Final Results

4imprint Group PLC 20 March 2002 Press Release 20 March 2002 4imprint Group plc Preliminary Results for the year ended 29 December 2001 4imprint Group plc, the leading global distributor of imprinted promotional products, today reports its Preliminary Results for the year ended 29 December 2001. Highlights • Turnover from continuing operations up 6.7% from £88.0 million to £94.0 million • Profits on continuing activities before amortisation and exceptionals down from £4.8m to £2.4m, in line with the October announcement • Final dividend of 1.25p per share (12.20p) • Core businesses remain cash generative Operational highlights • Restructuring completed - exceptional charge of £1.5 million • UK and US corporate programmes show continued sales growth • Expanding customer base from AIA franchise owner network • Direct marketing order volumes increased in both the US and the UK Commenting on the Results, Dick Nelson, Chief Executive of 4imprint Group plc, said: 'In the toughest market conditions experienced for a number of years, the Group maintained turnover in its existing businesses whilst integrating AIA, the US-based franchise network acquired in December 2000. The Group's flexibility in service delivery and ability to serve a wide range of business sectors means that, whilst affected by general market conditions, there is no undue reliance upon any one channel, sector or client. 'Sales are continuing to increase despite weak market conditions on both sides of the Atlantic. This is driven by new contract wins in both the Corporate Programmes and Premium divisions. Additionally with over 450 active franchise owners now in the AIA network, the Group is well positioned to rebound in 2002, assuming there is no major deterioration in either the UK or US economies.' - Ends - www.4imprint.com www.4imprint.co.uk For further information, please contact: 4imprint Group plc Dick Nelson, CEO Tel: +44 (0) 7788 145 193 Email: dnelson@4imprint.com (today only) Issued by: Bankside Consultants Limited Julian Bosdet / Henry Harrison-Topham Tel: +44 (0) 20 7444 4141 Email: henry.ht@bankside.com Chairman's Statement 2001 has seen the second and final phase of the transformation of our Group from its origins in the UK printing industry to become a leading international distributor of promotional merchandise. With the entire Group now focused on this market, we have been working on the development of our infrastructure and technical systems, together with the integration of previous acquisitions. All of this will provide our clients with the best possible service using a competitive cost base, giving the Group the opportunity of strong growth in profits. During 2001, we have succeeded in maintaining sales on a like for like basis and added the first year contribution from AIA, acquired on 30 December 2000. This has been achieved against a worsening economic background for the Group and its customers. We have a strong base of IT and telecommunications clients whose markets are suffering serious pressures after many years of rapid growth and we also serve several major airlines, all of which have been under severe economic strain. Only now are we beginning to show some recovery from the reductions in their business with the Group since last Autumn. This situation has resulted in lower profits than we had planned for the year, albeit in line with our October statement. However, our financial position remains strong and we have no net borrowings. We believe strongly that our broad customer base in both manufacturing and service companies is a valuable asset, which will position us to take maximum advantage of growth and recovery opportunities. We propose a final dividend of 1.25 pence per share, giving a total of 2.25 pence per share for the year (18.65 pence per share total in 2000). This is in accordance with the policy set out last year, which is to maintain a dividend cover of around three times, based upon profit before exceptional items and goodwill amortisation and after provision for a normalised tax rate. During the year we have made two important changes to our Board. Richard Harrison has retired after 10 years as Finance Director and 17 years with the Group. Martin Varley was a founder of Broadway Incentives, which has been one of the core divisions of our UK operations. Martin spent 8 years with the Group following our acquisition of his company, and since 2000 he held a Board position as Managing Director, Europe. Martin has now moved on to new challenges in another field. I would like to thank both Richard and Martin for their significant contributions to the Group. The Group has recognised a total charge of £0.3 million to satisfy fully the contractual agreements between the Group and Richard and Martin. We welcome Craig Slater to the Board as Finance Director. We congratulate both Nigel Brabbins, on his promotion to head our European Operations and Kevin Lyons-Tarr, as Chief Operating Officer at Oshkosh, who has ten years' experience with the Company. 2001 has not been an easy year. However, we have a clear and focused positive strategy, a strong 'blue chip' customer base now utilising our leading edge administrative technologies and a team of committed and extremely capable executives. Accordingly, the Board looks to the future with optimism and confidence. Rodger Booth Chairman Chief Executive's Review Introduction In the toughest market conditions experienced for a number of years the Group maintained turnover in its existing businesses whilst integrating AIA, the US-based franchise network acquired in December 2000. As a result, Group turnover from continuing operations increased by 6.7%, from £88.0 million to £94.0 million. The Group's flexibility in service delivery and ability to serve a wide range of business sectors means that, whilst affected by general market conditions, there is no undue reliance upon any one channel, sector or client. In particular, the business was able to mitigate the impact of more severe conditions in the IT, telecommunications and airline industries during 2001. Nevertheless, net margins were affected by the downturn and by the costs of the development initiatives outlined below. This resulted in profit before tax, amortisation and exceptional items on continuing activities of £2.4 million - in line with the trading statement issued in October 2001 - compared to £4.8 million in 2000. Significant progress was achieved on a number of operational initiatives, including the AIA integration and the establishment of business channels in the US. In order to achieve the objectives set for the AIA integration, the Group has invested in the further development of its operating system OASIS, the migration of certain jobs into our major US business facilities in Oshkosh and the establishment of additional services to assist franchise owners in further growth. In conjunction with the AIA development, the premium and corporate programme channels have also been established in Oshkosh. In the UK, the final stages of the restructuring announced last year were put in place. The main element of this was the closure in December of the Woking facility, which is expected to produce an immediate benefit of £0.5 million per annum. This compares with the expected cost of £1.5 million, which is shown as an exceptional item in the 2001 accounts. Alongside goodwill amortisation of £1.0 million this leads to a Group result of breakeven, compared to a loss of £45.1 million in 2000. The Group remains cash generative. However, 2001 was characterised by a significant cash outflow, as a result of: • the payment of £10.5 million for AIA • capital expenditure of £4.7 million largely spent on expanding the facilities in Oshkosh in order to house the AIA back office functions that will be consolidated there and the further development of the OASIS operating system, and • £3.8 million in dividends under the old Bemrose dividend policy, which, as indicated in last year's report, will not be continued. Corporate Programmes Our corporate programme channel designs, sources, manufacturers, warehouses and distributes promotional products for over 80 major clients worldwide such as Audi, British Airways, BT, Gillette, Hitachi Data Systems, IBM, ING, JCB, Microsoft, Northrop Grumman, Union Pacific and UNISYS. In UK corporate programmes there was sales growth both from existing customers and from several significant new contracts won during the year. This was despite spending cuts by some clients, particularly those in travel and technology. The wins included some high profile names such as Nissan Europe, Abbey National, DaimlerChrysler UK, Natwest and Ericsson, and these strengthen and broaden the customer base in this business. However, some of these accounts were added late in the year and, as a result, should yield benefits in 2002. The US strategy of using the AIA franchise owner network to find corporate programme opportunities continues to produce results. Through the use of web-based catalogues and our OASIS operating system, a competitive, and high quality service is offered to all corporate, programme clients, resulting in an expanding customer base. The Group has secured over a dozen new wins since the middle of last year when the initiative was launched. Hitachi Data Systems, Brunswick, JCB (now served in both the UK and the US), ING and Union Pacific join the growing list of valued clients. Significant resources have been added throughout the year to support the development of this channel, and revenue from these recent wins will gradually increase in the coming months as these programmes launch and grow. Direct Marketing Our direct marketing channel posts well over 10 million catalogues and other mailings annually and serves over 150,000 customers worldwide. Dot.com start-ups that had entered our industry found themselves in some difficulty. Accordingly, our initial US mailing plans for 2001, put forward in the autumn of 2000, called for a 30% increase in prospect catalogues being mailed. Unfortunately the recession dampened response rates and, though we cut back our mailings in the second half, the additional cost of aggressive prospecting in the first half impacted earnings in this division. The main impact of the recessionary market was to reduce average order size, but increased order volumes in both the US and the UK, the latter from a small base, offset this. Direct marketing orders coming in over the Internet now account for 25% of the intake in the UK and remain at 18% in the US. Premiums Our premium channel designs, sources and arranges offshore manufacturing of large one-off imprinted product orders most often used by larger companies in consumer promotions. Though this channel will see a slight lift from the upcoming World Cup, it continues to reduce cyclical dependence on the bi-annual sporting events that have dominated its top line in the past. With a renewed emphasis on net profit and cost control, the business produced improved net results from a reduced turnover. The Group has won contracts with a number of new clients, including the BBC, Gillette and Diageo; as well as becoming joint official premium promotion licensee for the Manchester 2002 Commonwealth Games. Our ongoing contracts to provide amenity kits for several major airlines should provide access to the steady improvement expected and already being seen in this sector. Our route to market in the US premium business via the AIA franchise owner network is the same as with corporate programmes. Both Corporate Programmes and infrastructure development have been our first priority and work on Premium sales is at an early stage. Lead times for major orders are longer but the initial response has been extremely positive. Partner Services Our Partner Services channel's charter is to leverage our bespoke enterprise operating systems and industry-leading supply chain management processes into other channels of distribution. AIA maintained strong growth, adding 130 new franchise owners in 2001, growing its recurring service fees by 35%, from System Wide Billings up 18% to US$110 million. When the acquisition of AIA was announced in December 2000, many prospective joiners took a wait-and-see attitude. As the strength of our newly combined resources has become better known, this caution has largely disappeared and we have been able to attract better experienced industry operators many of whom bring with them significant existing business. Franchise owners are progressively introduced to our highly efficient OASIS IT system. This is a major project that we aim to complete by the end of 2002. This will enable them to process transactions quicker and with greater accuracy, freeing them to spend more time selling. Outlook Sales are continuing to increase despite weak market conditions in both the UK and US. This is driven by new contract wins in both the Corporate Programmes and Premium divisions. Additionally with over 450 active franchise owners now in the AIA network, the Group is well positioned to rebound in 2002, assuming there is no major deterioration in either the UK or US economies. Dick Nelson Chief Executive Officer Consolidated Profit & Loss Account For the year ended 29 December 2001 Exceptionals Unaudited Exceptionals Audited & goodwill & goodwill amortisation Total amortisation Total 2001 2001 2001 2000 2000 2000 Note £'000 £'000 £'000 £'000 £'000 £'000 Turnover - continuing 93,973 - 93,973 88,032 - 88,032 - discontinued - - - 28,646 - 28,646 2 93,973 - 93,973 116,678 - 116,678 Change in stocks of finished goods (496) - (496) 7,632 - 7,632 Operating expenses excluding goodwill (91,507) - (91,507) (123,940) - (123,940) amortisation Goodwill amortisation - (954) (954) - (277) (277) Operating profit/(loss) - continuing 1,970 (954) 1,016 4,089 (277) 3,812 - discontinued - - - (3,719) - (3,719) 2 1,970 (954) 1,016 370 (277) 93 Exceptional item : loss on sale of businesses and fundamental 3 - (1,525) (1,525) - (45,884) (45,884) reorganisation Interest 474 - 474 704 - 704 Profit/(loss) before - continuing 2,444 (2,479) (35) 4,793 (1,666) 3,127 taxation - discontinued - - - (3,719) (44,495) (48,214) 2,444 (2,479) (35) 1,074 (46,161) (45,087) Taxation 4 (42) - (42) (275) - (275) Profit/(loss) after 2,402 (2,479) (77) 799 (46,161) (45,362) taxation Dividends : Ordinary & 5 (646) - (646) (5,350) - (5,350) preference Transfer to/(from) 1,756 (2,479) (723) (4,551) (46,161) (50,712) reserves Earnings per share Basic 6 (0.27)p (160.84)p Diluted 6 (0.27)p (160.83)p Dividend per ordinary 2.25p 18.65p share: Reconciliation of Movement in Shareholders' Funds For the year ended 29 December 2001 Unaudited Audited 2001 2000 £'000 £'000 Loss for the financial period (77) (45,362) Dividends (646) (5,350) (723) (50,712) Other recognised gains and losses relating to the period 593 (374) Shares issued in the period - 1,727 Redemption of preference share capital - (208) Goodwill reinstated on disposal of subsidiaries - 31,590 Net movement in shareholders' funds (130) (17,977) Opening shareholders' funds 45,845 63,822 Closing shareholders' funds 45,715 45,845 Consolidated Balance Sheet At 29 December 2001 2001 2000 Unaudited Audited £'000 £'000 £'000 £'000 Fixed assets Tangible 7,363 4,742 Goodwill 17,633 17,325 Investments 9 76 25,005 22,143 Current assets Stocks 5,295 5,732 Debtors 43,736 46,640 Cash 25,360 28,110 74,391 80,482 Current liabilities Loans & overdrafts 22,064 8,106 Trade creditors 12,572 15,101 Corporation tax 5,134 4,947 Finance leases - 7 Other creditors 4,382 17,690 Dividends 365 3,501 (44,517) (49,352) Net current assets 29,874 31,130 Total assets less current liabilities 54,879 53,273 Creditors due after more than one year Other 5,178 5,221 (5,178) (5,221) Provisions for liabilities and charges (3,986) (2,207) NET ASSETS 45,715 45,845 Capital and reserves Ordinary share capital 11,044 11,044 Share premium 37,630 37,630 Capital redemption reserve 208 208 Revaluation reserve 43 49 Profit & loss account (3,210) (3,086) SHAREHOLDERS' FUNDS 45,715 45,845 NET CASH 3,296 19,997 Consolidated Cashflow For the year ended 29 December 2001 Unaudited Audited Note 2001 2000 £'000 £'000 Cash inflow from operating activities 7 2,872 183 Returns on investments and servicing of finance 402 772 Taxation (314) (797) Capital expenditure (4,654) (4,745) Acquisitions (10,468) (1,863) Disposals (747) 37,672 Equity dividends paid (3,782) (5,272) Cash (outflow)/inflow before the use of liquid resources and financing (16,691) 25,950 Financing Issue of shares 67 1,689 Increase/(repayment) of loans 13,053 (2,700) Capital element of finance lease rental payments (7) (179) 13,113 (1,190) (Decrease)/increase in cash in the period (3,578) 24,760 Cash (outflow)/inflow from movement in debt and finance leasing (13,046) 2,879 Change in net debt resulting from cashflows (16,624) 27,639 Debt acquired with subsidiaries - (7,139) Finance leases disposed of with subsidiaries - 31 Translation difference (77) 70 Cash (outflow)/inflow in the period (16,701) 20,601 Opening net cash/(debt) 19,997 (604) Closing net cash 3,296 19,997 Notes to the Financial Statements 1 Basis of preparation This preliminary announcement for the year ended 29 December 2001 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 30 December 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 30 December 2000 are abridged, and as such do not represent statutory accounts. The full Annual Report & Accounts for the year ended 29 December 2001 will be posted to shareholders shortly and, after adoption at the Annual General Meeting, delivered to the Registrar of Companies. 2 Segmental Analysis 2001 2000 Sales Operating profit Sales Operating profit £'000 £'000 £'000 £'000 ORIGIN United Kingdom 49,980 1,063 51,821 2,007 Goodwill amortisation (277) (277) 49,980 786 51,821 1,730 United States 43,993 907 36,211 2,082 Goodwill amortisation (677) 43,993 230 36,211 2,082 Businesses disposed of 28,646 (3,719) TOTAL 93,973 1,016 116,678 93 PRODUCT Promotional Marketing 93,973 1,970 88,032 4,089 Goodwill amortisation (954) (277) 1,016 88,032 3,812 Businesses disposed of 28,646 (3,719) TOTAL 93,973 1,016 116,678 93 3 Exceptional Item 2001 2000 £'000 £'000 Loss on disposal of Bemrose Security Printing and Henry Booth Group (20,029) Loss on disposal of other subsidiaries (24,466) Costs of fundamental reorganisation (1,525) (1,389) (1,525) (45,884) The exceptional costs in 2001 represents the completion of the fundamental reorganisation and relates to the closure costs of the Woking operation together with an associated onerous lease provision. 4 Taxation 2001 2000 £'000 £'000 United Kingdom (571) (1,331) Overseas 613 1,606 42 275 5 Dividends on ordinary shares 2001 2000 p p Interim dividend (paid 12 November 2001) 1.00 6.45 Final dividend 1.25 12.20 2.25 18.65 The final dividend per ordinary share in respect of 2001 of 1.25p will be paid on 30th May 2002 to shareholders on the Register at close of business on 3rd May 2002. 6 Earnings Per Share The Earnings Per Share for the year is based on the loss after tax of £77,000 (2000 : Loss - £45,366,000) and weighted average shares in issue of 28,713,000 (2000 : 28,205,000). The Diluted Earnings Per Share for the year is based on the same profit and loss figures as above, but takes into account the dilutive effect of share options outstanding. The weighted average number of shares in issue for Diluted Earnings Per Share purposes are 28,713,000 (2000 : 28,207,000). 7 Reconciliation of operating profit to operating cashflows Unaudited Audited 2001 2000 £'000 £'000 Operating profit 1,016 93 Depreciation charge 1,922 3,537 Amortisation of goodwill 954 277 Loss/(profit) on sale of tangible fixed assets 113 (33) Release of deferred profit on sale and leaseback (35) (150) Pension prepayment movement - 75 Exceptional reorganisation costs paid (190) (1,256) Decrease/(increase) in stocks 443 (6,350) Decrease in debtors 5,224 11,617 Decrease in creditors (6,474) (7,230) Expenditure against provisions (101) (397) 2,872 183 8 Retirement benefits As required by the transitional provisions of FRS17, Retirement Benefits, the Group has calculated the net asset position of the defined benefit pension scheme as at 29 December 2001, and has concluded that the liabilities of the scheme were £3.4 million greater than its assets representing a deficit of 4.7% compared to the scheme assets. The Board is currently reviewing the options available to the Group. END This information is provided by RNS The company news service from the London Stock Exchange

Companies

4Imprint Group (FOUR)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today