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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