Interim Results
St. Ives PLC
12 April 2005
EMBARGOED FOR RELEASE 07:00 12 APRIL 2005
12 April 2005
ST IVES plc
Interim Results for the 26 weeks ended 28 January 2005
St Ives plc, the UK's leading printing group, announces interim results for the
26 weeks ended 28 January 2005.
Key Points
• Turnover £210.8m (2004: £208.8m)
• Pre tax profit £19.8m (2004: loss £5.0m)
• Underlying* pre tax profit £19.5m (2004: £17.1m)
• Basic earnings per share 12.96p (2004: loss 10.58p)
• Underlying* earnings per share 12.59p (2004: 10.81p)
• Interim dividend maintained at 5.00p per share
*pre exceptional items, goodwill amortisation and impairment
Commenting on the results, Chairman, Miles Emley said:
'The overall improvement in the underlying result was attributable to
rationalisation measures, a continued concentration on products with more
demanding requirements and an initial contribution from SP Group, acquired in
September 2004.
'We will not maintain capacity or pursue market share for its own sake and
remain committed to creating value for our shareholders. To this end, we will
sharpen our focus on shorter-run, specialist work where short lead times and
quick reprints, together with complex distribution, logistics and fulfilment,
help to reduce our customers' costs while enabling us to make a satisfactory
return.'
For further information contact:
St Ives plc
Miles Emley, Chairman
Brian Edwards, Managing Director 020 7928 8844
Smithfield
John Antcliffe
Anna Rainbow 020 7360 4900
Results
The interim results for the 26 weeks ended 28 January 2005 show turnover of
£210.8 million (2004 - £208.8 million) and profit before taxation, exceptional
items and goodwill amortisation of £19.5 million (2004 - £17.1 million). The
overall improvement in the underlying result was attributable to rationalisation
measures undertaken last year, especially in the USA, as well as the initial
contribution from SP Group, which we acquired in mid-September 2004. Profit
before taxation was £19.8 million (2004 - a loss of £5.0 million). Earnings per
share before exceptional items and goodwill amortisation were 12.59 pence (2004
- 10.81 pence). Basic earnings per share were 12.96 pence (2004 - a loss of
10.58 pence).
Dividend
An interim dividend of 5.00 pence (2004 - 5.00 pence) per share will be paid on
20 May 2005 to shareholders on the register on 22 April 2005.
Trading Conditions
As indicated in the preliminary announcement of the Group's results for last
year, many of our markets continued to experience fluctuating demand,
deflationary pricing and significant over-capacity. These conditions were
especially prevalent in markets for non-time-sensitive, commodity and longer-run
products. Corporate finance markets remained quiet. Demand for books was
maintained.
Books
Sales to book publishers were at similar levels to those in the previous year.
We again produced a high proportion of best-selling titles, because of the
responsive service we are able to offer customers, and have increased sales of
ancillary added-value services. Principally due to the strength of sterling
against the US dollar, exports were lower.
Direct Response, Commercial and Point-of-Sale
UK
Weak demand from a broad range of customers resulted in reduced volumes of
mailings and personalised products, as well as other forms of commercial print.
Price competition in the market for longer-run, commodity products was
especially intense, because of continuing over-capacity in web offset. As a
result of these factors, it proved difficult to achieve satisfactory utilisation
of our direct mail and commercial facilities at acceptable prices, and financial
returns were below those generated in the first half of the previous year.
SP Group, which we acquired in mid-September and provides point-of-sale products
and services to retailers and international brand companies, performed in line
with expectations. In the four and a half months since its acquisition, it
contributed sales of £15.3 million, more than offsetting the reduction in other
commercial sales to the UK market, and operating profit before goodwill
amortisation of £1.9 million.
Germany
Despite the absence of any improvement in demand and continued weak pricing in
its markets, Johler Druck, our German subsidiary, achieved an increase in sales.
Greater efficiencies and cost reductions led to a further reduction in the
level of losses. We disposed of our interest in Johler Druck on 5 April 2005.
USA
In the USA, sales were reduced following the closure of our Rochester facility
in the second half of the previous financial year. Despite continuing pricing
pressure, the benefits of the rationalisation were evident in improved
utilisation and a more suitable mix of work. Returns improved as a result.
Financial
There was no significant uplift in levels of activity in corporate financial
markets in either the UK or USA. Despite further price competition, sales of
fund and company Annual Reports were higher than in the previous year, albeit
demand for these products is mainly in the second half of our financial year.
As a result of earlier cost reduction initiatives, losses in the UK were
reduced.
Magazines
UK
Sales of magazines were at similar levels to the prior year. However continuing
over-capacity led to further pressure on pricing and under-utilisation,
especially of capacity more suited to longer-run products.
USA
Market conditions in the USA were similar to those in the UK. Our own sales and
utilisation improved, however, leading to a better financial result.
Multimedia
Our sales to this market grew, despite continued pricing pressure. Sales of
special packaging products for both CD and DVD increased, while printing for
standard CD products reduced further. Improved sales and utilisation at our
factory at Uden in Holland led to a better result there.
Disposal
We disposed of the whole of our interest in Johler Druck on 5 April 2005 for a
cash consideration of approximately £1.5 million, as its business no longer
formed part of our strategic focus. The net asset value of Johler at 30 July
2004 was £9.4 million and in the financial year ended on that date it made an
operating loss (before interest) of £935,000. In addition to the loss arising
on disposal at below net asset value, an amount of £5.9 million will be charged
as an exceptional item in respect of goodwill previously written off to reserves
and now required to be written back and written off to the profit and loss
account.
Capacity and Investment
In the light of the continuing over-capacity which exists in many of our
markets, we have been keeping the cost base of the Group under continuous
review. As part of the review, shortly after the end of the period we announced
the proposed closure of our Caerphilly factory with the expected loss of some
210 jobs. Consultations with the employees at Caerphilly continue. The closure
of our sheetfed facility in Bristol and the cessation of perfect binding in
Leeds both took effect during March. As previously announced, the costs of
these and other measures are estimated to amount to £13 million (of which around
£5 million is in cash and about £1 million represents the write-down of goodwill
previously charged to reserves) and will be charged as an exceptional item in
the second half of the financial year.
We will shortly be commissioning more productive replacement presses in our
factories at Peterborough and Roche. The purpose of this investment, as with
the recent installation of a high speed stitching line at Peterborough, is to
reduce our unit cost of production, to increase productivity and to enhance the
flexibility and responsiveness of the service which we offer. We will continue
to invest to reduce cost and improve service, but not to maintain capacity or
pursue market share for its own sake where the risk and returns are not
economic.
Outlook
Demand remains steady in the markets for books and for point-of-sale products
and services. There is no sign of any change in conditions in the market for
corporate financial print, where capital market activity which requires printed
documentation remains at a low level. Sales of Annual Reports for mutual funds
and listed companies have been assisted by increased paginations as a result of
greater disclosure requirements, although pricing remains competitive. Markets
for music and multimedia products provide limited future visibility, but
continue to be price competitive and over-supplied. Both in the UK and the USA,
markets for magazine and commercial printing continue to experience
over-capacity and sometimes uneconomic pricing, especially for longer-run,
non-time-sensitive products. Consequently, as already announced, it is unlikely
that the profit before exceptional items and goodwill amortisation for the
current year will exceed the result achieved in 2004.
We will sharpen our focus on shorter-run, specialist work where short lead times
and quick reprints, together with complex distribution, logistics and
fulfilment, help to reduce our customers' costs while enabling us to make a
satisfactory return. Our cost base will be kept under review; and we will invest
further, where the returns justify it, to improve productivity, reduce our unit
cost of production and enhance the service that we offer our customers.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
26 weeks to 28 January 2005
____________ ____________ ____________
Before Exceptional
exceptional items and 26 weeks 52 weeks
items and goodwill to to
goodwill amortisation 30 January 30 July
amortisation (note 6) Total 2004 2004
____________ ____________ ____________ _____________ _____________
£'000 £'000 £'000 £'000 £'000
Turnover (note 2)
_____________ ____________ ____________ _____________ _____________
Existing activities | 195,550 | | -| | 195,550 | | 208,828 | | 410,304 |
Acquired activities | 15,265 | | -| | 15,265 | | - | | - |
|_____________| |____________| |____________| |____________ | |_____________|
210,815 - 210,815 208,828 410,304
Cost of sales (155,785) 354 (155,431) (158,603) (306,196)
____________ ____________ ____________ _____________ _____________
Gross profit 55,030 354 55,384 50,225 104,108
Sales and distribution costs (12,655) - (12,655) (13,363) (26,005)
Administrative expenses
_____________ ____________ _____________ _____________ _____________
Goodwill amortisation | | | | | | | | |
- existing activities | - | | (707)| (707)| | (1,104)| | (1,810)|
- acquired activities | - | | (582)| (582)| | - | | - |
Goodwill impairment | - | | - | - | | (13,000)| | (13,000)|
Exceptional items | - | | 613 | 613 | | (3,429)| | (2,913)|
Other administrative | | | | | | | | |
expenses | (23,262)| | - | (23,262)| | (23,451)| | (45,578)|
|_____________| |____________| ____________| |_____________| |____________|
(23,262) (676) (23,938) (40,984) (63,301)
Other operating income/
(costs) 310 56 366 (1,374) (1,098)
Operating profit/(loss) (note 2)
____________ ___________ ____________ _____________ _____________
Existing activities | 17,507 | | 316 | | 17,823 | | (5,496) | | 13,704 |
Acquired activities | 1,916 | | (582)| | 1,334 | | - | | - |
|____________| |___________| |____________| |____________ | |_____________|
19,423 (266) 19,157 (5,496) 13,704
Profit on disposal of fixed
assets - 626 626 - -
Interest receivable 373 - 373 728 1,645
Interest payable (322) - (322) (213) (450)
____________ ____________ ____________ _____________ _____________
Profit/(loss) on ordinary
activities before taxation 19,474 360 19,834 (4,981) 14,899
Tax on profit on ordinary
activities (note 3) (6,524) 16 (6,508) (5,892) (11,899)
____________ ____________ ____________ _____________ _____________
Profit/(loss) on ordinary
activities after taxation 12,950 376 13,326 (10,873) 3,000
Equity dividends (note 4) (5,155) - (5,155) (5,145) (17,637)
____________ ____________ ____________ _____________ _____________
Retained profit/(loss) for
the financial period
transferred to/(from) reserves 7,795 376 8,171 (16,018) (14,637)
============ ============ ============ ============= =============
Basic earnings/(loss)
per share (note 5) 12.96p (10.58p) 2.92p
============ ============= =============
Diluted earnings/(loss)
per share (note 5) 12.95p (10.57p) 2.92p
============ ============= =============
Earnings per share before
exceptional items and
goodwill amortisation (note 5) 12.59p 10.81p 25.08p
============= ============= =============
Equity dividend per
ordinary share 5.00p 5.00p 17.15p
============ ============= =============
Comparative figures for the twenty six weeks to 30 January 2004 and fifty two
weeks to 30 July 2004 include exceptional items as detailed in note 6.
All transactions are derived from continuing activities.
CONSOLIDATED BALANCE SHEET
28 January 30 January 30 July
2005 2004 2004
____________ ____________ ____________
£'000 £'000 £'000
Fixed assets
Intangible assets 52,331 23,520 22,814
Tangible assets 161,089 169,087 163,165
Investments 1 - -
____________ ____________ ____________
213,421 192,607 185,979
____________ ____________ ____________
Current assets
Stocks 15,514 14,376 11,554
Debtors - amounts falling due
within one year 79,661 67,879 67,924
Debtors - amounts falling due
after more than one year 22,892 - 22,896
Cash at bank and in hand 10,242 51,234 47,455
____________ ____________ ____________
128,309 133,489 149,829
Creditors: amounts falling due
within one year (95,867) (85,190) (92,833)
____________ ____________ ____________
Net current assets 32,442 48,299 56,996
____________ ____________ ____________
Total assets less current liabilities 245,863 240,906 242,975
Creditors: amounts falling due
after more than one year (729) (882) (992)
Provisions for liabilities and charges (13,889) (19,226) (18,519)
Deferred income (506) (908) (706)
____________ ____________ ____________
Net assets 230,739 219,890 222,758
============ ============ ============
Capital and reserves
Called up share capital 10,344 10,329 10,331
Share premium account 46,325 45,852 45,909
Capital redemption reserve 1,238 1,238 1,238
ESOP reserve (1,913) (1,913) (1,913)
Profit and loss account 174,745 164,384 167,193
____________ ____________ ____________
Equity shareholders' funds 230,739 219,890 222,758
============ ============ ============
This interim statement was approved by the board of directors on 12 April 2005.
SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
26 weeks to 26 weeks to 52 weeks to
28 January 30 January 30 July
2005 2004 2004
____________ ____________ ____________
£'000 £'000 £'000
Net cash inflow from operating activities
before one-off pension payment 17,935 25,246 65,175
One-off pension payment - - (25,000)
____________ ____________ ____________
Net cash inflow from operating activities 17,935 25,246 40,175
Returns on investments and servicing
of finance (14) 503 1,289
Taxation (4,703) (6,968) (12,061)
Capital expenditure (8,435) (5,692) (14,935)
Acquisitions
Purchase of subsidiary undertaking (29,796) - -
Net cash acquired with subsidiary
undertaking 54 - -
Subsequent cash inflow in respect
of prior year acquisition - 1,020 1,020
Equity dividends paid (12,499) (12,487) (17,628)
____________ ____________ ____________
Net cash (outflow)/inflow before
financing (37,458) 1,622 (2,140)
Financing
Issue of shares 429 213 272
Decrease in debt and lease financing - (492) (526)
____________ ____________ ____________
(Decrease)/increase in cash (37,029) 1,343 (2,394)
============ ============ ============
NOTES TO THE SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
26 weeks to 26 weeks to 52 weeks to
28 January 30 January 30 July
2005 2004 2004
____________ ____________ ____________
£'000 £'000 £'000
Net cash inflow from operating activities
Operating profit/(loss) 19,157 (5,496) 13,704
Depreciation 14,989 16,371 31,769
Goodwill amortisation 1,289 1,104 1,810
Goodwill impairment - 13,000 13,000
(Credit)/charge in respect of long term
incentive schemes (634) 316 633
Other non cash movements (1,560) 7,223 8,687
Changes in working capital (12,414) (7,202) (1,977)
Other items (2,892) (70) (27,451)
____________ ____________ ____________
17,935 25,246 40,175
============ ============ ============
Reconciliation of net cash flow to
movement in net (debt)/funds
(Decrease)/increase in cash in the period (37,029) 1,343 (2,394)
Cash outflow from decrease in debt and
lease financing - 492 526
____________ ____________ ____________
Change in net funds resulting from cash
flows (37,029) 1,835 (1,868)
Loan notes issued on acquisition of
subsidiary (3,450) - -
Exchange adjustments 456 1,637 1,597
____________ ____________ ____________
Movement in net funds in the period (40,023) 3,472 (271)
Opening net funds 26,006 26,277 26,277
____________ ____________ ____________
Closing net (debt)/funds (14,017) 29,749 26,006
============ ============ ============
Acquisition
excluding
30 July cash and Exchange 28 January
2004 Cash flow overdrafts movement 2005
____________ ____________ ____________ ____________ ____________
£'000 £'000 £'000 £'000 £'000
Analysis of net
(debt)/funds
Cash at bank and
in hand 47,455 (37,029) - (184) 10,242
Bank loans due
within one year (21,449) - (3,450) 640 (24,259)
____________ ____________ ____________ ____________ ____________
26,006 (37,029) (3,450) 456 (14,017)
============ ============ ============ ============ ============
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
26 weeks to 26 weeks to 52 weeks to
28 January 30 January 30 July
2005 2004 2004
____________ ____________ ____________
£'000 £'000 £'000
Profit/(loss) after taxation 13,326 (10,873) 3,000
Exchange differences 15 (4,057) (4,520)
Related taxation - (1) 1,573
____________ ____________ ____________
Total recognised gains and losses
relating to the period 13,341 (14,931) 53
============ ============ ============
MOVEMENTS IN CONSOLIDATED SHAREHOLDERS' FUNDS
26 weeks to 26 weeks to 52 weeks to
28 January 30 January 30 July
2005 2004 2004
____________ ____________ ____________
£'000 £'000 £'000
Opening shareholders' funds 222,758 239,437 239,437
Total recognised gains and losses 13,341 (14,931) 53
Equity dividends (5,155) (5,145) (17,637)
Issue of ordinary shares 429 213 272
Long term incentive schemes (634) 316 633
____________ ____________ ____________
Closing shareholders' funds 230,739 219,890 222,758
============ ============ ============
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 2004.
The interim statements are neither audited nor reviewed. The financial
information set out in these statements does not comprise statutory
accounts for the purposes of Section 240 of the Companies Act 1985. The
abridged information for the fifty two weeks to 30 July 2004 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.
NOTES TO THE FINANCIAL STATEMENTS continued
2. Analyses of turnover and operating profit
The geographical analysis of turnover and operating profit/(loss) by origin
is stated below:
26 weeks to 26 weeks to 52 weeks to
28 January 30 January 30 July
2005 2004 2004
____________ ____________ ____________
£'000 £'000 £'000
Turnover
United Kingdom 149,039 141,911 288,052
United States of America 43,207 53,084 94,840
Rest of the World 18,569 13,833 27,412
____________ ____________ ____________
210,815 208,828 410,304
============ ============ ============
Operating profit/(loss) before exceptional
items and goodwill amortisation
United Kingdom 16,625 16,041 36,704
United States of America 2,132 957 2,573
Rest of the World 666 (426) (818)
____________ ____________ ____________
19,423 16,572 38,459
============ ============ ============
Operating exceptional items excluding
goodwill impairment
United Kingdom (39) (130) (2,866)
United States of America 1,062 (7,834) (7,079)
Rest of the World - - -
____________ ____________ ____________
1,023 (7,964) (9,945)
============ ============ ============
Operating profit/(loss)
United Kingdom 16,586 15,911 33,838
United States of America 3,194 (6,877) (4,506)
Rest of the World 666 (426) (818)
____________ ____________ ____________
20,446 8,608 28,514
Goodwill amortisation - UK (582) - -
Goodwill amortisation - USA (707) (1,104) (1,810)
Goodwill impairment - USA - (13,000) (13,000)
____________ ____________ ____________
19,157 (5,496) 13,704
============ ============ ============
NOTES TO THE FINANCIAL STATEMENTS continued
2. Analyses of turnover and operating profit continued
The segmental analysis of turnover is stated below:
26 weeks to 26 weeks to 52 weeks to
28 January 30 January 30 July
2005 2004 2004
____________ ____________ ____________
£'000 £'000 £'000
Books 32,967 33,322 66,042
Direct Response, Commercial and
Point-of-Sale 93,678 97,677 181,990
Financial 12,670 12,207 33,810
Magazines 52,832 50,447 104,033
Multimedia 18,668 15,175 24,429
____________ ____________ ____________
210,815 208,828 410,304
============ ============ ============
The turnover of SP Group since acquisition of £15,265,000 is included in
Direct Response, Commercial and Point-of-Sale in the table above for the
current period.
3. Taxation
The taxation charge is analysed below:
26 weeks to 26 weeks to 52 weeks to
28 January 30 January 30 July
2005 2004 2004
____________ ____________ ____________
£'000 £'000 £'000
United Kingdom taxation 5,305 5,856 12,602
Overseas taxation 1,203 36 (703)
____________ ____________ ____________
6,508 5,892 11,899
============ ============ ============
The taxation charge for the period ended 28 January 2005 is based on the
estimated charge for the fifty two weeks to 29 July 2005.
4. Equity dividends
The directors have declared an interim equity dividend of 5.00p
(2004 - 5.00p) net per share. The payment date will be 20 May 2005 and the
record date will be 22 April 2005.
NOTES TO THE FINANCIAL STATEMENTS continued
5. Earnings per share
The calculation of the basic earnings/(loss) per share is based on profit
after taxation as disclosed in the profit and loss account of £13,326,000
(2004: January - loss £10,873,000; July - profit £3,000,000). Earnings per
share before exceptional items and goodwill amortisation is calculated by
adding back exceptional items and goodwill amortisation, as adjusted for
tax, to the profit after taxation. Basic earnings/(loss) per share and
earnings per share before exceptional items and goodwill amortisation are
calculated on a weighted average of 102.9 million (2004: January -
102.8 million; July - 102.8 million) shares in issue during the period.
The calculation of the diluted earnings/(loss) per share is based on profit
after taxation as disclosed in the profit and loss account and on a diluted
weighted average of 102.9 million (2004: January - 102.9 million; July -
102.9 million) shares during the period.
6. Exceptional items and goodwill amortisation
Goodwill amortisation of £1,289,000 (2004: January - £1,104,000; July -
£1,810,000) was charged in the twenty six weeks ended 28 January 2005.
The exceptional items, excluding goodwill impairment, included within the
profit and loss account are as follows:
26 weeks to 26 weeks to 52 weeks to
28 January 30 January 30 July
2005 2004 2004
____________ ____________ ____________
£'000 £'000 £'000
Income/(costs)
Cost of sales 354 (2,853) (5,265)
Sales and distribution costs - (184) (377)
Administrative expenses 613 (3,429) (2,913)
Other operating income/(costs) 56 (1,498) (1,390)
____________ ____________ ____________
Operating exceptional items 1,023 (7,964) (9,945)
Profit on disposal of fixed assets 626 - -
____________ ____________ ____________
1,649 (7,964) (9,945)
============ ============ ============
7. Acquisition of business
On 13 September 2004 the whole of the issued share capital of SP Group
Holdings Limited ('SP Group') was acquired on a debt free basis. The
initial consideration for the acquisition was £33 million, payable as to
£29.8 million in cash and as to the balance through the issue of floating
rate loan notes. Additional consideration of up to £3.92 million will
(if applicable) become payable in cash or loan notes in the early summer of
2005, if the profit before interest and goodwill amortisation of SP Group
for the year ending 31 March 2005 is £4.9 million. Reduced additional
consideration will be payable if the profit before interest and goodwill
amortisation for the year ending 31 March 2005 is more than £4.3 million,
but less than £4.9 million.
NOTES TO THE FINANCIAL STATEMENTS continued
8. Post balance sheet events
On 21 February 2005 it was proposed that, subject to appropriate
consultation with its workforce, all production would cease at St Ives
Caerphilly Limited. The cost of closure of the factory, together with the
costs of certain other actions initiated since the period end, is estimated
to be £13 million. These costs will be charged as exceptional in the
second half of the current financial year.
On 5 April 2005 we disposed of the whole of our interest in Johler Druck
GmbH ('Johler') for a cash consideration of approximately £1.5 million.
The net asset value of Johler at 30 July 2004 was £9.4 million and in the
financial year ended on that date it made an operating loss (before
interest) of £935,000. In addition to the loss arising on disposal at
below net asset value, an amount of £5.9 million will be charged as an
exceptional item in respect of goodwill previously written off to reserves
and now required to be written back and written off to the profit and
loss account. The exceptional costs relating to this transaction will be
charged in the second half of the financial year.
9. A copy of the interim statement will be sent to all shareholders.
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