Interim Results - 6 Months to 28 January 2000

St. Ives PLC 18 April 2000 ST IVES plc - INTERIM RESULTS for the twenty-six weeks ended 28 January 2000 Half Year Half Year Change 2000 1999 * Turnover £239.0m £223.2m +7.1% * Profit before tax £32.0m £27.3m +17.3% * Earnings per share 21.30p 18.04p +18.1% * Dividend per share 4.75p 4.25p +11.8% Miles Emley, Chairman, commented: 'We have made further considerable progress. Our exposure to a broad range of markets, each with different dynamics, remains a strength. We look forward to meeting our expectations and to a satisfactory outcome for the year as a whole.' Enquiries to: Miles Emley, Chairman St Ives plc Brian Edwards, Managing Director 020 7928 8844 Cary Martin Citigate Dewe Rogerson Penny Cross 020 7638 9571 Duncan Murray Results We are pleased to report further improved results for the 26 weeks ended 28 January 2000. Turnover was £239.0 million (1999 - £223.2 million), an increase of 7.1 per cent on the previous year turnover excluding paper increased by 9.7 per cent. Profit before taxation of £32.0 million (1999 - £27.3 million) represents an increase of 17.3 per cent. Basic earnings per share were 21.3p (1999 - 18.04p), up 18.1 per cent compared with the first half of the previous year. Dividend An interim dividend of 4.75p per share has been declared. This represents an increase of 11.8 per cent over the interim dividend of 4.25p declared in respect of the first half of last year. Trading Conditions The encouraging result for the first half of the year demonstrates the benefits of our commitment to service and quality and of continuing investment in modern, flexible equipment and the systems to support it. Our exposure to a broad range of markets, each with different dynamics, remains a strength. Both in Europe and North America, a number of our competitors have installed additional capacity and, in the UK, some have lost less time sensitive work overseas. As a result, while many of our markets have been busy, they have also been extremely competitive. These factors have affected our web offset capacity serving both commercial and publishing markets. Nevertheless, we have made further considerable progress. Books Clays has performed well. Sales, especially of cased books, have grown. We have increased our share of the UK trade and general market, principally by continuing to provide a faster, more reliable service than any of our competitors. We have been especially successful in winning orders to print or reprint best selling titles. Commencement of construction work on our proposed new site close to our existing factory awaits detailed planning consent. Direct Response and Commercial In the UK the direct response and commercial markets continue to grow. We have improved our sales mix by undertaking more specialist, shorter run work, and our recent investment in additional mailing and personalisation equipment has helped us to achieve this. Since the half year replacement sheetfed presses have been installed at Bradford and Romford. The integration of the Hunters Armley companies with our other businesses serving these markets was completed before the start of the period and has enabled us to achieve better utilisation and greater efficiency. In Germany, the markets which we serve have remained extremely competitive. A modest improvement in the performance of Johler Druck has been offset on translation by the further strengthening of sterling against the Deutsche mark. At St Ives Cleveland (formerly The Perlmuter Printing Company) in the USA volumes increased in a competitive market. Delays in the construction of the factory extension and installation of a new binding line led to reduced efficiency in the bindery and higher than planned outwork. Financial In corporate financial markets we were considerably more busy than in the first half of the previous financial year, producing documentation both for new equity issues and cross border merger and acquisition transactions. Activity levels reduced around Christmas and the New Year, but business has since picked up, especially for European customers. Shortly after the end of the half year, we commissioned a new sheetfed press at Westerham Press to serve the Report and Accounts and high quality commercial markets. Magazines In the UK, we have experienced fluctuating demand. Overall, volumes were flat. Paginations were high in October and November, but below seasonal norms towards the end of the half year. Volumes for shorter run, specialist magazines have been more robust than for longer run, more general titles. We are well placed to supply the continuing growth in demand for perfect bound, as opposed to saddle-stitched, product. In February, a replacement web press was commissioned at our Plymouth factory. In the USA, greater than expected growth in pagination during the autumn led to our doing more work than we could produce efficiently despite the commissioning of our new press last summer. Multimedia Volumes of music product have been maintained, in a market which continues to experience highly competitive pricing. We have made progress in broadening our product and customer base by doing more work for packaging of internet access CDs and other multimedia products. February saw the commissioning of a new sheetfed press at our Blackburn factory, principally to supply the commercial market in the North West of England. Balance sheet At the half year, shareholders' funds had increased to £202.9 million. Implementation of our extensive capital expenditure programme announced at the end of last year continues. This mainly comprises replacement equipment aimed at improving efficiency and maintaining our cost effectiveness relative to competing media. However, it includes associated property construction, some of which has been delayed while planning and similar consents are obtained. As a result our net cash resources, which totalled £49.8 million at the half year, are temporarily greater than planned. Outlook Our capital investment programme is directed at ensuring that the inherent advantages of print in mass market communication (eg quality, immediacy, browsability, portability) continue to be available to our customers on terms which are competitive with other media. The new digital technologies have helped us to make further improvements to the speed and flexibility of the service which we offer our customers. The internet has created rather than displaced demand for print in many of our markets, both through the introduction of new products and through increased demand for existing products. The signs are that these trends will continue. Markets for longer run or less time sensitive commercial products remain extremely competitive: this is mainly the result of the installation of additional capacity by our competitors and, in the UK, the continuing strength of sterling. In the USA, while our magazine volumes continue to run modestly ahead of last year, demand for commercial products has become more volatile. Current levels of activity in the market for financial print are high. Otherwise, conditions in our markets are similar to those at this time last year. We continue to look forward to meeting our expectations and to a satisfactory outcome for the year as a whole. CONSOLIDATED PROFIT AND LOSS ACCOUNT 26 weeks to 26 weeks to 52 weeks to 28 January 29 January 30 July 2000 1999 1999 ------------ ------------ ------------- £'000 £'000 £'000 Turnover (note 2) 239,018 223,210 452,237 Cost of Sales (174,949) (165,645) (331,477) ------------ ------------ ------------- Gross Profit 64,069 57,565 120,760 Sales and distribution costs (11,841) (10,102) (21,528) Administration expenses (21,261) (20,300) (40,684) Other operating income 162 123 954 ------------ ------------ ------------- Operating profit (note 2) 31,129 27,286 59,502 Interest receivable 1,607 861 2,085 Interest payable (713) (856) (1,482) ------------ ------------ ------------- Profit before taxation 32,023 27,291 60,105 Taxation (note 1) (9,927) (8,733) (19,053) ------------ ------------ ------------- Profit after taxation 22,096 18,558 41,052 Dividends (note 3) (4,938) (4,371) (15,207) ------------ ------------ ------------- Retained profit 17,158 14,187 25,845 ============ ============ ============= Earnings per share (note 4) 21.30p 18.04p 39.87p ============ ============ ============= Diluted Earnings per share (note 4) 20.98p 17.95p 39.63p ============ ============ ============= Dividend per ordinary share 4.75p 4.25p 14.7p ============ ============ ============= All transactions are derived from continuing activities. CONSOLIDATED BALANCE SHEET 28 January 29 January 30 July 2000 1999 1999 £'000 £'000 £'000 Tangible fixed assets 171,180 180,955 170,306 Current assets Stocks 17,830 13,012 14,692 Debtors 81,290 79,380 76,342 Cash at bank and in hand 69,952 35,917 64,233 ------------ ------------ ------------- 169,072 128,309 155,267 Creditors - due within one year (113,876) (107,498) (112,173) ------------ ------------ ------------- Net current assets 55,196 20,811 43,094 ------------ ------------ ------------- Total assets less current liabilities 226,376 201,766 213,400 Creditors - due after more than one year (6,722) (8,868) (10,225) Provisions and deferred taxation (14,181) (15,178) (14,982) Deferred income (2,578) (3,288) (2,984) ------------ ------------ ------------- 202,895 173,075 186,566 ============ ============ ============= Capital and reserves Called up share capital 10,380 10,289 10,366 Share premium account 41,304 38,995 40,875 Capital redemption reserve 1,040 1,040 1,040 Profit and loss account 150,171 122,751 134,285 ------------ ------------ ------------- Equity shareholders' funds 202,895 173,075 186,566 ============ ============ ============= This interim statement was approved by the Board of Directors on 18 April 2000. SUMMARISED CONSOLIDATED CASH FLOW STATEMENT 26 weeks to 26 weeks to 52 weeks to 28 January 29 January 30 July 2000 1999 1999 ------------ ------------ ------------- £'000 £'000 £'000 Net cash inflow from operating activities 34,982 35,383 92,344 Returns on investments and servicing of finance 879 374 852 Tax paid (6,121) (3,743) (21,381) Capital Expenditure (13,197) (13,258) (19,291) Acquisitions - - (312) Equity dividends paid (9,205) (10,841) (13,581) ------------ ------------ ------------- Net cash inflow before financing 5,702 9,551 38,631 Financing Issue of shares 443 65 2,022 Decrease in debt (2,113) (2,636) (4,395) ------------ ------------ ------------- Increase in cash 4,032 6,980 36,258 ============ ============ ============= NOTES TO THE SUMMARISED CONSOLIDATED CASH FLOW STATEMENT 26 weeks to 26 weeks to 52 weeks to 28 January 29 January 30 July 2000 1999 1999 ------------ ------------ ------------- £'000 £'000 £'000 Net cash inflow from operating activities Operating profit 31,129 27,286 59,502 Depreciation 13,573 14,757 29,537 Other non cash movements (515) (483) (1,694) Changes in working capital (9,205) (6,177) 4,882 Other items - - 117 ------------ ------------ ------------- 34,982 35,383 92,344 ============ ============ ============= NOTES TO THE SUMMARISED CONSOLIDATED CASH FLOW STATEMENT continued 26 weeks to 26 weeks to 52 weeks to 28 January 29 January 30 July 2000 1999 1999 ------------ ------------ ------------- £'000 £'000 £'000 Reconciliation of net cash flow to movement in net funds Increase in cash in the period 4,032 6,980 36,258 Cash outflow from decrease in debt and lease financing 2,113 2,636 4,395 ------------ ------------ ------------- Change in net funds resulting from cash flows 6,145 9,616 40,653 New finance lease - (1,021) (1,021) Exchange adjustments (274) 81 (64) ------------ ------------ ------------- Movement in net funds in the period 5,871 8,676 39,568 Opening net funds 43,947 4,379 4,379 ------------ ------------ ------------- Closing net funds 49,818 13,055 43,947 ============ ============ ============= Other 30 July non cash Exchange 28 January 1999 Cashflow changes movements 2000 --------- ---------- -------- ---------- ----------- £'000 £'000 £'000 £'000 £'000 Analysis of net funds Cash at bank and in hand 64,233 6,109 - (390) 69,952 Overdrafts - (2,077) - (1) (2,078) ---------- 4,032 Bank loans - due within one year (9,379) 425 (255) 29 (9,180) - due after one year (3,906) 735 255 88 (2,828) Finance leases (7,001) 953 - - (6,048) --------- ---------- -------- ---------- ----------- 43,947 6,145 - (274) 49,818 ========= ========== ======== ========== =========== STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 26 weeks to 26 weeks to 52 weeks to 28 January 29 January 30 July 2000 1999 1999 ------------ ------------ ------------- £'000 £'000 £'000 Profit after taxation 22,096 18,558 41,052 Exchange differences (1,272) 535 35 ------------ ------------ ------------- Total recognised gains and losses 20,824 19,093 41,087 ============ ============ ============= MOVEMENTS IN SHAREHOLDERS' FUNDS 26 weeks to 26 weeks to 52 weeks to 28 January 29 January 30 July 2000 1999 1999 ------------ ------------ ------------- £'000 £'000 £'000 Opening shareholders' funds 186,566 158,288 158,288 Total recognised gains and losses 20,824 19,093 41,087 Dividends (4,938) (4,371) (15,207) Issue of ordinary shares 443 65 2,022 Goodwill adjustment - - 376 ------------ ------------ ------------- Closing shareholders' funds 202,895 173,075 186,566 ============ ============ ============= NOTES TO THE FINANCIAL STATEMENTS 1. Basis of preparation The interim statements have been prepared in accordance with the accounting policies set out in, and are consistent with, the Group's Annual Report for 1999 except that the taxation charge for the period is based on he estimated charge for the fifty-two weeks to 28 July 2000. 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 1999 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. The comparative figures for the 26 weeks to 29 January 1999 have been restated to reflect the difference between the provisional FRS 12 adjustment that was made in the interim results for January 1999 and that which was finalised in July 1999. 2. Geographical analysis The geographical analysis of turnover and operating profit by origin is stated below 26 weeks to 26 weeks to 52 weeks to 28 January 29 January 30 July 2000 1999 1999 ------------ ------------ ------------- £'000 £'000 £'000 Turnover United Kingdom 186,858 170,962 351,925 United States of America 36,789 34,206 68,799 Rest of the World 15,371 18,042 31,513 ------------ ------------ ------------- 239,018 223,210 452,237 ============ ============ ============= Operating profit United Kingdom 27,032 22,378 50,894 United States of America 2,583 3,466 6,708 Rest of the World 1,514 1,442 1,900 ------------ ------------ ------------- 31,129 27,286 59,502 ============ ============ ============= The directors consider that the Group has only one class of business and consequently no further analysis of turnover or profit is given. 3. Dividends The directors have declared an interim dividend of 4.75p (1999 - 4.25p) net per share. The payment date will be 2 June 2000 and the record date will be 8 May 2000. 4. Earnings per share The calculation of the basic earnings per share is based on profit after taxation as disclosed in the profit and loss account of £22,096,000 (1999: January £18,558,000; July £41,052,000) and on a weighted average of 103.7 million (1999: January - 102.9 million; July - 103.0 million) shares in issue during the period. The calculation of the diluted earnings per share is based on profit after taxation as disclosed in the profit and loss account and on a diluted weighted average of 105.3 million (1999: January - 103.4 million; July - 103.6 million) shares during the period. The difference between the number of shares used in the basic and diluted earnings per share calculation is 1.6 million (1999: January - 0.5 million; July - 0.6 million) representing dilutive share options held but not yet exercised. Dilution has been restricted to share options where the individual option price is less than the average market value of shares during the period, which was 580.0p (1999: January - 366.0p; July - 435.8p). 5. A copy of this interim statement has been sent to all shareholders.

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