. Setup costs of £94,000 relate to new subsidiaries in Shanghai and Dubai. These items are recorded in the Strategic Marketing Segment.

The St Ives Defined Benefits Pension Scheme charges include service costs of £582,000, net pension finance charge of £972,000 and other costs of £327,000 related to the St Ives Defined Benefits Pension Scheme, partially offset by a curtailment credit of £198,000. These items are recorded in the Books segment.

In the current period, the tax credit of £3,931,000 (2015: £3,841,000) relates to the items discussed above.

4. Income tax charge

Income tax charge as shown in the Consolidated Income Statement is as follows:

	2016 £'000	2015 £'000
Total current tax charge:
Current period	5,468	6,114
Adjustments in respect of prior periods	27	(19)
Total current tax charge	5,495	6,095
Deferred tax on origination and reversal of temporary differences:
Deferred tax credit	(3,181)	(2,411)
Adjustments in respect of prior periods	77	(511)
Total deferred tax credit	(3,104)	(2,922)
Total income tax charge	2,391	3,173

The income tax charge on the (loss)/profit before and after adjusting items is as follows:

	2016 £'000	2015 £'000
Tax charge on adjusted profit before tax	6,322	7,014
Tax credit on adjusting items	(3,931)	(3,841)
Total income tax charge	2,391	3,173

 

The charge can be reconciled to the (loss)/profit before tax per the Consolidated Income Statement as follows:

	2016 £'000	2015 £'000
(Loss)/profit before tax	(5,714)	8,729
Tax calculated at a rate of 22.66% (2015: 19.86%)	(1,295)	1,734
Non-deductible charges on impairment of assets	2,469	664
Expenses not deductible for tax purposes	2,675	2,564
Effect of tax deductible goodwill	(423)	-
Non-taxable income	-	(363)
Effect of change in UK corporate tax rate	(538)	80
Credit on research and development activities	(214)	-
Other foreign taxes	150	-
Movement in deferred tax on industrial buildings	(430)	(976)
Utilisation of tax losses not previously recognised	(107)	-
Adjustments in respect of prior periods	104	(530)
Total income tax charge	2,391	3,173

Income tax credit as shown in the Consolidated Statement of Comprehensive Income is as follows:

	2016 £'000	2015 £'000
United Kingdom corporation tax credit at 20% (2015: 20.67%)	(415)	(479)
Deferred tax on origination and reversal of temporary differences	960	(3,446)
Total income tax credit	545	(3,925)

Income tax credit/(charge) as shown in the Statement of Changes in Equity is as follows:

	2016 £'000	2015 £'000
United Kingdom corporation tax credit at 20% (2015: 20.67%)	255	345
Deferred tax on origination and reversal of temporary differences	(231)	(456)
Total income tax credit/(charge)	24	(111)

5. Dividends

	per share	2016 £'000	2015 £'000
Final dividend paid for the 52 weeks ended 1 August 2014	5.00p	−	6,590
Interim dividend paid for the 26 weeks ended 30 January 2015	2.25p	−	2,865
Final dividend paid for the 52 weeks ended 31 July 2015	5.55p	7,515	−
Interim dividend paid for the 26 weeks ended 29 January 2016	2.35p	3,419	−
Dividends paid during the period		10,934	9,455
Proposed final dividend at the period end of 5.45p per share (2015: 5.55p per share)	5.45p	7,758	−

 

6. Earnings per share

The calculation of the basic and diluted earnings per share is based on the following:

Number of shares

	2016 '000	2015 '000
Weighted average number of ordinary shares for the purposes of basic earnings per share	136,633	127,784
Effect of dilutive potential ordinary shares:
Share options	930	3,232
Weighted average number of ordinary shares for the purposes of diluted earnings per share	137,563	131,016

Basic and diluted earnings per share

52 Weeks to 29 July 2016

52 Weeks to 31 July 2015

	Earnings £'000	Earnings per share pence	Earnings £'000	Earnings per share pence
Earnings and basic earnings per share
Adjusted earnings and Adjusted basic earnings per share	24,059	17.61	25,963	20.32
Adjusting items	(32,164)	(23.54)	(20,407)	(15.97)
(Loss)/earnings and basic earnings per share	(8,105)	(5.93)	5,556	4.35
Earnings and diluted earnings per share
Adjusted earnings and Adjusted diluted earnings per share	24,059	17.49	25,963	19.82
Adjusting items	(32,164)	(23.38)	(20,407)	(15.58)
(Loss)/earnings and diluted earnings per share	(8,105)	(5.89)	5,556	4.24

Adjusted earnings is calculated by adding back adjusting items, as adjusted for tax, to the profit/(loss) for the period.

7. Retirement benefits

The net obligation in respect of the St Ives Defined Benefits Pension Scheme of £26,394,000 at 29 July 2016 has decreased compared to 31 July 2015 (£27,597,000) primarily due to an increase in plan assets partially offset by a decrease in the discount rate.

8. Acquisition

Fripp, Sandeman and Partners Limited

On 13 August 2015, the Group acquired the entire share capital of Fripp, Sandeman and Partners Limited ('FSP'), a UK-based retail consultancy. The consideration was satisfied in cash and St Ives plc shares.

The provisional allocation of the purchase price payable for FSP is as follows:

	Historical net assets £'000	Fair value adjustments £'000	Fair value of net assets £'000
Proprietary techniques	-	893	893
Property, plant and equipment	44	-	44
Software	125	-	125
Trade and other receivables	466	-	466
Bank balances and cash	943	-	943
Trade and other payables	(477)	-	(477)
Provision for repairs on leasehold premises	-	(21)	(21)
Deferred tax liabilities	(3)	(179)	(182)
Net assets acquired	1,098	693	1,791
Goodwill arising on acquisition			668
Total consideration			2,459

The fair value of the components of the total consideration payable are as follows:

			£'000
Cash consideration paid in the current period			1,521
Working capital paid in the current period			779
Total cash paid in the period			2,300
Fair value of 362,095 St Ives plc ordinary shares allocated from treasury shares as at 13 August 2015			652
Less consideration treated as deemed remuneration			(493)
Total consideration			2,459

Goodwill of £668,000 arising on acquisition reflects future growth opportunities. Goodwill related to FSP is not deductible for tax purposes.

The acquisition had the following impact on investing cash outflows in the current period:

			£'000
Cash paid			2,300
Less cash acquired			(943)
Net cash outflow			1,357

At the acquisition date, it was estimated that all the trade and other receivables were collectible

The post-acquisition impact of FSP on the Group's revenue and operating profit are as follows:

	2016 £'000
Revenue	2,173
Operating profit	402

 

The App Business Limited

The Group acquired 82.16% of total share capital of The App Business Limited ('TAB') on 29 January 2016 and the remaining 17.84% of the total share capital on 8 February 2016. TAB is a UK-based mobile consultancy business.

The provisional allocation of the purchase price payable for TAB is as follows:

	Historical net assets £'000	Fair value adjustments £'000	Fair value of net assets £'000
Proprietary techniques	-	12,294	12,294
Customer contracts	-	1,192	1,192
Trademark	-	1,073	1,073
Property, plant and equipment	324	-	324
Trade and other receivables	2,494	-	2,494
Bank balances and cash	3,665	-	3,665
Trade and other payables	(1,614)	623	(991)
Provision for repairs on leasehold premises	-	(195)	(195)
Deferred tax liabilities	(62)	(2,440)	(2,502)
Net assets acquired	4,807	12,547	17,354
Goodwill arising on acquisition			8,378
Total consideration			25,732

At the acquisition date, it was estimated that all the trade and other receivables were collectible.

Goodwill of £8,378,000 arising on acquisition reflects future growth opportunities. Goodwill related to TAB is not deductible for tax purposes.

The fair value of the components of the total consideration payable are as follows:

			£'000
Cash consideration paid in the current period			20,402
Working capital paid in the current period			2,843
Total cash paid in the period			23,245
Fair value of 3,167,493 St Ives plc ordinary shares issued as at 8 February 2016			6,801
Working capital payment payable			873
Less consideration treated as deemed remuneration			(5,187)
Total consideration			25,732

Estimated deferred consideration is payable in three tranches and is dependent upon the level of EBITDA achieved by TAB for the years ending 30 April 2016, 30 April 2017 and 30 April 2018. The total consideration payable is capped at £55,000,000 excluding a working capital adjustment of £3,717,000.

The acquisition had the following impact on investing cash outflows in the current period:

			£'000
Cash paid			23,245
Less cash acquired			(3,665)
Net cash outflow			19,580

At the acquisition date, it was estimated that all the trade and other receivables were collectible.

The post-acquisition impact of TAB on the Group's revenue and operating profit are as follows:

	2016 £'000
Revenue	6,532
Operating profit	1,495

Had TAB been acquired at the beginning of the current period, it would have had the following incremental impact on the Group's revenue and operating profit in the current period:

	2016 £'000
Revenue	6,317
Operating profit	1,688

9. Notes to the condensed consolidated cash flow statement

Reconciliation of cash generated from operations

	2016 £'000	2015 £'000
(Loss)/profit from continuing operations	(1,843)	11,713
Adjustments for:
Depreciation of property, plant and equipment	7,201	7,201
Share of losses from joint arrangement	122	88
Impairment losses	12,712	3,009
Amortisation of intangible assets	10,016	8,690
(Loss)/profit on disposal of property, plant and equipment	1,484	(721)
Share-based payment (credit)/charge	(238)	908
Settlement of share based payments	108	541
Net increase in derivative liabilities	(175)	(67)
Decrease in defined benefits pension scheme obligations	(2,278)	(2,325)
Re-measurement of  deferred consideration	(781)	2,538
Charge for contingent consideration required to be treated as remuneration	8,220	6,233
Increase/(decrease) in provisions	55	(409)
Operating cash inflows before movements in working capital	34,603	37,399
Increase in inventories	(880)	(833)
(Increase)/decrease in receivables	(9,579)	6,864
Increase/(decrease) in payables	3,992	(8,077)
(Decrease)/increase in deferred income	(906)	1,132
Net decrease in provision for deemed remuneration	(3,580)	(975)
Cash generated from operations	23,650	35,510

Analysis of net debt

 

	31 July 2015 £'000	Cash flow £'000	Foreign exchange losses £'000	29 July 2016 £'000
Cash and cash equivalents	16,392	(4,533)	(24)	11,835
Bank loans	(79,225)	(10,000)	(3,370)	(92,595)
	(62,833)	(14,533)	(3,394)	(80,760)

Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and other short-term highly liquid investments with a maturity of three months or less.

The effective interest rates on cash and cash equivalents are based on current market rates.

10. Related parties

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. No material related party transactions have been entered into during the year, which might reasonably affect the decisions made by the users of these financial statements.

No other executive officers of the Company or their associates had material transactions with the Group during the year.

11. Post balance sheet events

On 28 September 2016, the Company sold the freehold land and building of its Burnley site which, at the balance sheet date, was recorded as an asset held for sale.

The foregoing contains forward looking statements made by the directors in good faith based on information available to them up to 4 October 2016. Such statements need to be read with caution due to inherent uncertainties, including economic and business risk factors underlying such statement.

 

END

 

 

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