Final Results

4imprint Group PLC 20 March 2001 For Immediate Release 20 March 2001 PRELIMINARY RESULTS FOR THE FULL YEAR ENDED 30 DECEMBER 2000 4imprint Group plc ('4imprint'), the leading global distributor of imprinted promotional products, today announces Preliminary results for the full year ended 30 December 2000. Commenting on today's announcement Rodger Booth, Chairman of 4imprint said: 'The year 2000 has been a landmark in the development of the Group. Following a detailed review, the specialist printing businesses were sold and our activities concentrated on our newer operations, and the name of the Group was changed to 4imprint Group plc to better reflect this.' Key Points: * Turnover increased 22.4% on existing business - Promotional Marketing (Continuing Operations), £88.0m (1999 £71.9m) - Discontinued Operations, £28.7m (1999 £108.4m) * Pre tax profit for continuing operations increased 66.5% to £4.5m (1999 £2.7m) * Successful exit from specialist print business * Acquisition of Adventures in Advertising (AIA) for $12.8 million * New client wins included AMEC, BAE Systems, NTL, Nortel and Unisys. Dick Nelson, Chief Executive also commented: ' I am delighted with the company's performance over the last year especially our recent acquisition of Adventures in Advertising. We have also made significant progress particularly in our UK operations both in terms of revenue growth and business efficiency and I am confident these measures will ensure healthy returns moving forward.' THERE WILL BE AN ANALYST BRIEFING AT BUCHANAN COMMUNICATIONS 107 CHEAPSIDE, EC2 ON TUESDAY 20 MARCH AT 09.30 AM. For further information, please contact: 4imprint Group Dick Nelson, Chief Executive 020 7466 5000 (today only) Richard Harrison, Finance Director 020 7466 5000 (today only) Buchanan Communications Mark Edwards, Jeremy Garcia, Alison Cole 020 7466 5000 Chairman's Statement The year 2000 has been a landmark in the development of the Group. Following a detailed review the Board concluded that there were insufficient long-term growth prospects for the printing businesses, which had been the core of the Group for more than 100 years. These were therefore sold, and our activities concentrated on our newer operations involved in the sale and distribution of imprinted promotional products on an international basis. When the disposals were complete I moved to my present role as non-executive chairman, and Dick Nelson was appointed CEO. The name of the Group was changed to 4imprint Group PLC to better reflect our new activities. In his report and the pages that follow Dick describes our ongoing business in more detail, and reports on the very significant progress, which has been made during the year in these operations. I am also pleased to report the appointment of Mike Potter as a non-executive director of the Group. Mike is founder and CEO of Redwood, whose main activities are the publication of consumer magazines and the provision of marketing services. Chief Executive's Review Review of 2000 Results Operations Another giant step in the transformation of our Group took place this year with the disposal of our Specialist Print Services operations based in Hull and Derby, England, our Lett's Diary business in Dalkeith, Scotland, and our SKM operation in Michigan, US, each to their respective management teams. The loss on the disposal of these subsidiaries was £44.5 million, after writing back goodwill of £31.6 million and raised cash of approximately £35million. The continuing promotional products business experienced excellent turnover growth in the UK, the US and Germany, up a total of 22.4%, while operating profits were up 8% on prior year despite an additional media spend of £1.5+ million. The media spend in the UK was in conjunction with the launch of the new 4imprint brand, unifying four separate corporate identities into one while in the US, the Group aggressively promoted its web site in the face of intense, new competition which has subsequently subsided. We also experienced a positive turnaround at PPI to a profit from an operating loss the prior year. Additionally, significant consolidation of the continuing UK operations has been in process throughout the year, positioning the Group to operate more efficiently in the future. This includes: * Integration of the former Broadway and Bourne Publicity sales forces into one and the creation of a single 4imprint catalogue * Consolidation of the Bourne trade print operation into Product Source in Manchester * Combining the corporate programme fulfillment centers at Broadway and Bourne into one facility in Whitefield * Closing the HQ office in Beverley and relocating it to Whitefield Reorganisation costs of £1.4 million are included in the Exceptional items charge of £45.884 million. The Group Company balance sheet is strong with £20 million of net cash. Dividend In light of the fundamental restructuring of the Group the Board have also reviewed the dividend policy. The growth characteristics and cash requirements of the Group going forward are significantly different from when it was dominated by the printing companies. Accordingly, the Board will implement a new dividend policy based on a payout covered approximately 3x by earnings. This will be introduced in the coming year beginning with the 2001 interim dividend (payable November 2001). Notwithstanding this new dividend policy, the Board is proposing a final dividend for 2000 of 12.2p (payable May 2001) making a total of 18.65p for the year. Corporate Programmes In the UK, the Group continues to build on its industry leading position in corporate programmes with a number of new account wins against no losses. These new programmes include BAE Systems, NTL, AMEC, Airproducts, Unisys, Exel, Worldspan and Nortel. In July the Group entered into an agreement with the corporate sales division of Lands' End, one of the world's largest direct marketers of clothing and one of the leaders in the corporate embroidered apparel segment in the US. To date we have participated with them in programmes for General Motors' Saturn division and the American International Automobile Dealers Association and its 7,000 members. Contracts of this nature take time to develop but nevertheless discussions are underway to explore ways to move forward more quickly. In the meantime, we continue to make good progress in the US with other corporate programmes and have achieved contracts with Kinko's, Crawford Company, AMEC (UK and US), and Kaytee and are making further inroads in our relationship with the Kohler Company. Direct Marketing Catalogue sales grew 11% and on-line ordering activity was up substantially. We continue to have the most robust web site in our industry now featuring over 3,000 products that can be ordered online in the US, accounting for 17-20% of our intake on a weekly basis compared to 3% this time last year. We launched our fully transactional UK web site mid-year and Internet order volume is increasing strongly here as well. We have added a number of significant enhancements to our corporate programme web offering as well which include real-time viewing of inventory levels so clients can actually 'see what's on the shelf' and automatic order and package tracking. As more of our corporate programme clients continue to migrate to the Internet, our processing costs continue to decrease. Significant Acquisition Taps Into $10 Billion+ Market Segment We have long looked for a way to leverage our technological and order processing leadership into the largest segment of the US promotional products industry, that is the two-thirds of the $15 billion market that is served by salespeople calling face-to-face on end user buyers. To gain access to this part of the market, the Group acquired Adventures in Advertising Franchise, Inc. (AIA) for $12.75 million plus debt effective 30 December 2000 from founder Dan Carlson and his brother Kurt. In the past three years AIA has billed on behalf of their franchisees $22 million, $44 million and $93 million and has become by far the largest franchisor in our industry with a network of over 400 franchise owners. Critical to sustaining their very rapid growth was the need to acquire the processing technology to support their business on a larger scale. Additionally, capital to fund the growth was also needed. Consequently, this near-perfect match between their needs and our resources culminated in our acquisition of AIA. Unlike traditional distributor operations in the industry, AIA does not employ its own sales force. Each of its 400+ franchise owners is just that, an independent business owner. Each pays his/her own expenses. The main benefits they receive from being a franchise owner are training, access to group buying power (which is now significantly enhanced as a result of the acquisition) and, since AIA handles all billings and payments to vendors for the franchise owners, the owners have the freedom to spend more time with customers and make more sales because AIA is taking care of the 'back office chores'. Acquisition will spur Corporate Programmes and Premium Divisions As a result of some operating constraints on the business, AIA was able to offer very limited corporate programme support to its franchise owners. These services will now be significantly enhanced and fully supported from our distribution facility in Oshkosh. Additionally, the Group's extensive 20-year experience in providing large quantity import orders through our PPI division and their Hong Kong office will be a valued resource for the franchise owners and their salespeople. An AIA version of OASIS, our bespoke enterprise operating system, will be installed throughout the franchise network as soon as practically possible. Also, Dan and Kurt Carlson will remain with the Group on long-term contracts. Outlook Our UK companies have made a good start to the year and future prospects are solid. We would be remiss not to view the current economic situation in the US with caution but note that in previous recessionary periods the Group has been able to achieve market share gains. Our on-line ordering activity continues to accelerate and with our 100,000+ catalogue customer base we are well diversified across all industries. Good progress is being made on the integration of AIA into the 4imprint enterprise operating system. Billings by AIA on behalf of their franchisees are up more than 40% on 2000, in line with expectations at the time of acquisition. 4imprint Group plc GROUP CONSOLIDATED PROFIT & LOSS ACCOUNT Full Year Ended 30 December 2000 Continuing Discontinued Exceptional 2000 1999 operations operations items Unaudited Audited £'000 £'000 £'000 £'000 £'000 Turnover 88,032 28,646 - 116,678 180,295 Change in stocks of 1,646 5,986 - 7,632 638 finished goods and work in progress 89,678 34,632 - 124,310 180,933 Operating expenses (85,589) (38,351) - (123,940) (168,820) excluding amortisation Operating profit 4,089 (3,719) - 370 12,113 before amortisation Goodwill (277) - - (277) (250) amortisation Operating 3,812 (3,719) - 93 11,863 profit/(loss) Exceptional items - - (45,884) (45,884) 1,600 Net interest 704 - - 704 (803) receivable/(payable) Profit/(loss) on 4,516 (3,719) (45,884) (45,087) 12,660 ordinary activities before tax Tax on (275) (3,842) (loss)/profit on ordinary activities (Loss)/profit for (45,362) 8,818 the financial year Dividends (5,350) (48,252) Transfer from (50,712) (39,434) reserves Loss per ordinary share Basic (160.84)p 26.28p Diluted (160.83)p 26.21p These financial statements should be read in conjunction with the notes attached 4imprint Group plc GROUP CONSOLIDATED BALANCE SHEET At 30 December 2000 2000 1999 Unaudited Audited £'000 £'000 £'000 £'000 Fixed assets Goodwill 17,325 5,447 Tangible 4,742 27,401 Investments 76 483 22,143 33,331 Current assets Stocks 5,732 13,134 Debtors 46,640 54,181 Cash 28,110 3,208 80,482 70,523 Current liabilities Loans & overdrafts 8,106 3,595 Trade creditors 15,101 19,024 Corporation tax 4,947 4,809 Finance leases 7 213 Other creditors 17,690 14,398 Dividends 3,501 3,427 (49,352) (45,466) Net current assets 31,130 25,057 Pension cost prepayments - 11,631 Total assets less current 53,273 70,019 liabilities Creditors due after more than one year Other 5,221 35 Finance leases - 4 (5,221) (39) Provisions for liabilities and (2,207) (6,158) charges NET ASSETS 45,845 63,822 Capital and reserves Ordinary share capital 11,044 10,834 Preference share capital - 208 Share premium 37,630 36,113 Capital redemption reserve 208 - Revaluation reserve 49 4,288 Profit & loss account (3,086) 12,379 SHAREHOLDERS' FUNDS 45,845 63,822 NET CASH/(DEBT) 19,997 (604) GEARING N/A 1% 4imprint Group plc RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS Full Year Ended 30 December 2000 2000 1999 Unaudited Audited £'000 £'000 Profit for the financial year (45,362) 8,818 Dividends (5,350) (48,252) (50,712) (39,434) Other recognised gains and losses relating to the (374) (246) period Surplus on revaluation - 536 Shares issued in the period 1,727 1,499 Redemption of preference share capital (208) - Goodwill reinstated on disposal of subsidiaries 31,590 42,554 Goodwill adjustment relating to previous acquisitions - (47) Net movement in shareholders' funds (17,977) 4,862 Opening shareholders' funds 63,822 58,960 Closing shareholders' funds 45,845 63,822 4imprint Group plc CONSOLIDATED SUMMARISED CASHFLOW STATEMENT Full Year Ended 30 December 2000 2000 1999 Unaudited Audited £'000 £'000 Cashflow from operating activities Operating profit and other non cash movements 3,799 17,896 Exceptional reorganisation costs paid (1,256) - Movement in stocks (6,350) (1,699) Movement in debtors 11,617 3,074 Movement in creditors (7,230) (2,477) Expenditure against provisions (397) (16) Net cash inflow from operating activities 183 16,778 Returns on investments and servicing of finance 772 (1,256) Taxation (797) (3,258) Capital expenditure (4,745) (6,705) Disposals 37,672 74,451 Acquisitions (1,863) (6,589) Equity dividends paid (5,272) (49,688) Issue and redemption of shares 1,689 569 27,639 24,302 Debt acquired with subsidiaries (7,139) (150) Finance leases disposed of 31 386 Translation difference 70 (203) Movement in net debt in the period 20,601 24,335 Opening net debt (604) (24,939) Closing net cash/(debt) 19,997 (604) 4imprint Group plc NOTES TO THE PRELIMINARY ANNOUNCEMENT Full Year Ended 30 December 2000 1 Basis of Preparation This preliminary announcement for the year ended 30 December 2000 has not been audited and does not constitute statutory accounts within the meaning of S240 of the Companies Act 1985. The financial information has been prepared on the basis of the accounting policies set out in the Group's Annual Report & Accounts for the year ended 1 January 2000. These accounts carry an unqualified auditor's report, and have been delivered to the Registrar of Companies. The comparative results for the year ended 1 January 2000 are abridged, and as such do not represent statutory accounts. The full Annual Report & Accounts for the year ended 30 December 2000 will be posted to shareholders shortly and, after adoption at the Annual General Meeting, delivered to the Registrar of Companies. 2 Segmental Analysis 2000 1999 Sales Op Profit Sales Op Profit £'000 £'000 £'000 £'000 ORIGIN United Kingdom 51,821 1,730 42,166 605 United States 36,211 2,082 29,738 2,924 Discontinued 28,646 (3,719) 108,391 8,334 Businesses 116,678 93 180,295 11,863 PRODUCT Promotional Marketing 88,032 3,812 71,904 3,529 Discontinued 28,646 (3,719) 108,391 8,334 Businesses 116,678 93 180,295 11,863 3 Exceptional Item 2000 1999 £'000 £'000 Loss on Class 1 (20,029) - disposal (Bemrose Security Printing and Henry Booth Group) Loss on disposal of (24,466) (102) other subsidiaries Costs of fundamental (1,389) - reorganisation Net release of - 1,973 provision for loss on sale of US Supplier businesses Closure costs relating - (271) to Meridian Promotional Products BV, Holland (45,884) 1,600 The current year losses on the disposal of businesses include costs of £31,590,000 relating to goodwill previously written off against reserves. 4 Taxation 2000 1999 £'000 £'000 United Kingdom (1,331) 2,605 Overseas 1,606 245 Exceptional items - 992 275 3,842 5 Dividends 2000 1999 p p Interim dividend (paid 13 November 2000) 6.45 6.45 Final dividend 12.20 12.20 Special dividend (paid 24 May 1999) - 100.00 18.65 118.65 The final dividend in respect of 2000 of 12.20p will be paid on 25th May 2001 to shareholders on the Register at close of business on 27th April 2001. 6 Loss per share (EPS) The loss per share calculation is based on losses after tax and preference dividends of £45,366,000 (1999 : Profit - £8,802,000), and weighted average shares in issue of 28,205,000 (1999 : 33,493,000). The diluted loss per share is based on the same loss and profit figures as above, but takes into account the dilutive effect of share options outstanding, which leaves the weighted average number of shares in issue of 28,207,000 (1999 : 33,586,000).

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