Interim Results
St. Ives PLC
11 April 2007
11 April 2007
ST IVES plc
Interim Results for the 27 weeks ended 2 February 2007
St Ives plc, the UK's leading printing group, announces interim results for the
27 weeks ended 2 February 2007.
Key Points
• Revenue £209.2m (2006*: £195.6m)
• Pre tax profit £10.7m (2006*: £14.2m)
• Underlying** pre tax profit £11.4m (2006*: £11.5m)
• Basic earnings per share from continuing operations 6.62p (2006*: 9.35p)
• Underlying** earnings per share 7.43p (2006*: 7.48p)
• Acquisition of Service Graphics for £18.2m: digital printing facilities of
enlarged Group second to none in UK
• Sale of corporate finance related activities for £4.7m
• Interim dividend maintained at 5.00p per share
* comparative figures for the first half of 2006 have been restated as set out
in notes 7 and 13
** before restructuring costs, provision releases and other one-off items
Commenting on the results, Chairman, Miles Emley said:
'Whilst most markets have continued to experience over-capacity and pricing
pressure, we are making significant progress in achieving our strategic
objectives.
'Our increasing focus on specialist, non-commoditised markets and our Group
sales initiative continue to deliver results and we expect our underlying
trading performance for the year as a whole to be considerably ahead of that
achieved in 2006.'
For further information contact:
St Ives plc 020 7928 8844
Miles Emley, Chairman
Brian Edwards, Managing Director
Smithfield 020 7360 4900
John Antcliffe
Rupert Trefgarne
Results
The results for the 27 weeks ended 2 February 2007 show revenue from continuing
operations of £209.2 million (2006* - £195.6 million) and profit before tax,
restructuring costs, provision releases and other one-off items of £11.4 million
(2006* - £11.5 million). Profit from continuing operations before tax was £10.7
million (2006* - £14.2 million). Earnings per share from continuing operations
before restructuring costs, provision releases and other one-off items were
7.43p (2006* - 7.48p).
We acquired Service Graphics Limited on 6 November 2006 and as expected its
operations made a small loss of £331,000 in the last 13 weeks of the period,
when activity in its market is normally at a seasonally low level. As a result
of this acquisition, the digital printing facilities of the enlarged Group are
second to none in the UK in terms of the scale and range of systems and formats
which we can offer.
On 16 January 2007 we completed the disposal of our corporate finance and mutual
fund printing business: this part of our business made a net loss after tax in
the period up to the date of disposal of £0.8 million (2006 - a net loss of £0.8
million).
After writing off £14.4 million of goodwill on the disposal of our corporate
finance and mutual fund printing operations, the overall result of the Group was
a net loss after tax for the period of £7.3 million (2006* - a profit after tax
of £8.8 million). Earnings per share from continuing operations were 6.62p
(2006* - 9.35p). The loss per share from continuing and discontinued operations
was 7.08p (2006* - earnings per share of 8.59p).
The underlying results are similar to those achieved in the first half of last
year* and in line with the indications given in our statement of 30 January
2007.
Dividend
The Board has declared an interim dividend of 5p per share (2006 - 5p per
share), which will be payable on 18 May 2007 to shareholders on the register on
20 April 2007.
Trading Conditions
Trading conditions remain extremely challenging. Revenue growth in specialist,
shorter-run products was partly offset by reductions in the more commoditised
segments. Pricing pressure exists in most of our markets. Forward visibility
continues to be limited, and volatile demand made effective utilisation a
challenge in most areas.
Media Products
Revenue from Media Products was £97.7 million, 1.5 per cent below the first half
of last year and underlying operating profit reduced from £13.9 million to £11.8
million. Sales of both cased and paperback books increased in a steady market,
albeit at some cost to margin as a result of pricing pressure on contract
renewals. Export sales were ahead as were sales of ancillary post-production
services. As in the past, we produced a high proportion of best-selling titles.
Profitability in our book business was modestly lower as short-term
fluctuations in demand prevented sustained levels of satisfactory utilisation.
Magazine revenues were below those achieved in the first half of the prior year
in the face of continuing fierce competition in this over-supplied market.
Paginations varied markedly from issue to issue. New business, mainly
comprising shorter-run, specialist titles, has been won partly to replace work
declined on pricing grounds in the previous financial year. Further benefit
from the new work will come through in the second half of the financial year.
Reductions in direct labour and overhead costs were insufficient to offset lower
volume and price.
Sales of standard CD and DVD packaging were reduced against a background of weak
demand and delays in the launch of new computer games software. This was only
partly offset by growth in demand for special packaging, mainly for DVD
products. As a result our businesses serving this market overall made a small
loss in the half year.
Commercial Products
Revenue from Commercial Products was £80.3 million, including £8.7 million from
Service Graphics in respect of the 13 week period since its acquisition.
Excluding the contribution from Service Graphics, revenue from Commercial
Products was 13 per cent higher than in the first half of the previous year*.
Our businesses supplying this sector returned an underlying operating profit of
£1.8 million, as compared with breakeven in the first half of last year. Our
Group Sales team has opened a number of new accounts and generated increased
volumes from some existing customers. As a result, sales to both the general
commercial and point-of-sale markets increased. In the direct mail and
commercial markets profitability reduced as a result of continuing price
competition. Demand for direct mail products was weak.
Our point-of-sale business consolidated its leading position in its market,
growing sales and achieving a return to better levels of profitability, as a
result of more effective utilisation and improved production controls. On 6
November 2006 we acquired Service Graphics, the leading large format digital
printer in the UK, which serves the outdoor advertising and exhibition markets.
Activity levels around the Christmas holiday period in its market are usually
low.
Sales of corporate finance and mutual fund work were lower. As already
announced, we completed the sale of this business on 16 January 2007. Its
results are shown in the accompanying financial statements as discontinued
operations. We continue to be active in Annual Report printing, which is
concentrated in the second half of our financial year, although the first half
result showed a small improvement on the previous year.
USA
Our US business generated revenues of £33.6 million. In US dollar terms revenue
increased by 5.5 per cent from $61.3 million to $64.7 million. Due to the
weakness of the US dollar the turnover in sterling showed a 3 per cent
reduction. The business overall achieved a return to profit following the
disruption caused by hurricanes to our south Florida facilities in the first
half of the previous year. A number of the larger customers of our creative
business in south Florida decided to source their requirements in-house; the
additional sales won partly to replace this work were at reduced margins. St
Ives Inc, Cleveland, mainly supplying commercial, point-of-sale and direct mail
markets generated increased revenues and profit.
Balance Sheet, Investment, Cash Flow
The Group's financial position remains robust, supported by strong operating
cash flow. At the half year end, net assets were £155.9 million and net debt
stood at £39.0 million. The increased level of net debt reflects the £18.2
million cost of acquisition of Service Graphics and the initial receipt of £4.1
million on disposal of the corporate finance and mutual fund printing business
of St Ives Financial. As planned, capital expenditure during the period was
£11.6 million, considerably below the £22.9 million incurred in the first half
of the previous year.
Strategy
Our strategy remains one of increased focus on customers and markets which have
a requirement for bespoke solutions rather than commodity products. The
acquisition of Service Graphics in November represents a further change in the
overall balance of our business in this direction.
Our Group Sales team continues to make progress in selling the entire range of
our capabilities, mainly to non-media customers. In pursuance of this strategy
we already have in place a complete range of fulfilment and logistics
capabilities and we are expanding further our internet-based software solutions
to facilitate and enhance communication with our customers at every level.
Outlook
Most markets continue to experience overcapacity and price pressure, especially
for longer-run, commoditised products. Although some of our competitors have
decommissioned ageing, mainly web offset, equipment, others have announced
further investment which may result in additional capacity.
All our markets are experiencing increasingly sharp short-term fluctuations in
demand as customers' order cycles and lead times become ever more compressed.
These conditions make consistent, satisfactory utilisation a challenge and
require ever increasing responsiveness and flexibility on our part. Our
continuing development of front-end software solutions is directed at satisfying
customers' increasingly time-critical requirements.
Against this background, demand for consumer books remains steady. Our further
focus on shorter-run, specialist magazines will achieve a broader spread of
business, which will enable improved utilisation. Sales to multimedia customers
continue to be a concern and we are increasingly utilising spare capacity in the
multimedia factories to meet the needs of customers from other parts of the
Group.
We expect our Group Sales team to generate more sales to commercial markets,
particularly of point-of-sale and other marketing and advertising products and
services. The integration of Service Graphics with SP Group is under way.
Increased disclosure is leading to further expansion in pagination of Company
Annual Reports.
In the US magazine and commercial markets, conditions are similar to those
prevailing in the UK. Consequently here too our drive is towards shorter-run
niche markets with specialist requirements.
We are making significant progress in pursuing our strategic objectives.
However, increasing short-term volatility in demand and extremely short forward
visibility in all markets makes improving profitability a challenge.
Nonetheless, overall we continue to expect the underlying trading performance
for the year as a whole to be considerably ahead of the prior year.
Miles Emley
Chairman
11 April 2007
* Comparative figures for the twenty six weeks ended 27 January 2006 have been
restated as set out in notes 7 and 13 of the accompanying financial statements.
CONSOLIDATED INCOME STATEMENT
27 weeks to 2 February 2007
________________________________________
Before Restructuring
restructuring costs,
costs, provision
provision releases
releases and other 26 weeks to 52 weeks to
and one-off 27 January 28 July
other items 2006 2006
one-off (notes (restated - (restated -
items 6 & 13) Total notes 7 & 13) note 13)
__________ __________ __________ __________ __________
£'000 £'000 £'000 £'000 £'000
Revenue (note 2)
+---------+ +---------+ +----------+ +---------+ +---------+
Existing activities | 200,461| | -| | 200,461 | | 195,595| | 382,510|
Acquired activities | 8,739| | -| | 8,739 | | -| | -|
+---------+ +---------+ +----------+ +---------+ +---------+
209,200 - 209,200 195,595 382,510
Cost of sales (160,789) - (160,789) (149,845) (293,480)
__________ __________ __________ __________ __________
Gross profit 48,411 - 48,411 45,750 89,030
Sales and distribution costs (12,509) (80) (12,589) (11,464) (23,194)
Administrative expenses (23,025) (858) (23,883) (21,170) (41,622)
Other operating income
+---------+ +---------+ +----------+ +---------+ +---------+
Profit on disposal of | | | | | | | | | |
fixed assets | -| | 274| | 274 | | 2,084| | 2,084|
Other income | 423| | -| | 423 | | 797| | 1,421|
+---------+ +---------+ +----------+ +---------+ +---------+
423 274 697 2,881 3,505
__________ __________ __________ __________ __________
Profit from operations (note 2)
+---------+ +---------+ +----------+ +---------+ +---------+
Existing activities | 13,631| | (664)| 12,967 | | 15,997| | 27,719|
Acquired activities - (loss) | (331)| | -| (331)| | -| | -|
| | | | | | | | |
+---------+ +---------+ +----------+ +---------+ +---------+
13,300 (664) 12,636 15,997 27,719
Investment income 5,032 - 5,032 4,624 9,221
Finance costs (6,924) - (6,924) (6,409) (12,758)
__________ __________ __________ __________ __________
Profit before tax (note 6) 11,408 (664) 10,744 14,212 24,182
Income tax expense (note 3) (3,751) (176) (3,927) (4,580) (8,104)
__________ __________ __________ __________ __________
Profit for the period from
continuing operations 7,657 (840) 6,817 9,632 16,078
Loss from discontinued
operations (831) (13,284) (14,115) (783) (1,264)
__________ __________ __________ __________ __________
Net (loss)/profit for the
period 6,826 (14,124) (7,298) 8,849 14,814
========== ========== ========== ========== ==========
Basic and diluted earnings/(loss) per share (note 5)
From continuing operations 6.62p 9.35p 15.60p
From continuing and discontinued
operations (7.08p) 8.59p 14.38p
========== ========== ==========
Comparative figures for the twenty six weeks to 27 January 2006 and fifty two
weeks to 28 July 2006 include restructuring costs, provision releases and other
one-off items as detailed in note 6.
CONSOLIDATED BALANCE SHEET
2 February 27 January 28 July
2007 2006 2006
(restated -
note 7)
___________ ___________ ___________
£'000 £'000 £'000
ASSETS
Non-current assets
Property, plant and equipment 159,490 163,144 160,909
Goodwill 54,996 54,135 54,135
Other intangible assets 1,682 586 1,089
Deferred tax assets 6,248 17,340 12,067
Other non-current assets 125 139 132
___________ ___________ ___________
222,541 235,344 228,332
___________ ___________ ___________
Current assets
Inventories 13,804 13,430 12,593
Trade and other receivables 71,793 76,669 67,000
Derivative financial instruments - 11 -
Cash and cash equivalents 9,550 7,577 12,620
___________ ___________ ___________
95,147 97,687 92,213
___________ ___________ ___________
Total assets 317,688 333,031 320,545
___________ ___________ ___________
LIABILITIES
Current liabilities
Trade and other payables 56,494 64,230 63,480
Short-term borrowings 47,693 28,388 21,490
Obligations under finance leases 433 - -
Current tax payable 5,188 5,510 3,350
Deferred income 250 102 81
Short-term provisions 1,281 2,121 2,126
Derivative financial instruments - 90 85
___________ ___________ ___________
111,339 100,441 90,612
___________ ___________ ___________
Non-current liabilities
Retirement benefit obligations (note 11) 47,162 73,590 59,471
Deferred tax liabilities 2 49 2
Deferred income 130 155 411
Obligations under finance lease 420 - -
Other non-current liabilities 1,107 789 714
Long-term provisions 1,582 1,006 1,434
___________ ___________ ___________
50,403 75,589 62,032
___________ ___________ ___________
Total liabilities 161,742 176,030 152,644
___________ ___________ ___________
Net assets 155,946 157,001 167,901
=========== =========== ===========
EQUITY
Capital and reserves
Share capital 10,355 10,355 10,355
Other reserves 45,468 46,951 46,334
Retained earnings 100,123 99,695 111,212
___________ ___________ ___________
Total equity 155,946 157,001 167,901
=========== =========== ===========
This interim statement was approved by the board of directors on 11 April 2007.
CONSOLIDATED CASH FLOW STATEMENT
27 weeks 26 weeks 52 weeks
to to to
2 February 27 January 28 July
2007 2006 2006
__________ ___________ __________
£'000 £'000 £'000
Operating activities
Cash generated from operations (note 8) 9,162 35,959 67,648
Interest received 257 115 255
Interest paid (343) (266) (634)
Income taxes paid (1,625) (3,716) (7,551)
__________ ___________ __________
Net cash from operating activities 7,451 32,092 59,718
__________ ___________ __________
Investing activities
Acquisition of business - (2,901) (2,901)
Acquisition of subsidiary (18,530) - -
Cash acquired with subsidiary 173 - -
Purchase of property, plant and equipment (10,901) (19,788) (31,085)
Purchase of other intangibles (739) (214) (810)
Proceeds on disposal of property, plant and
equipment 1,915 6,221 6,970
Disposal of subsidiary 4,073 - -
Cash disposed of with subsidiary (162) - -
Regional grants received - - 285
__________ ___________ __________
Net cash used in investing activities (24,171) (16,682) (27,541)
__________ ___________ __________
Financing activities
Proceeds from issue of share capital - 198 198
Loan notes redeemed (339) (2,194) (2,317)
Capital element of finance lease rentals (109) - -
Loan interest paid (604) (491) (1,040)
Interest element of finance lease rentals (14) - -
Dividends paid (12,521) (12,521) (17,672)
Increase/(decrease) in bank overdrafts 27,532 1,613 (4,059)
__________ ___________ __________
Net cash used in financing activities 13,945 (13,395) (24,890)
__________ ___________ __________
Net (decrease)/increase in cash and cash equivalents (2,775) 2,015 7,287
Cash and cash equivalents at beginning of period 12,620 5,594 5,594
Effect of foreign exchange rate changes (295) (32) (261)
__________ ___________ __________
Cash and cash equivalents at end of period (note 9) 9,550 7,577 12,620
========== =========== ==========
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
27 weeks 26 weeks 52 weeks
to to to
2 February 27 January 28 July
2007 2006 2006
(restated -
note 7)
___________ ___________ ___________
£'000 £'000 £'000
Exchange differences on translating foreign
operations (1,045) (109) (899)
Losses on cash flow hedges taken to equity - (191) (85)
Actuarial gains/(losses) on defined benefit pension
schemes 12,472 (5,518) 8,974
Tax on items taken directly to equity (3,565) 1,779 (1,651)
___________ ___________ ___________
Net income/(expense) recognised directly in equity 7,862 (4,039) 6,339
Transfer to profit and loss from equity of exchange
differences on disposal of foreign operation 38 - -
Transfer to initial carrying amount of non-financial
hedged items on cash flow hedges - 75 (24)
Tax on items transferred from equity - (22) 7
(Loss)/profit for the period (7,298) 8,849 14,814
___________ ___________ ___________
Total recognised income 602 4,863 21,136
===========
Transition adjustment on adoption of IAS 32 and IAS 39 24 24
___________ ___________
Total recognised income for the period 4,887 21,160
=========== ===========
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
The interim statements have been prepared in accordance with the accounting
policies set out in the Group's Annual Report and Accounts for 2006.
The interim statements are neither audited nor reviewed. The financial
information 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 2006 has been prepared from the Group's statutory
accounts for that period which have been filed with the Registrar of Companies.
The auditors' report on the accounts of the Group for that period was
unqualified and did not contain a statement under either Section 237(2) or
Section 237(3) of the Companies Act 1985.
2. Segment reporting
(a) Business segments
27 weeks to 2 February 2007
____________________________________________________________________
Media Commercial
Products Products USA Elimination Total
_________ _________ _________ _________ _________
£'000 £'000 £'000 £'000 £'000
Revenue
External sales 95,980 79,623 33,597 - 209,200
Inter-segment sales 1,716 627 42 (2,385) -
_________ _________ _________ _________ _________
Total revenue 97,696 80,250 33,639 (2,385) 209,200
========= ========= ========= ========= =========
Result
Segment result 11,785 1,598 853 - 14,236
Add back restructuring costs,
provision releases and other
one-off items - 227 - - 227
_________ _________ _________ _________ _________
Segment result before
restructuring costs, provision
releases and other one-off
items 11,785 1,825 853 - 14,463
========= ========= ========= =========
Unallocated corporate expenses (net) (1,163)
_________
Profit from continuing operations
before restructuring costs,
provision releases and other
one-off items 13,300
Restructuring costs, provision releases
and other one-off items (664)
_________
Profit from continuing operations 12,636
Investment income 5,032
Finance costs (6,924)
Income tax expense (3,927)
_________
Profit for the period from
continuing operations 6,817
=========
26 weeks to 27 January 2006
(restated - notes 7 & 13)
____________________________________________________________________
Media Commercial
Products Products USA Elimination Total
_________ _________ _________ _________ _________
£'000 £'000 £'000 £'000 £'000
Revenue
External sales 98,800 62,159 34,636 - 195,595
Inter-segment sales 411 1,025 51 (1,487) -
_________ _________ _________ _________ _________
Total revenue 99,211 63,184 34,687 (1,487) 195,595
========= ========= ========= ========= =========
Result
Segment result 14,228 84 (546) - 13,766
Add back restructuring costs,
provision releases and other
one-off items (350) (26) - - (376)
_________ _________ _________ _________ _________
Segment result before
restructuring costs, provision
releases and other one-off
items 13,878 58 (546) - 13,390
========= ========= ========= =========
Unallocated corporate expenses (net) (153)
_________
Profit from continuing operations
before restructuring costs,
provision releases and other
one-off items 13,237
Restructuring costs, provision releases
and other one-off items 2,760
_________
Profit from continuing operations 15,997
Investment income 4,624
Finance costs (6,409)
Income tax expense (4,580)
_________
Profit for the period from
continuing operations 9,632
=========
52 weeks to 28 July 2006
(restated - note 13)
____________________________________________________________________
Media Commercial
Products Products USA Elimination Total
_________ _________ _________ _________ _________
£'000 £'000 £'000 £'000 £'000
Revenue
External sales 186,253 131,202 65,055 - 382,510
Inter-segment sales 1,712 1,476 88 (3,276) -
_________ _________ _________ _________ _________
Total revenue 187,965 132,678 65,143 (3,276) 382,510
========= ========= ========= ========= =========
Result
Segment result 23,211 2,710 (509) - 25,412
Add back restructuring costs,
provision releases and other
one-off items 693 134 268 - 1,095
_________ _________ _________ _________ _________
Segment result before
restructuring costs, provision
releases and other one-off
items 23,904 2,844 (241) - 26,507
========= ========= ========= =========
Unallocated corporate expenses (net) (33)
_________
Profit from continuing operations
before restructuring costs,
provision releases and other
one-off items 26,474
Restructuring costs, provision releases
and other one-off items 1,245
_________
Profit from continuing operations 27,719
Investment income 9,221
Finance costs (12,758)
Income tax expense (8,104)
_________
Profit for the period from
continuing operations 16,078
=========
(b) Geographical segments
27 weeks to 2 February 2007
____________________________________________
United
United States of Rest of
Kingdom America the World Total
________ ________ ________ ________
£'000 £'000 £'000 £'000
Revenue 169,196 33,597 6,407 209,200
======== ======== ======== ========
Result
Segment result from continuing operations 11,854 853 (71) 12,636
Add back restructuring costs, provision
releases and other one-off items 664 - - 664
________ ________ ________ ________
Segment result before restructuring costs,
provision releases and other one-off items 12,518 853 (71) 13,300
======== ======== ======== ========
26 weeks to 27 January 2006
(restated - notes 7 & 13)
____________________________________________
United
United States of Rest of
Kingdom America the World Total
________ ________ ________ ________
£'000 £'000 £'000 £'000
Revenue 154,212 34,636 6,747 195,595
======== ======== ======== ========
Result
Segment result from continuing operations 15,948 (546) 595 15,997
Add back restructuring costs, provision
releases and other one-off items (2,760) - - (2,760)
________ ________ ________ ________
Segment result before restructuring costs,
provision releases and other one-off items 13,188 (546) 595 13,237
======== ======== ======== ========
52 weeks to 28 July 2006
(restated - note 13)
____________________________________________
United
United States of Rest of
Kingdom America the World Total
________ ________ ________ ________
£'000 £'000 £'000 £'000
Revenue 304,813 65,055 12,642 382,510
======== ======== ======== ========
Result
Segment result from continuing operations 27,578 (509) 650 27,719
Add back restructuring costs, provision
releases and other one-off items (1,513) 268 - (1,245)
________ ________ ________ ________
Segment result before restructuring costs,
provision releases and other one-off items 26,065 (241) 650 26,474
======== ======== ======== ========
3. Income taxes
The income tax charge is analysed below:
27 weeks 26 weeks 52 weeks
to to to
2 February 27 January 28 July
2007 2006 2006
___________ ___________ ___________
£'000 £'000 £'000
United Kingdom income tax 3,751 4,331 7,718
Overseas income tax 176 249 386
___________ ___________ ___________
3,927 4,580 8,104
=========== =========== ===========
The income tax charge for the twenty seven weeks to 2 February 2007 is based on
the estimated annual charge for the fifty three weeks to 3 August 2007.
4. Dividends
27 weeks to 26 weeks to 52 weeks to
2 February 27 January 28 July
2007 2006 2006
___________ ___________ ___________
per share £'000 £'000 £'000
Final dividend paid for the 52 weeks to
29 July 2005 12.15p - 12,521 12,521
Interim dividend paid for the 26 weeks to
27 January 2006 5.00p - - 5,151
Final dividend paid for the 52 weeks to
28 July 2006 12.15p 12,521 - -
___________ ___________ ___________
Dividends paid during the period 12,521 12,521 17,672
=========== =========== ===========
Proposed interim dividend for the 27
weeks to 2 February 2007 5.00p 5,151
===========
5. Earnings per share
27 weeks to 26 weeks to 52 weeks to
2 February 27 January 28 July
2007 2006 2006
___________ ___________ ___________
million million million
Basic and diluted weighted average number of shares 103.0 103.0 103.0
=========== =========== ===========
27 weeks to 26 weeks to 52 weeks to
2 February 2007 27 January 2006 28 July 2006
___________________ ___________________ ___________________
Earnings Earnings Earnings Earnings Earnings Earnings
per per per
share share share
_________ _________ _________ _________ _________ _________
£'000 pence £'000 pence £'000 pence
Earnings and earnings per share
from continuing activities
Earnings and basic earnings per
share 6,817 6.62 9,632 9.35 16,078 15.60
Restructuring costs, provision
releases and other one-off items 840 0.81 (1,932) (1.87) (527) (0.51)
_________ _________ _________ _________ _________ _________
Adjusted earnings and adjusted
earnings per share 7,657 7.43 7,700 7.48 15,551 15.09
========= ========= ========= ========= ========= =========
Diluted earnings per share 6.62 9.35 15.60
========= ========= =========
Losses and loss per share from
discontinued activities
Losses and basic loss per share (14,115) (13.70) (783) (0.76) (1,264) (1.22)
Restructuring costs, provision
releases and other one-off items 13,284 12.89 - - 300 0.29
_________ _________ _________ _________ _________ _________
Adjusted losses and adjusted
loss per share (831) (0.81) (783) (0.76) (964) (0.93)
========= ========= ========= ========= ========= =========
Diluted loss per share (13.70) (0.76) (1.22)
========= ========= =========
Basic (loss)/earnings per share
from continuing and
discontinued activities (7.08) 8.59 14.38
========= ========= =========
Adjusted earnings/(loss) is calculated by adding back restructuring costs,
provision releases and other one-off items, as adjusted for tax, to the profit/
(loss) for the period.
6. Restructuring costs, provision releases and other one-off items
Restructuring costs, provision releases and other one-off items included within
the income statement in respect of continuing operations are as follows:
27 weeks 26 weeks 52 weeks
to to to
2 February 27 January 28 July
2007 2006 2006
___________ ___________ ___________
£'000 £'000 £'000
Income/(costs)
Cost of sales - (113) (798)
Sales and distribution costs (80) 8 (387)
Administrative expenses (858) 300 (371)
Profit on disposal of fixed assets 274 2,084 2,084
Other income - 481 717
___________ ___________ ___________
(664) 2,760 1,245
=========== =========== ===========
Restructuring costs, provision releases and other one-off items includes
professional fees incurred in dealing with the approach made by Tangent
Communications Ltd and rationalisation costs following further restructuring of
part of the Group's Commercial Products operations. Profit on disposal of fixed
assets relates to properties sold. Other income in the prior year is profit on
disposal of other fixed assets.
The profit before tax, before and after restructuring costs, provision releases
and other one-off items, is as follows:
27 weeks 26 weeks 52 weeks
to to to
2 February 27 January 28 July
2007 2006 2006
___________ ___________ ___________
£'000 £'000 £'000
Profit before tax, restructuring costs, provision
releases and other one-off items 11,408 11,452 22,937
Restructuring costs, provision releases and other
one-off items (664) 2,760 1,245
___________ ___________ ___________
Profit before tax 10,744 14,212 24,182
=========== =========== ===========
7. Restatement of prior period
The results for the 26 weeks to 26 January 2006, and the balance sheet as at
that date, have been restated to reflect the accounting errors identified in the
point-of-sale business during the 2006 year end review. The effect of this is
to reduce revenue by £808,000, reduce the profit before tax for the period by
£2,428,000 and reduce net assets by £1,700,000.
8. Reconciliation of cash generated from operations
27 weeks 26 weeks 52 weeks
to to to
2 February 26 January 28 July
2007 2006 2006
(restated) (restated)
___________ ___________ ___________
£'000 £'000 £'000
Profit from operations
continuing operations 12,636 15,997 27,719
discontinued operations - (loss) (1,187) (1,060) (1,615)
Adjustments for:
Depreciation of property, plant and equipment 13,423 13,453 26,808
Gain on disposal of property, plant and equipment (697) (2,881) (3,505)
Deferred income (112) (51) (102)
Share-based payment (credit)/charge (36) 99 (121)
(Decrease)/increase in retirement benefit
obligations (744) 140 (120)
Decrease in provisions (947) (2,044) (1,575)
___________ ___________ ___________
Operating cash flows before movements in working
capital 22,336 23,653 47,489
(Increase)/decrease in inventories (606) (112) 495
Decrease in receivables 2,193 1,016 10,088
(Decrease)/increase in payables (14,761) 11,402 9,576
___________ ___________ ___________
Cash generated from operations 9,162 35,959 67,648
=========== =========== ===========
9. Analysis of net debt
28 July Exchange 2 February
2006 Acquisition Cash flow movements 2007
____________ ____________ ____________ ____________ ____________
£'000 £'000 £'000 £'000 £'000
Cash and cash
equivalents 12,620 - (2,775) (295) 9,550
Bank overdrafts (327) - (27,532) - (27,859)
Debt due within one year (21,163) - 339 990 (19,834)
Finance leases - (962) 109 - (853)
____________ ____________ ____________ ____________ ____________
(8,870) (962) (29,859) 695 (38,996)
============ ============ ============ ============ ============
10. Movement in equity
27 weeks 26 weeks 52 weeks
to to to
2 February 27 January 28 July
2007 2006 2006
____________ ____________ ____________
£'000 £'000 £'000
Opening equity 167,901 164,337 164,337
Transition adjustment on adoption of IAS 32 and IAS 39 - 24 24
____________ ____________ ____________
Opening equity (restated) 167,901 164,361 164,361
Foreign exchange adjustments (868) (42) (433)
Losses on cash flow hedges - (81) (85)
(Loss)/profit for the period (7,298) 8,849 14,814
New shares issued - 198 198
Recognition of share-based payments (36) 99 (122)
Actuarial gain/(loss) on defined benefit pension
scheme 8,730 (3,862) 6,840
Transfer to profit and loss from equity of exchange
differences on disposal of foreign operation 38 - -
Dividends (12,521) (12,521) (17,672)
____________ ____________ ____________
Closing equity 155,946 157,001 167,901
============ ============ ============
11. Retirement benefits
The liability of £47.2 million (£33.0 million net of deferred tax) is lower than
at July 2006 primarily due to an increase in corporate bond yields from 5.1% to
5.3% resulting in a corresponding increase in the discount rate. All other
assumptions remain in line with those at 28 July 2006.
12. Acquisition of subsidiary
On 6 November 2006, the Group acquired the whole of the issued share capital of
Service Graphics Limited for an initial consideration of £18.2 million.
Additional consideration will be paid to certain director shareholders if profit
before interest and taxation exceeds £2.97 million for each of the years ending
31 December 2007 and 2008.
The transaction has been accounted for by the acquisition method of accounting.
Provisional
Book value fair value Fair value
adjustments
____________ ____________ ____________
£'000 £'000 £'000
Net assets acquired:
Property, plant and equipment 2,488 - 2,488
Current assets
Inventories 984 - 984
Trade and other receivables 8,956 - 8,956
Bank and cash balances 173 - 173
____________ ____________ ____________
10,113 - 10,113
____________ ____________ ____________
Current liabilities
Trade and other payables (6,032) - (6,032)
Other current liabilities (1,646) (95) (1,741)
____________ ____________ ____________
(7,678) (95) (7,773)
____________ ____________ ____________
Net current assets 2,435 (95) 2,340
Long term provisions (175) (268) (443)
Other non-current liabilities (523) - (523)
____________ ____________ ____________
4,225 (363) 3,862
============ ============
Provisional goodwill 15,268
____________
Consideration
Initial 18,244
Professional fees and stamp duty 286
Deferred 600
____________
Total consideration 19,130
============
Net cash outflow arising on acquisition:
Cash consideration paid (18,530)
Cash and cash equivalents acquired 173
____________
(18,357)
============
The goodwill arising on the acquisition of Service Graphics Limited is
attributable to the anticipated future profitability and the future operating
synergies within the combined businesses.
The results of the acquired business and assets have been consolidated in the
income statement from the date of acquisition.
13. Discontinued operations
On 16 January 2007 the Group disposed of all the corporate financial printing
activities carried on by St Ives Financial Limited together with the entire
share capital of St Ives Financial Inc and St Ives Financial Japan KK ('the
Corporate Finance activities').
The loss after tax for the period from the discontinued operations is analysed
below:
25 weeks 26 weeks 52 weeks
to to to
16 January 27 January 28 July
2007 2006 2006
___________ ___________ ___________
£'000 £'000 £'000
Loss from the Corporate Finance activities (831) (783) (1,264)
Loss on disposal of the Corporate Finance activities (13,284) - -
___________ ___________ ___________
(14,115) (783) (1,264)
=========== =========== ===========
The following were the results of the Corporate Finance activities for the
period:
25 weeks 26 weeks 52 weeks
to to to
16 January 27 January 28 July
2007 2006 2006
___________ ___________ ___________
£'000 £'000 £'000
Revenue 5,947 8,748 18,753
Cost of sales (3,558) (4,671) (10,438)
___________ ___________ ___________
2,389 4,077 8,315
Operating costs (3,576) (5,137) (9,930)
___________ ___________ ___________
Loss from operations (1,187) (1,060) (1,615)
Financial costs 1 3 3
___________ ___________ ___________
Loss before tax (1,186) (1,057) (1,612)
Income tax credit 355 274 348
___________ ___________ ___________
Loss after tax (831) (783) (1,264)
=========== =========== ===========
The net assets of the Corporate Finance activities at date of disposal were:
16 January
2007
___________
£'000
Net assets disposed of 3,959
Attributable goodwill 14,408
___________
18,367
Loss on disposal before tax 13,664
___________
Total consideration net of legal fees received in
cash (£630,000 after 2 February 2007) 4,703
===========
A tax credit of £380,000 arose on the disposal.
14. A copy of the interim statement will be sent to all shareholders.
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