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 â€¢ Revenue Â£209.2m (2006*: Â£195.6m) â€¢ Pre tax profit Â£10.7m (2006*: Â£14.2m) â€¢ Underlying** pre tax profit Â£11.4m (2006*: Â£11.5m) â€¢ Basic earnings per share from continuing operations 6.62p (2006*: 9.35p) â€¢ Underlying** earnings per share 7.43p (2006*: 7.48p) â€¢ Acquisition of Service Graphics for Â£18.2m: digital printing facilities of enlarged Group second to none in UK â€¢ Sale of corporate finance related activities for Â£4.7m â€¢ 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 Â£209.2 million (2006* - Â£195.6 million) and profit before tax, restructuring costs, provision releases and other one-off items of Â£11.4 million (2006* - Â£11.5 million). Profit from continuing operations before tax was Â£10.7 million (2006* - Â£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 Â£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 Â£0.8 million (2006 - a net loss of Â£0.8 million). After writing off Â£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 Â£7.3 million (2006* - a profit after tax of Â£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 Â£97.7 million, 1.5 per cent below the first half of last year and underlying operating profit reduced from Â£13.9 million to Â£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 Â£80.3 million, including Â£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 Â£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 Â£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 Â£155.9 million and net debt stood at Â£39.0 million. The increased level of net debt reflects the Â£18.2 million cost of acquisition of Service Graphics and the initial receipt of Â£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 Â£11.6 million, considerably below the Â£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) __________ __________ __________ __________ __________ Â£'000 Â£'000 Â£'000 Â£'000 Â£'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) ___________ ___________ ___________ Â£'000 Â£'000 Â£'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 __________ ___________ __________ Â£'000 Â£'000 Â£'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) ___________ ___________ ___________ Â£'000 Â£'000 Â£'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 _________ _________ _________ _________ _________ Â£'000 Â£'000 Â£'000 Â£'000 Â£'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 _________ _________ _________ _________ _________ Â£'000 Â£'000 Â£'000 Â£'000 Â£'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 _________ _________ _________ _________ _________ Â£'000 Â£'000 Â£'000 Â£'000 Â£'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 ________ ________ ________ ________ Â£'000 Â£'000 Â£'000 Â£'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 ________ ________ ________ ________ Â£'000 Â£'000 Â£'000 Â£'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 ________ ________ ________ ________ Â£'000 Â£'000 Â£'000 Â£'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 ___________ ___________ ___________ Â£'000 Â£'000 Â£'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 Â£'000 Â£'000 Â£'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 _________ _________ _________ _________ _________ _________ Â£'000 pence Â£'000 pence Â£'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 ___________ ___________ ___________ Â£'000 Â£'000 Â£'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 ___________ ___________ ___________ Â£'000 Â£'000 Â£'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 Â£808,000, reduce the profit before tax for the period by Â£2,428,000 and reduce net assets by Â£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) ___________ ___________ ___________ Â£'000 Â£'000 Â£'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 ____________ ____________ ____________ ____________ ____________ Â£'000 Â£'000 Â£'000 Â£'000 Â£'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 ____________ ____________ ____________ Â£'000 Â£'000 Â£'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 Â£47.2 million (Â£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 Â£18.2 million. Additional consideration will be paid to certain director shareholders if profit before interest and taxation exceeds Â£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 ____________ ____________ ____________ Â£'000 Â£'000 Â£'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 ___________ ___________ ___________ Â£'000 Â£'000 Â£'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 ___________ ___________ ___________ Â£'000 Â£'000 Â£'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 ___________ Â£'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 (Â£630,000 after 2 February 2007) 4,703 =========== A tax credit of Â£380,000 arose on the disposal. 14. A copy of the interim statement will be sent to all shareholders. This information is provided by RNS The company news service from the London Stock Exchange

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Friday, 17th May 2024

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