Final Results - Year Ended 1 January 2000
Bemrose Corp PLC
3 March 2000
BEMROSE CORPORATION Plc
PRELIMINARY RESULTS FOR THE YEAR
ENDED 1 JANUARY 2000
This announcement was due to be made on Monday 6th March, but due
to the volatility in the share price it has been brought forward
to today.
Bemrose Corporation Plc, a leading international supplier of
promotional products and security printing announces Preliminary
results for the year ended 1 January 2000.
Planned disposal of print based activities and refocus of
activities on Promotional Products and Business to Business e-
commerce.
Promotional Products accounts for approximately 50%
of sales and 30% of Group operating Profit(excluding
discontinued busiensses)
Nelson Marketing's e-commerce business 4imprint.com launched
in September 1999
already accounts for 10% of Nelson's sales. Substantial
growth predicted
New Board appointments, - Dick Nelson to CEO and Martin
Varley responsible for European Promotional Products.
Profit before tax £12.7m (1998 £11.6m) in line with December
trading statement.
Gearing reduced to 1%, with shareholders funds up 8.1% to
£63.8m.
Final Dividend of 12.2p per share (1998 11.35p) making 18.65p
for the year (1998 17.5p), up 6.8% for the year.
Commenting on today's announcement Rodger Booth, Chairman of
Bemrose said :
'The past 12 months have seen the transformation of our company
from a print based group to a progressive internet driven
distribution business. Our experience in Direct Marketing,
Purchasing and Customer service will be highly relevant as we
build upon our existing profitable base. Dick Nelson who succeeds
me as CEO, is well qualified to lead our outstanding team. Our
printing businesses are market leaders and among the most
successful in the industry. As chairman I shall retain a special
responsibility to oversee their transfer to new ownership.'
There will be an analyst briefing at
Buchanan Communications,
107 Cheapside EC2
at 10.00am Monday 6th March 2000
For further information contact:
Dick Nelson, Rodger Booth, Bemrose Corporation Plc
0171 466 5000
Mark Edwards, Kirsty Robeson, Buchanan Communications
0171 466 5000
CHAIRMAN'S STATEMENT
Financial Highlights
1999 1998
Turnover £180.3m £216.6m
Turnover (excluding £160.3m N/A
disposals)9 £12.66m £11.6m2
Profit before Tax (after £12.15m N/A
exceptional)2 £8.82m £4.7m
Profit Before Tax (continuing
businesses)9, 2
Earnings
Shareholders Funds £63.8m £59.0m
Net Debt £0.6m £24.9m
Debt/Equity 1% 42%
EPS 26.28p 10.91p
Net Ordinary Dividend 18.65p 17.5p
Special Dividend 100p N/A
9 Disposals relate primarily to US Supplier businesses sold to
Norwood in May 1999.
2 1998 PBT is after £9.5m provision for loss on US disposals.
Review of 1999 Results
A significant transformation of our company began in 1999. It
started with the sale of our US Supplier Division to Norwood
completed on May 13th. The special dividend of 100p paid on May
24th returned some £43m to shareholders, and reduced the shares in
issue by 35 percent. The balance of the £80m proceeds have been
retained within the company. We have achieved another excellent
year in our US distributor business, but in the UK we have
encountered tougher trading conditions. In spite of this we have
completed some important strategic moves, including two
acquisitions and the launch of our interactive e-commerce site. I
reported at the half year the losses from our discontinued US
operations had substantially reduced earnings. We looked forward
to a stronger second half which was indeed achieved, but fell
short of our hopes. On December 2nd I announced that results from
our Specialist Print Services division would be behind 1998, and
that the newly acquired businesses of Bourne and PPI would be loss
making in 1999.
The profit before tax of £12.15m for continuing operations is in
line with our trading update. The turnover and profit figures
cannot be meaningfully compared with prior year as a result of the
significant disposals and acquisitions. The financial position of
the company is sound, with shareholders funds increasing 8.1% to
£63.8m, and debt almost eliminated following the disposal of the
US Supplier businesses. We are proposing a final dividend of
12.2p up 7.5% from 1998 (11.35p). The underlying dividend cover
is 1.4 times Earnings per share is a composite figure as a result
of the reduction of the number of shares in issue in May following
the payment of the special dividend.
The Way Forward
In December 1999 we instructed N M Rothschild and Sons to
undertake a review of the strategic options available to the
company. The board has now considered their report.
We have reached the conclusion that the two divisions of the
company, Promotional Marketing and Specialist Print Services have
very different characteristics, and will benefit from separate
development in the future.
Promotional Products
Our Promotional Products business operates companies in the USA,
UK and other European Countries. We purchase globally, and can
offer a global distribution service to clients. We supply
merchandise imprinted with corporate messages and logos to all
kinds and sizes of organisations, from Microsoft and British
Airways to local clubs and associations. Our different businesses
can source container loads of specially imprinted merchandise from
Asia, or deliver 100 coffee mugs printed with a corporate logo.
This is accomplished by highly trained and experienced staff using
the latest technologies. A major source of growth in recent years
has been the direct marketing catalogue business Nelson Marketing.
In September 1999 Nelson launched the e-commerce business
4imprint.com. In order to capture the opportunities that the
internet will bring, Nelson Marketing's core activity, the
distribution to a large customer base of promotional products
catalogue (currently some 6 million catalogues per annum) and the
subsequent sourcing from a wide range of manufacturers, is ideally
placed to benefit from the cost savings and incremental growth
that e-commerce can bring. To date, in just four months trading e-
commerce sales have grown progressively to represent more than 10%
of Nelson Marketing's sales. We perceive that this channel will
grow substantially in the years ahead, increasing our market share
and changing the way we do business with many of our customers.
So far we have invested very limited sums in developing and
marketing this service, but it may be necessary to invest
substantially larger sums in future to achieve optimum growth,
with a consequential short term effect on net earnings. In
conjunction with this investment we will also review the
possibility of partnering with organisations which can offer
complementary products or services.
Specialist Print Services
Specialist Print Services comprises businesses with leading
positions within a number of markets related to the printing
process. We have historically achieved margins among the best in
the industry, with strong positive cash flows. Growth however is
expected to be more limited than that currently available from
Promotional Marketing.
The Board has decided to seek to dispose of the Specialist Print
Services division, completing the transformation to a global
distributor of promotional products. N M Rothschild & Sons are
handling this process, and have already received a number of
expressions of interest including an approach from existing
management, led by Mr Graham Bennington, the Director responsible
for this division. We anticipate that under new ownership
operational management will continue in place and that the service
to customers will continue without interruption.
In due course we will consider returning a proportion of the
proceeds of the disposal to shareholders. A part of the proceeds
will be retained for the development of the continuing businesses.
Future dividend policy will take into account the capital
reduction and the earnings profile of the ongoing businesses.
Ongoing Management
It is appropriate that the new business should be led by those
best equipped to do so. After the disposal of Specialist Print
Services is completed I shall become non executive chairman of the
company. I have worked for Henry Booth and Bemrose for more than
30 years, the last 8 as Group Chief Executive. Effective from
today, March 6th Dick Nelson takes over as Chief Executive of
Bemrose Corporation plc. Martin Varley, the founder of our
Broadway Division, is appointed to the Group Board responsible for
European Promotional Products. In May - following the AGM, Brian
Ford will retire as a non executive Director at the end of his six
years service. I would personally like to thank Brian for his
advice and support through this challenging period. It is when
questions have been the most difficult that his contribution has
been the most valuable. In the months ahead we shall seek to
recruit a further non executive director with experience specific
to our continuing businesses.
In order to build and retain a strong team to develop the new
promotional products distribution and e-commerce business the
board proposes to introduce a new incentive share plan. The plan,
which will be subject to shareholder approval at an EGM, will
involve the grant of options over 4.2 million shares (15% of the
issued share capital) at 350p. The share plan will have
challenging performance requirements, requiring the doubling and
trebling of the share price within the next 3/5 years for the
options to vest. This plan is described in detail in the circular
to shareholders which will be despatched in the next few days.
Our priorities for the months ahead are to develop our ongoing
businesses, and to complete the restructuring of the company in a
reasonable timescale. Trading in the first weeks of the year is
satisfactory, with continuing growth in e-commerce and direct
marketing, but with reduced volumes in some print markets where
customers built stocks against possible Millennium disruption.
BEMROSE CORPORATION PLC
GROUP CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 1 JANUARY 2000
Cont Ops Discontinued 1999 1998
Existing Aquisitions Operations Unaudited Audited
£'000 £'000 £'000 £'000 £'000
Turnover 142,829 17,500 19,966 180,295 216,616
Changes in stocks of (9) (581) 1,228 638 219
finished goods and
work in progress
142,820 16,919 21,194 180,933 216,835
Operating
expenses (129,253) (17,537) (22,280)(169,070)(193,804)
Operating profit 13,567 (618) (1,086) 11,863 23,031
(loss)
Exceptional item: 1,600 (9,486)
release/(establishment)
of Provision for
loss on disposal of
subsidiaries
Net interest payable (803) (1,921)
Profit on ordinary activities before tax 12,660 11,624
Tax on profit on ordinary activities (3,842) (6,945)
Profit for the financial period 8,818 4,679
Dividends (48,252) (7,524)
Transfer (from) reserves (39,434) (2,845)
Earnings per Ordinary Share
Basic 26.28p 10.91p
Diluted 26.21p 10.87p
These financial statements should be read in
conjunction with the notes attached.
BEMROSE CORPORATION PLC
GROUP CONSOLIDATED BALANCE SHEET
AT 1 JANUARY 2000
1999 1998
Unaudited Audited
£000 £000
Fixed assets
Tangible assets 27,401 51,865
Goodwill 5,447 3,014
Investments 483 26
33,331 54,905
Current assets
Stocks 13,134 22,960
Debtors 54,181 58,254
Cash at bank and in hand 3,208 2,411
70,523 83,625
Creditors: amounts falling due within
one year (3,595) (1,037)
Bank loans and overdrafts (213) (354)
Obligations under finance leases (41,658) (46,772)
Other creditors
Net current assets 25,057 35,462
Pension cost prepayments 11,631 11,604
Total assets less current liabilities 70,019 101,971
Creditors: amounts falling due after
more than one year - (25,443)
Bank loans (4) (516)
Obligations under finance leases (35) (3,358)
Other long term liabilities
Provisions for liabilities and charges (6,158) (13,694)
Net assets 63,822 58,960
Called up share capital
Share premium account 11,042 10,935
Revaluation reserve 36,113 34,721
Profit and loss account 4,288 3,463
12,379 9,841
Shareholders' funds 63,822 58,960
BEMROSE CORPORATION PLC
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
FOR THE YEAR ENDED 1 JANUARY 2000
1999 1998
Unaudited Audited
£000 £000
Profit for the financial year 8,818 4,679
Dividends (48,252) (7,524)
(39,434) (2,845)
Other recognised gains and losses in the
period (246) (166)
Surplus on revaluation 536 -
Shares issued in the period 1,499 570
Shares to be issued - (107)
Net movement in goodwill in the period 42,507 (56)
Net movement in shareholders' funds 4,862 (2,604)
Opening shareholders' funds 58,960 61,564
Closing shareholders' funds 63,822 58,960
1.BEMROSE CORPORATION PLC
GROUP CONSOLIDATED SUMMARISED CASHFLOW
FOR THE YEAR ENDED 1 JANUARY 2000
1999 1998
Unaudited Audited
£000 £000
Cash inflow/(outflow) from operating activities
Operating profit and depreciation 17,896 29,622
(Increase)/decrease in stocks (1,699) 283
Decrease in debtors 3,074 4,079
(Decrease) in creditors (2,477) (5,166)
(Expenditure against) provisions (16) (1,598)
16,778 27,220
Returns on investment and
servicing of finance finance (1,256) (1,591)
Taxation (3,258) (5,547)
Capital expenditure (6,207) (11,529)
Acquisitions (6,589) (3,429)
Disposals 73,953 -
Equity dividends paid (49,688) (7,128)
Issue of shares 569 396
24,302 (1,608)
Debt acquired with subsidiaries (150) (65)
Debt disposed of 386 -
New finance leases - (298)
Translation difference (203) (50)
Cash inflow/(outflow) in the period 24,335 (2,021)
Opening net debt (24,939) (22,918)
Closing net debt (604) (24,939)
BEMROSE CORPORATION PLC
NOTES TO THE PRELIMINARY ANNOUNCEMENT
FOR THE YEAR ENDED 1 JANUARY 2000
1 Basis of Preparation
This preliminary announcement for the year ended 1 January
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 and Accounts for the year ended 2 January 1999.
These accounts carry an unqualified auditor's report, and
have been delivered to the Registrar of Companies. The
comparative results for the year ended 2 January 1999 are
abridged, and as such do not represent statutory accounts.
The full Annual Report and Accounts for the year ended 1
January 2000 will be posted to shareholders shortly and,
after adoption at the Annual General Meeting, delivered to
the Registrar of Companies.
2 Segmental Analysis
1999 1998
Sales Op. Sales Op.
£'000 Profit £'000 Profit
£'000 £'000
ORIGIN 127,083 9,978 109,994 12,743
United Kingdom 53,212 1,885 106,622 10,288
United States
180,295 11,863 216,616 23,031
PRODUCT
Specialist Print 84,415 9,271 85,363 10,879
Services 75,914 3,678 52,620 4,475
Promotional 19,966 (1,086) 78,633 7,677
Products
Discontinued
Businesses
180,295 11,863 216,616 23,031
3 Exceptional Item
1999 1998
£'000 £'000
Release/(creation) of provision for loss 1,973 (9,486)
on sale of US Supplier businesses (271) -
Closure costs relating to Meridian (102) -
Promotional Products BV, Holland
Loss on disposal of Rowton Crystal Limited
1,600 -
The variance to the original provision relating to the
disposal of the US Supplier businesses arises principally
from exchange rate movements and a favourable outcome on the
purchase price adjustment.
4 Taxation
1999 1998
£'000 £'000
United Kingdom 2,605 3,698
Overseas 245 2,646
Exceptional item 992 601
3,842 6,945
BEMROSE CORPORATION PLC
NOTES TO THE PRELIMINARY ANNOUNCEMENT (CONTINUED)
FOR THE YEAR ENDED 1 JANUARY 2000
5 Dividends
1999 1998
p p
Special dividend (paid 24 May 1999) 100.00 -
Interim dividend (paid 15 November 1999) 6.45 6.15
Final dividend 12.20 11.35
118.65 17.50
The final dividend in respect of 1999 of 12.20p will be paid
on 22nd May 2000 to shareholders on the Register at close of
business on 25th April 2000.
6. Earnings per share (EPS)
The EPS calculation is based on profits after tax and
preference dividends of £8,802,000 (1998 : £4,668,000), and
weighted average shares in issue of 33,493,000 (1998 :
42,801,000)
Diluted earnings per share (DEPS) is based on the same
profits figures as for EPS, but takes into account the
dilutive effect of share options outstanding, which increases
the weighted average number of shares in issue for DEPS
purposes to 33,586,000 (1998 : 42,959,000)
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