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IG Design Group PLC (IGR)

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Tuesday 24 November, 2020

IG Design Group PLC

Interim Results

RNS Number : 2479G
IG Design Group PLC
24 November 2020
 

EMBARGOED UNTIL 7.00 AM, 24 NOVEMBER 2020

IG Design Group PLC

(the "Company", the "Group" or "Design Group")

Results for the six months ended 30 September 2020

STRONGER THAN EXPECTED H1 PERFORMANCE- FULL YEAR OUTLOOK AHEAD OF MARKET EXPECTATIONS

 

IG Design Group plc, one of the world's leading designers, innovators and manufacturers of Gift Packaging, Celebrations, Craft & creative play, Stationery, Gifting and related product categories announces its results for the six months ended 30 September 2020.

 

As previously announced the Group's reporting currency has moved to US dollars following the acquisition of CSS Industries, Inc. ('CSS') in March 2020 which increased the US dollar revenues to over 70% of the Group.

 

 Financial Highlights

H1 2021

H1 2020

Revenue

$434.6m

$309.2m

Adjusted*

 

 

-  Profit Before Tax

$30.2m

$26.1m

-  Diluted Earnings per Share

22.0c

24.2c

Reported

 

 

-  Profit Before Tax

$17.1m

$20.5m

-  Diluted Earnings per Share

11.4c

19.0c

Net debt as at the period end

$23.2m

$106.1m

Average Leverage

0.2x

1.1x

Interim Dividend

3.0p (3.9c)

3.0p (3.7c)

*Adjusted results are stated before Adjusting items - for further detail see Alternative Performance Measures reconciliation within the Detailed Financial Review

· A stronger than expected start to the 2021 financial year (against revised Covid-19 forecasts)

-            First half revenue up 41% year-on-year with Adjusted profit before tax up 16%

-        Growth driven by the CSS acquisition, with Covid-19 negatively impacting trading across the Group, particularly during the first quarter

Adjusted diluted Earnings per share at 22.0 cents is down on prior year reflecting increased shares in issue following CSS equity raise

· A strong first half cash management performance, underpinning interim dividend

Net debt improved $82.9 million on the prior year with Average leverage at 0.2 times

Interim dividend of 3.0 pence (3.9 cents) at the same level as last year, despite the uncertainty caused by Covid-19, reflecting the stronger than expected first half performance of the Group

Operational Highlights

· Covid-19 plans successfully implemented; we have remained open, continued to serve customers and have delivered a stronger than expected financial performance

· Orderbook is currently in excess of 80% of full year revenue forecasts; a higher level than this time in the prior year, with everyday volumes continuing to be strong across the business

· Continue to focus on revenue growth initiatives including building on cross-selling opportunities in the US, expanding our range of sustainable products and developing an increased e-commerce offering and capability

· Capital investment spend is lower than in previous years but we continue to benefit from prior year investments

· CSS has delivered a strong first half performance with revenues** broadly flat year-on-year despite Covid-19 and acquisition synergies are already delivering ahead of schedule.

 

Outlook

Notwithstanding our caution in relation to the outlook for the balance of the year as the challenges of Covid-19 continue to impact the world, the Board are confident that the full year performance will be ahead of market expectations.

 

Paul Fineman, CEO, commented:

"In what has been an unprecedented period, what has shone through is the resilience and agility of our teams and our businesses. Together, we have managed to overcome numerous challenges in order to continue the delivery of quality products to our customers. Their skills and hard work have secured a strong performance and we take this opportunity to again thank them.

 

Though it has become more difficult for many to gather together it is pleasing to see that people's desire to celebrate life's special occasions has not waned despite the current circumstances. We've also seen countless families embracing at-home activities such as sewing or crafting. Similarly, Christmas in 2020 is being enthusiastically anticipated with customers reporting strong sell-through of decorations, gift packaging and crackers. 

 

The outlook is encouraging, although we remain aware of continued global and regional challenges. Thanks to the strength of our performance in this half, together with our strong future pipeline, we are now tracking to deliver a full year performance ahead of market expectations."

 

Presentations and Overview video

 

IG Design Group is hosting a webinar for analysts at 0900 hrs GMT today. If you would like to register please contact  [email protected]  

 

The Company is also hosting a webinar for retail investors tomorrow, Wednesday, 25 November at 1430 hrs GMT. If you would like to attend please register here: http://bit.ly/IG_DesignGroup_H1_piworld_investor_webinar

 

A video overview of the results from the CEO, Paul Fineman, and CFO, Giles Willits, is available to watch here: https://www.thedesigngroup.com/half-year-results-video-2020/

 

** Included the this report are certain prior year figures related to CSS Industries, Inc. taken from previously published financial statements.

 

For further information:

 

 

 

IG Design Group plc

01525 887310

Paul Fineman, Chief Executive

 

Giles Willits, Chief Financial Officer

 

 

 

Canaccord Genuity Limited

020 7523 8000

Bobbie Hilliam, NOMAD

Alex Aylen, Sales

 

 

 

Alma PR

 

Rebecca Sanders-Hewett

020 3405 0205

Susie Hudson

Sam Modlin

[email protected]

 

OVERVIEW & OUTLOOK

The first half results follow the exciting year to 31 March 2020, which included significant operational and strategic progress and great momentum. The six months to 30 September 2020 has of course been impacted by the Covid-19 pandemic, and our focus has been not only on ensuring the business successfully manages the challenges presented by the pandemic but also to continue to capitalise on the growth opportunities available to the Group while delivering the CSS integration and forecasted synergies.

It is undoubtedly times like these that demonstrate the strength of our teams, our processes and especially our ability to deliver, and our teams have done just that. The Board continues to be grateful for the attitude and determination of every individual in the Design Group teams around the world to ensure the business remains in good shape. We continue to work closely with both our suppliers and customers to maintain our high levels of service whilst working to adapt to new requirements and ensuring an efficient supply chain.

The Board is extremely pleased to be able to report that all of our businesses are performing better than initial Covid-19 forecasts and despite the additional challenges around the world as the pandemic continues to impact trading, we remain fully operational, benefitting from the swift implementation of our response plans at the outset of the crisis.

The first half can be very much split into two. The first three months were a challenging time for our teams when they were focused on working with customers and suppliers to finalise Covid-19 impacted seasonal orders all while maintaining operational effectiveness and customer service on Everyday products. Not surprisingly sales dropped significantly in the first quarter as many retailers were forced to close.  However, certain categories such as Craft and creative play and Gifting performed strongly, catering well to the demand of consumers looking for family-friendly entertainment whilst under various restrictions.

The second quarter saw a return to more normal trends with the business focused on delivering seasonal orders while continuing to optimise revenues through Everyday channels. The acquisition of CSS benefitted the business throughout the period, helping the Group increase its proportion of Everyday non seasonal revenues while also introducing the new 'Craft' category to our product portfolio.  Its integration continues to proceed well and is ahead of schedule in relation to the delivery of synergies, benefitting from the early and successful unification of the management leadership team in the Americas from the date of acquisition.

Thanks to the strength of our performance in this half and our strong future pipeline, notwithstanding our caution in relation to the outlook for the balance of the year as the challenges of Covid-19 continue to impact the world, the Board are confident that the full year performance will be ahead of expectations.  Our trading as we approach Christmas continues to be strong and customers are reporting good sell-through to date on seasonal as well as Everyday product lines. Our cash management continues to deliver seasonal debt levels significantly below the prior year and as a result the Board expects average leverage to be below 0.5x for the year to 31 March 2021. The Group is well placed to deliver continued growth in FY22 and beyond.  

COVID-19

Covid-19 continues to have a significant impact on the world, our trading partners and the Group. As announced at the previous financial year end (March 2020), we took swift action to ensure the teams were safe and the business remained financially robust and ready to benefit in the future for when trading returned to more normal levels. The business responded well to this challenge and delivered a performance ahead of our revised projections. It has maintained safe operations in all territories whilst continuing to serve our customers successfully. Furthermore, we continue to focus on developing growth initiatives and delivering synergies following the CSS acquisition in March 2020. 

The impact of Covid-19 on the business in the first half of the financial year has been significant with trading down across the Group year-on-year as a result of the pandemic. It is difficult to calculate the exact extent of Covid-19 on the results, however, the following movements on revenue have been seen;

In the first quarter of the current financial year revenues were down year-on-year across the Group (excluding CSS) by 27.8%. CSS quarter one sales** were down 11.7%. This reflected the significant reduction in orders for Everyday products as many retailers were closed and those retailers which remained open focused their activities on essential product lines.

In the second quarter, which is financially a much more significant trading period for the Group, the business saw revenues recover strongly with CSS up 2.4% year-on-year in the quarter and Group revenues (excluding CSS) down just 2.8% on the prior period. Our orderbook remains ahead of our initial Covid-19 expectations but down like-for-like in absolute ($) terms against the prior year as our customers have taken a more cautious outlook to ensure high sell-through over the Christmas period. Everyday sales have recovered well, particularly in some key areas such as Craft and creative play.

The reduced volumes going through the business impacted on the gross margin percentage as a result of product mix and lower absorption of overheads into inventory in manufacturing. Furthermore, despite the Group taking quick action to control costs and maximise early synergies from the CSS acquisition the fixed overhead cost base, which is required to support the higher activity of the Group post the pandemic, increased as a percentage of revenues. Overall, the Group has delivered a robust adjusted operating margin at 7.5% (H1 2020: 9.3%), ahead of expectations.

Where appropriate, the Group has separately identified direct incremental costs associated with Covid-19 which total $2.0 million in the first half and have been included in Adjusting items. In addition, the business has incurred other costs resulting from Covid-19 and these, alongside Government assistance received totalling $3.6 million (the majority of which was received into our business in Australia) have not been included in Adjusting items.

SUMMARY 2021 INTERIM RESULTS 

The Group's results are reported in US dollars for the first time following the CSS acquisition which increased the US dollar revenues to over 70% of the Group.

In the first half Revenue   increased by 41% to $434.6 million (H1 2020: $309.2 million) including the effect of $149.1 million sales from CSS, with Adjusted profit before tax up 16.0% year-on-year at $30.2 million (H1 2020: $26.1 million). Excluding CSS, Revenue   is down 8% reflecting the impact of Covid-19.

Adjusted diluted earnings per share was 22.0 cents (H1 2020: 24.2 cents) which reduced, despite increased profit levels, because of the higher shares in issue following the equity raise to support the CSS acquisition in the final quarter of the 2020 financial year.

The Group ended the half year delivering a significant year-on-year reduction in net debt at $23.2 million (H1 2020: $106.1 million) with Average leverage improving to 0.2 times (H1 2020: 1.1 times). This very strong performance primarily reflects effective cash management actions, including strong management of working capital and a reduction to our capital investment programme.

Profit before tax at the half year was $17.1 million (H1 2020: $20.5 million). This reduction reflects the impact of the increase year-on-year in Adjusting items to $13.1 million (H1 2020: $5.6 million) which primarily result from the CSS integration costs and direct incremental Covid-19 associated expenditure. Diluted earnings per share therefore reduced to 11.4 cents (H1 2020: 19.0 cents). 

The Board is pleased to declare an interim dividend, at the same level as last year, of 3.0 pence (3.9 cents) in respect of the period to 30 September 2020, reflecting the stronger than expected first half performance of the Group.   The final dividend of 5.75 pence in relation to the year ended 31 March 2020 was paid in November 2020, later than the prior year reflecting the impact of Covid-19 and the later than usual Annual General Meeting.

REGIONAL HIGHLIGHTS

Overall, the Group has seen growth in both Revenue   and Adjusted operating profit which increased to $32.4 million (H1 2020: $28.7 million) primarily as a result of the addition of CSS to the Group. Following the CSS acquisition the reporting structure of the Group has been reviewed and Group results are now presented as two reporting segments - DG Americas (DG Americas and CSS) and DG International (comprising UK and associated Asian operations, Europe, and Australia).

 

 

 

Segmental Revenue

 

Adjusted Operating Profit

 

Adjusted Operating Margin

% Group revenue

 

 

H1 2021

H1 2020

% growth

 

H1 2021

H1 2020

% growth

 

H1 2021

H1 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

74%

DG Americas

$m

321.6

183.8

75%

 

19.5

17.7

11%

 

6.1%

9.6%

27%

DG International

$m

115.5

128.4

(10%)

 

15.1

13.2

15%

 

13.1%

10.3%

(1%)

Elims / Central costs

$m

(2.5)

(3.0)

 

 

(2.2)

(2.2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100%

Total

$m

434.6

309.2

41%

 

32.4

28.7

13%

 

7.5%

9.3%

 

Design Group Americas

 

The CSS acquisition has transformed the scale of our business in the US, which now accounts for nearly three quarters of the Group's revenue. Following the acquisition in March 2020 the US team focused on the rapid integration of the two businesses under the unified senior leadership team comprising both CSS and Design Group executives. This integration is ahead of plan and is forecast to deliver synergies, identified at the time of the acquisition, ahead of expectations. These synergies include workforce rationalisation, cost savings associated with no longer running CSS as a listed business, site closure savings, scale-based purchasing upside and the early benefit from commercial opportunities resulting from combining the two businesses. 

Revenue has grown significantly in the first half of this year, up 75% on the prior year at $321.6 million (H1 2020: $183.8 million) with the additional revenues from CSS of $149.1 million contributing to the scale of the business. Due to the nature of the CSS integration in the US it is not possible to accurately provide a like-for-like year-on-year profit performance split between the two US businesses. Adjusted operating profit at $19.5 million was ahead of last year (H1 2020: $17.7 million), with CSS contributing to profits for the first time. Adjusted operating margin declined to 6.1% from 9.6% as at 30 September 2020 reflecting the impact of Covid-19, which has reduced volumes.  

The impact of Covid-19 on our Americas business has seen some facilities closed for periods of time at the height of the pandemic from March through to July. The US government assistance provided support to the workforce focused on payments direct to the individual rather than through the employer and as such no government assistance has been received directly by the Americas business during the period. Furthermore, an unintended impact of the US government assistance direct to the individual is that additional costs have been incurred to encourage employees to return to work rather than remain at home receiving the government assistance. This, alongside incremental cleaning and PPE expenditure has added significant cost to the running of the US manufacturing facilities in the first half of the year, of which $1.4 million has been treated as an Adjusting item.

The area where the US government's Covid-19 package provided benefit to the businesses was an extension of the time period in which operating losses could be carried back for tax purposes, generating a substantial tax refund for the group of c.$17 million. As at 30 September we have received the first of three payments with a second instalment received in October. We expect to have received the entire tax refund by the end of the financial year.

Since the end of the half year our business in the US has experienced an IT incident that has impacted operations resulting in some shipping delays. We expect that these delayed shipments will be mostly caught up, but that there could be some missed sales and additional costs of operating. As a result, there will be some costs in the second half (which will be treated as Adjusting items), against which we anticipate receiving insurance recoveries in FY22. The financial impact of the IT incident is not anticipated to be material to the overall financial performance of the Group during the period.

Despite the challenges in the period, the business continues to move forward, with the focus at half year being the execution of our Christmas product offerings and this is in full swing as we approach the Christmas season. Our new state-of-the-art printing press in Memphis which came online in March 2020 has had its first full six months of manufacturing and as a result of this capital investment, the team in Memphis are able to print higher volumes, more efficiently.

Furthermore, during the first half the Americas has seen growth through the successful development of our seasonal gifting and décor product ranges under the X&O brand. In addition, following the CSS acquisition, the business has benefitted from the increased scale of the e-tailer and online platforms of bricks and mortar retailers and is now focused on building on the CSS e-commerce experience to re-launch and develop a refreshed and expanded offering across the Americas Group.

In addition, areas of focus for the second half include cross-selling opportunities amongst the enlarged Americas Group including geographical expansion into Canada and Latin America, as well as between the Americas and International.

Design Group International

The combination of our UK, European and Australian businesses under the Design Group International umbrella allows the Group to benefit from an integrated management and operational structure as well as to position us for future growth across this segment. Our International businesses account for over a quarter of the Group's revenues, and as anticipated due to the impact of Covid-19 on our business, Revenues for the DG International business were down 10% on the prior year at $115.5 million (H1 2020: $128.4 million). However, Adjustedoperating profit was up 14.5% at $15.1 million (H1 2020: $13.2 million), reflecting variations in product mix alongside a focus on overhead expenditure and in part as a result of government assistance received in certain territories.  

Despite the impact of Covid-19, the UK had a robust first half revenue and margin performance, with good seasonal orders delivered on schedule. It has continued to extend its focus on sustainability with the expansion of its 'eco-nature' brand and has further built its online offering through Amazon. It also undertook a significant restructuring of the organisation, the costs of which have been treated as Adjusting items. Europe has performed well, supported by the stronger than expected performance of its major customers who have also traded robustly, after the initial lockdowns in Europe. Operationally, it has also been supported by the commissioning of the new 'Robowrap' investment which has helped drive improved productivity. Australia has performed ahead of expectations and was able to maintain good margins in the circumstances. It also took early action following the Covid-19 lockdown to reorganise some of its operations to manage costs. 

The impact of Covid-19 operationally has varied across the businesses within the DG International group. Across all manufacturing sites, we have seen lower volume throughput which has reduced overhead absorption into inventory and caused efficiency levels to drop as further rigor and process is required to ensure the safety of all of our employees on the manufacturing floor. This includes shorter shifts to allow for clean down and sanitising all equipment and areas before the subsequent shift moves in. Of this expenditure incremental costs directly associated with Covid-19 of $0.5 million have been included as an Adjusting item.

Our warehouse in Australia is situated in Melbourne, Victoria which had further lockdown restrictions imposed as the number of cases rose. Although this impacted productivity as the warehouse was not able to operate at full capacity, the team in Australia has managed to mitigate the impact of this using extra shifts to ensure volume throughput was not lost.

Parts of the DG International group have received government assistance where available to mitigate as much as possible the need to reduce the workforce around the Group. In total the International division received $3.6 million of government assistance in the period, which has helped offset the additional costs incurred across the Group.

OUR PRODUCTS AND BRANDS

Pivotal to the Group's 'working with the winners' strategy is the continuous refreshing of our well-diversified, yet complementary product portfolio. This keeps us at the forefront of our customers' minds and makes us an attractive 'supplier of choice' for our retail partners. The first half split of revenue highlights how the Group has transformed its mix of revenue toward everyday based categories including Craft & creative play and Gifting. 

 

 

 

 

 

Revenue by product category

H1 2021

H1 2020

Celebrations

59%

$256.8m

76%

$235.2m

Craft & creative play

21%

$90.0m

5%

$14.1m

Stationery

4%

$15.6m

7%

$20.9m

Gifting

14%

$64.3m

9%

$29.1m

'Not-for-resale' consumables

2%

$7.9m

3%

$9.9m

Total

 

$434.6m

 

$309.2m

 

 

 

 

 

 

                   

 

Our product offering was further enhanced at the end of the last financial year as a result of the acquisition of CSS, and we introduced a new Craft product category throughout the Group. The benefits and the growth to the Group in this category, which includes creative play, has meant increased sales in these areas during the last six months as many households were in lockdown and turned to creative play products to entertain children whilst schools were closed as well as reigniting or taking up new hobbies in the crafting arena. 'Not-for-resale' consumables had a challenging first half with our retail customers in this category closed for much of the first quarter, resulting in lower year-on-year orders. 

 

Revenues associated with seasonal products, whilst increasing, have reduced as a percentage of the total product portfolio helping drive forward one of our key strategic performance indicators, being diversifying seasonality within the business.

DETAILED FINANCIAL REVIEW

The Group's results are reported in US dollars for the first time following the CSS acquisition and the subsequent increased concentration of the Group revenues and earnings in US dollars. Prior year comparatives throughout this report have been presented in US dollars. Note 14 in this report contains the relevant comparatives for financial year 2020 in both US dollar and sterling denomination.

The Group has delivered ahead of our Covid-19 expectations in the first half of the year.

 

H1 2021

 

H1 2020

 

Reported

Adjusting Items

Adjusted

 

Reported

Adjusting Items

Adjusted

 

$m

$m

$m

 

$m

$m

$m

Revenue

434.6

-

434.6

 

309.2

-

309.2

Gross profit

83.7

0.9

84.6

 

63.0

0.6

63.6

Overheads

(64.4)

12.2

(52.2)

 

(39.9)

5.0

(34.9)

Operating profit

19.3

13.1

32.4

 

23.1

5.6

28.7

Finance charge

(2.2)

-

(2.2)

 

(2.6)

-

(2.6)

Profit before tax

17.1

13.1

30.2

 

20.5

5.6

26.1

Tax

(4.8)

(2.9)

(7.7)

 

(4.6)

(1.3)

(5.9)

Profit after tax

12.3

10.2

22.5

 

15.9

4.3

20.2

 

Group Revenue for the period of $434.6 million grew 41% year-on-year reflecting the contribution of CSS, acquired on 3 March 2020. Excluding CSS, organic Revenue declined by 8% as a result of the impact of Covid-19. Adjusted operating profit   for the Group increased by 13.3% to $32.4 million (H1 2020: $28.7 million) with Adjusted operating margin   down year-on-year at 7.5% (H1 2020: 9.3%). Gross margin fell in the half year, largely as a result of customer/product mix, and lower overhead absorption into inventory, to 19.3% (H1 2020: 20.4%). Adjusted overheads as a percentage of revenue increased to 12.0% (H1 2020: 11.3%). Overall Adjusted profit before tax   increased 16.0% to $30.2 million (H1 2020: $26.1 million) largely due to increased profits from the CSS acquisition although offset by the impact of Covid-19 on the Group. Half year Profit before tax was $17.1 million (H1 2020: $20.5 million) primarily reflecting the impact of the increase year-on-year in Adjusting items to $13.1 million (H1 2020: $5.6 million).

 

Finance expenses

Finance costs of $2.2 million are lower compared to the prior year of $2.6 million. This primarily reflects the lower level of debt held in the year, offset by an increased impact of IFRS 16 charges associated with CSS leases.

Adjusting items

Adjusting items are material items of unusual or non-recurring nature which represent gains or losses which are separately presented by virtue of their nature, size and/or incidence. The Group has incurred Adjusting items in the period to 30 September 2020 totalling $13.1 million (H1 2020: $5.6 million). These items are as follows:

 

 

 

Adjusting Items

H1 2021

H1 2020

Losses/(gains) and transaction costs relating to acquisitions and disposals of businesses

$0.9m

$0.7m

Acquisition integration and restructuring costs

$5.5m

$1.2m

Impairment of assets

$0.1m

-

Incremental Covid-19 costs

$2.0m

-

Amortisation of acquired intangibles

$2.2m

$1.8m

LTIP charges

$2.4m

$1.9m

Total

$13.1m

$5.6m

 

Losses/(gains) and transaction costs relating to acquisitions and disposals of businesses - $0.9 million (H1 2020: $0.7 million)

 

In the period, costs of $0.1 million associated with the acquisition of CSS were incurred relating to advisor fees. In addition, $0.5 million of acquisition related employee payments from the Impact Innovations Inc. transaction in 2019 which lock in and incentivise legacy talent. Finally, an additional $0.3 million of transaction costs associated with the disposal of Zhejiang Shaoxing Royal Arts and Crafts Co. Ltd were incurred.

Acquisition integration and restructuring costs - $5.5 million (H1 2020: $1.2 million)

The main costs relate to the integration of CSS into the enlarged DG Americas as new team structures have been put in place. There have also been associated temporary staff costs and recruitment costs as roles are being filled.

The CSS business includes a large portfolio of owned and leased sites, and part of the integration project includes the consolidation of these locations resulting in the impairment of lease assets and the ongoing costs associated with the closure of sites as well as the lease liability interest costs.

The UK undertook a reorganisation in light of Covid-19 for which the costs have been treated as Adjusting items. In addition, in Australia a similar reorganisation was made in the first half of the financial year.

Impairment of assets - $0.1 million (H1 2020: $nil)

In light of the impact of Covid-19 on the business, a review of inventory, trade receivables and fixed assets was undertaken at 31 March 2020. Inventories were assessed for the net realisable value and an impairment of $7.4 million was taken. Similarly trade receivables were assessed for their expected credit loss in line with IFRS 9 and an impairment of $3.8 million was taken. As at 30 September 2020, this assessment continues, and for trade receivables any impairment taken at the year end that was not required has been reversed ($3.1 million) alongside any additional debtors as at the reporting date who are now considered higher risk for which an impairment has been taken ($3.9 million). Inventories continue to be assessed for net realisable value, with sell-through of provided inventory of $1.8 million being offset  against further inventory risk of $1.2 million recognised. Given the seasonality of our business and the high proportion of Christmas related sales, further assessment will be undertaken by the end of the financial year.

Incremental Covid-19 costs - $2.0 million (H1 2020: $nil)

 

The Covid-19 outbreak has developed rapidly in 2020, with measures taken around the world to contain the virus affecting economic activity. The Group has been affected in every territory in which we operate and the impact on the general economic environment and the reduced demand of goods from our customers as well as the closures of our businesses has had a significant impact. Certain costs relating to incremental direct labour have been identified that have impacted the financial results of the business during the year to date, equal to $2.0 million. The most significant element of these costs totalled $1.3 million relating to additional labour costs across our manufacturing facilities in the USA, Mexico and India.

 

Management have taken a judgement not to include government assistance received in the period as an Adjusting item, as whilst the amounts received were incremental, the underlying employee expenditure would likely not have been incurred if the government assistance was not received.

Amortisation of acquired intangibles - $2.2 million (H1 2020: $1.8 million)

Under IFRS, as part of the acquisition of a company, it is necessary to identify intangible assets such as customer relationships and brands which form part of the intangible value of the acquired business but are not part of the acquired balance sheet. These intangible assets are then amortised to the income statement over an appropriately judged period. These are not operational costs relating to the running of the acquired business and are directly related to the accounting for the acquisition. These include tradenames and brands acquired as part of the acquisition of Impact Innovations Inc. and CSS Industries Inc. in the USA and Biscay Pty Greetings Ltd in Australia. As such we include these as Adjusting items.

In addition, in accordance with IFRS 3, on acquisition, businesses need to be fair valued, which can result in an uplift to stock on hand relating to sales orders already attached to the acquired stock. This uplift will distort the margins associated with the stock, and typically unwinds quickly as stock is sold soon after acquisition. The unwind of the stock uplift ($0.6 million) associated with the CSS acquisition is included as an Adjusting item, consistent with the treatment adopted with the Impact acquisition. This has fully unwound as at 30 September 2020.

LTIP charges - $2.4 million (H1 2020: $1.9 million)

As part of our senior management remuneration, the Group operates a Long Term Incentive Plan ('LTIP') in the form of options for ordinary shares of the Group. In accordance with accounting principles, despite this plan not being a cash cost to the business, a share based payments charge or credit is taken to the income statement. We consider that these charges do not form part of the underlying operational costs and therefore include these as Adjusting items.

The LTIP charge for the period was $2.4 million which consists of a principal IFRS 2 charge of $2.2 million and an employer's social security charge of $0.2 million.

Taxation

The taxation charge for the half year was $4.8 million (H1 2020: $4.6 million) with the effective tax charge on Adjusted profit before tax at 25.4% (H1 2020: 22.5%). The rate is higher than the weighted blend of statutory rates in the countries in which we operate as a result of estimated permanent disallowable deductions for tax purposes. The effective rate on Profit before tax is 28.1% (H1 2020: 22.2%).

Earnings per share

Adjusted earnings per share at 22.0 cents were down 9% on the prior year (H1 2020: 24.2 cents) primarily as a result of a higher diluted share number following the share raise in early 2020. Diluted earnings per share are 11.4 cents (H1 2020: 19.0 cents). The reconciliation between Reported and Adjusted earnings per share can be seen below:

 

 

 

Earnings per share

H1 2021

H1 2020

Earnings attributable to equity holders of the Company

$11.2m

$15.3m

Adjustments

 

 

Adjusting items (net of non-controlling interest effect)

$13.2m

$5.5m

Tax charge/(relief) on adjustments (net of non-controlling interest effect)

($2.9m)

($1.3m)

Adjusted earnings

$21.5m

$19.5m

Weighted average number of shares

 

 

Basic weighted average number of shares outstanding

97.7m

80.0m

Dilutive effect of employee share option plans

0.3m

0.4m

Diluted weighted average ordinary shares

98.0m

80.4m

 

 

 

Basic earnings per share

11.5c

19.1c

Impact of Adjusting items

10.5c

5.3c

Basic adjusted earnings per share

22.0c

24.4c

Diluted earnings per share

11.4c

19.0c

Diluted adjusted earnings per share

22.0c

24.2c

 

Cash flow and net debt

 

As at 30 September 2020 net debt (excluding IFRS 16 lease liabilities) was $23.2 million, significantly better than the prior year of $106.1 million. Average leverage as at the half year was 0.2 times from 1.1 times for the comparative prior period reflecting an improved Adjusted EBITDA alongside the year-on-year reduction in average debt.

Cashflow

H1 2021

H1 2020

Adjusted EBITDA

$49.7m

$37.2m

Movements in working capital

($104.9m)

($139.8m)

Adjusted cash used by operations

($55.2m)

($102.6m)

Adjusting items

($10.4m)

($1.9m)

Cash used by operations

($65.6m)

($104.5m)

Capital expenditure (net of disposals of property, plant and equipment)

($3.4m)

($5.1m)

Tax received/(paid)

$2.9m

($3.0m)

Interest paid

($1.9m)

($2.1m)

Payments of lease liabilities

($7.2m)

($3.9m)

Dividends paid (including those paid to non-controlling interests)

-

($5.9m)

FX and other

($0.4m)

($3.8m)

Movement in net debt

($75.6m)

($128.3m)

Opening net cash

$52.4m

$22.2m

Closing net debt

($23.2m)

($106.1m)

 

Working capital

 

The Group's working capital movement this half year was impacted by the acquisition of CSS. The net working capital outflow in the half year was $104.9 million (H1 2020: $139.8 million).  Stripping out the effect of CSS on working capital movements there was an underlying outflow of $74.4 million in the first half of 2021. This lower working capital movement reflects the reduced year-on-year seasonal working capital build as a result of the impact of Covid-19 alongside the stronger cash management disciplines across the Group.  

In the current Covid-19 environment the Group continues to actively track debtors and credit risk profiles of all of our customers to ensure we try to mitigate as far as possible any additional exposure to credit risk.

Adjusting items

During the first half of the year there was $10.4 million (H1 2020: $1.9 million) net cash outflow  in relation to Adjusting items of which $4.5 million related to cash outflow for costs accrued at the year end. The significant majority of the total outflow related to the restructuring and synergy realisation costs associated with the CSS acquisition.

Capital expenditure

During the first half of the year the Group invested $3.4 million (H1 2020: $5.1 million). The majority of this spend was in DG Americas on the fit out of the newly leased site in Mississippi, Tennessee.   

Cash tax

During the first half of the year the Group benefited from a net cash inflow of tax as a result of US tax repayments following claims made by CSS under the CARES Act. The total cash amounts received at 30 September 2020 was $3.2 million. The Group made tax payments of $0.3 million which compares to a tax payment of $3.0 million in the prior year. The reduced cash tax payments are directly as a result of lower earnings driven by Covid-19.

Dividend payments

As part of the Covid-19 cash actions taken by the Group the timing of the final dividend payment in relation to the year ended 31 March 2020 was moved from September 2020 to November 2020. As such no payment was made in the first half of the financial year compared to a $5.9 million outflow in the prior year. 

Financial position and going concern basis

The Group has a banking facility (refinanced in January 2020) which runs to May 2022 and includes a revolving credit facility ('RCF') of $95 million, a further flexible RCF of up to £130 million, flexible to meet working capital requirements during peak manufacturing, and a maximum limit of $18 million invoice financing arrangement in Hong Kong. The Group also has access to supplier financing arrangements which we utilise at certain times of the year.

The Group has been fully compliant with all banking covenants associated with these facilities and has not required, nor requested, any covenant waivers associated with the impact of Covid-19 on the Group results.

In light of the ongoing Covid-19 pandemic, as with the financial statements for 31 March 2020, the Directors have paid particularly close attention to their assessment of going concern in preparation of these financial statements.

The Group is currently trading ahead of forecasts used to consider the going concern assessment. These forecasts which have been reviewed in detail by the Board, and take into account the significant seasonal working capital cycle of the business, have been sensitised to reflect potential adverse downturns in the current assumptions including the second wave of the pandemic. Management has also produced a maximum stress forecast which has been deliberately engineered to challenge the Group's liquidity position and covenant performance during the forecast period. These forecasts and additional analysis demonstrated that there is sufficient excess headroom for the Group to meet its obligations as they fall due for a forecast period of more than twelve months beyond the date of these accounts. As such, the Directors do not see any practical, regulatory or legal restrictions which would limit their ability to fund the different regions of the business as required.

Accordingly, the Directors have continued to adopt the going concern basis of accounting in preparing the financial statements.

Principal risks and uncertainties

Risk is an inherent part of business, especially as Design Group aim to continue to deliver growth around the world. The Group actively monitors the risk related to its business and the environment in which it operates, as our continued success is influenced by how well we manage our risks. As at 30 September 2020, the Group's principal risks and uncertainties, as detailed in the Group's financial statements for the year ended 31 March 2020 are still active risks and there have been no material movements in these risks during the first half of this financial year. These will be reviewed again at year end, however, the Group do not expect there to be any significant change in the principal risks and uncertainties by the end of the year.

Statement of Directors' responsibilities

The Directors confirm to the best of their knowledge that:

· The condensed interim set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union;

· The interim report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

· The interim report includes a fair review of the information required by DTR 4.2.8R (disclosures of related parties transactions and any changes therein).

 

Alternative performance measures

This review includes alternative performance measures ('APMs') that are presented in addition to the standard IFRS metrics. The Directors believe that these APMs provide important additional information regarding the adjusted performance of the business including trends, performance and position of the Group. APMs are used to enhance the comparability of information between reporting periods and segmental business units by adjusting for exceptional or uncontrollable factors which affect IFRS measures, to aid the understanding of the Group's performance. Consequently, APMs are used by the Directors and management for strategic and performance analysis, planning, reporting and reward setting. APMs reflect the results of the business excluding Adjusting items, which are items that are material and of an unusual or non-recurring nature.

The APMs and the definitions used are listed below:

· Adjusted EBITDA - EBITDA before Adjusting items

· Adjusted operating profit - Profit before finance charges, tax and Adjusting items

· Adjusted profit before tax   - Profit before tax and Adjusting items

· Adjusted profit after tax   - Profit after tax before Adjusting items and associated tax effect

· Adjusted earnings per share - Fully diluted earnings per share before Adjusting items and associated tax effect

 

In addition, the Group uses APMs in order to calculate other key performance metrics including:

 

· Average leverage   - Rolling twelve month average bank debt (being average debt measured before lease liabilities) divided by rolling twelve month Adjusted EBITDA reduced for lease payments

· Adjusted operating margin - Adjusted operating profit divided by revenue

 

Adjusting items

Further details of the items categorised as Adjusting items are disclosed in more detail in note 3.

A full reconciliation between our adjusted and reported results is provided below:

 

APM Reconciliation

H1 2021

H1 2020

Adjusted EBITDA

$49.7m

$37.2m

Adjusting items

($10.0m)

($3.8m)

EBITDA

$39.7m

$33.4m

 

 

 

Adjusted operating profit

$32.4m

$28.7m

Adjusting items

($13.1m)

($5.6m)

Reported operating profit

$19.3m

$23.2m

 

 

 

Adjusted profit before tax

$30.2m

$26.1m

Adjusting items

($13.1m)

($5.6m)

Reported profit before tax

$17.1m

$20.5m

 

 

 

Adjusted profit after tax

$22.2m

$20.2m

Adjusting items

($10.2m)

($4.3m)

Reported profit after tax

$12.3m

$15.9m

 

 

 

Adjusted earnings per share

22.0c

24.2c

Adjusting items

(10.6c)

(5.2c)

Reported diluted earnings per share

11.4c

19.0c

 

** Included in this report are certain prior year figures related to CSS Industries, Inc. taken from previously published financial statements.

 

CONDENSED CONSOLIDATED INCOME STATEMENT

SIX MONTHS ENDED 30 SEPTEMBER 2020

 

 

 

 

 

 

 

Unaudited six months ended 30 Sep 2020

Unaudited restated(a) six months ended 30 Sep 2019

Twelve months restated(a) ended 31 Mar 2020

 

Note

$000

$000

$000

Revenue

2

434,635

309,220

624,340

Cost of sales

 

(350,937)

(246,186)

(530,109)

Gross profit

 

83,698

63,034

94,231

Selling expenses

 

(21,584)

(13,374)

(33,766)

Administration expenses

 

(46,480)

(27,089)

(58,868)

Other operating income

4

3,909

503

927

Profit on disposal of property, plant and equipment

 

10

-

246

(Loss)/profit on disposal of subsidiary

 

(208)

-

1,836

Operating profit

3

19,345

23,074

4,606

Finance expenses

 

(2,265)

(2,616)

(5,479)

Profit/(loss) before tax

 

17,080

20,458

(873)

Income tax (charge)/credit

5

(4,801)

(4,535)

18,276

Profit for the period

 

12,279

15,923

17,403

Attributable to:

 

 

 

 

Owners of the Parent Company

 

11,222

15,297

16,461

Non-controlling interests

 

1,057

626

942 

 

Earnings per ordinary share

   

 

 

 

 

 

 

Note

Unaudited six months ended 30 Sept 2020

Unaudited restated(a) six months ended 30 Sep 2019

Twelve months restated(a) ended 31 Mar 2020

Basic

8

11.5c

19.1c

19.9c

Diluted

8

11.4c

19.0c

19.8c

 

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

SIX MONTHS ENDED 30 SEPTEMBER 2020

 

 

 

 

 

 

 

Unaudited six months ended 30 Sep 2020

Unaudited restated(a)

six months ended 30 Sep 2019

Twelve months restated(a) ended 31

Mar 2020

 

 

$000

$000

$000

Profit for the period

 

12,279

15,923

17,403

Other comprehensive income:

 

 

 

 

Exchange difference on translation of foreign operations (net of tax)

 

(4,144)

(4,031)

3,112

Recycling translation reserves on disposal of subsidiary

 

-

-

42

Transfer to profit and loss on maturing cash flow hedges (net of tax)

 

127

(490)

(490)

Net unrealised (loss)/gain on cash flow hedges (net of tax)

 

(391)

(64)

657

Other comprehensive (expense)/income for the period, net of tax items which may be reclassified to profit and loss in subsequent periods

 

(4,408)

(4,585)

3,321

Total comprehensive income for the period, net of tax

 

7,871

11,338

20,724

Attributable to:

 

 

 

 

Owners of the Parent Company

 

6,143

10,860

20,372

Non-controlling interests

 

1,728

478

352

 

 

7,871

11,338

20,724

             

 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

SIX MONTHS ENDED 30 SEPTEMBER 2020

 

 

 

 

 

 

 

 

 

 

 

Attributable to the owners of the Parent Company

 

 

 

 

 

Share

 

 

 

 

 

 

 

 

 

premium

 

 

 

 

 

 

 

 

 

and capital

 

 

 

 

 

Non-

 

 

Share

redemption

Merger

Hedging

Translation

Retained

Shareholders'

controlling

 

 

capital

reserve

reserve

reserve

reserve

earnings

equity

interests

Total

 

$000

$000

$000

$000

$000

$000

$000

$000

$000

At 1 April 2020 (restated(a))

5,974

215,417

40,175

320

(4,389)

113,703

371,200

4,643

375,843

Profit for the period

-

-

-

-

-

11,222

11,222

1,057

12,279

Other comprehensive (expense)/ income

-

-

-

(264)

(4,815)

-

(5,079)

671

(4,408)

Total comprehensive income for the period

-

-

-

(264)

(4,815)

11,222

6,143

1,728

7,871

Transactions with owners in their capacity as owners

 

 

 

 

 

 

 

 

 

Equity-settled share-based payments

-

-

-

-

-

2,309

2,309

-

2,309

Tax on equity-settled share-based payments

-

-

-

-

-

(266)

(266)

-

(266)

Recognition of non-controlling interests

-

-

-

-

-

-

-

276

276

Options exercised

14

-

-

-

-

(14)

-

-

-

Exchange differences on opening balances

268

9,647

1,799

-

-

-

11,714

-

11,714

At 30 September 2020

6,256

225,064

41,974

56

(9,204)

126,954

391,100

6,647

397,747

 

SIX MONTHS ENDED 30 SEPTEMBER 2019

 

 

 

 

 

 

 

 

 

 

 

Attributable to the owners of the Parent Company

 

 

 

 

 

Share

 

 

 

 

 

 

 

 

 

premium

 

 

 

 

 

 

 

 

 

and capital

 

 

 

 

 

Non-

 

 

Share

redemption

Merger

Hedging

Translation

Retained

Shareholders'

controlling

 

 

capital

reserve

reserve

reserve

reserve

earnings

equity

interests

Total

 

$000

$000

$000

$000

$000

$000

$000

$000

$000

At 31 March 2019 (restated(a))

5,093

74,962

42,119

153

(8,133)

108,763

222,957

5,266

228,223

Impact of adopting IFRS 16

-

-

-

-

-

(2,427)

(2,427)

(572)

(2,999)

Restated equity at 1 April 2019

5,093

74,962

42,119

153

(8,133)

106,336

220,530

4,694

225,224

Profit for the period

-

-

-

-

-

15,297

15,297

626

15,923

Other comprehensive expense

-

-

-

(554)

(3,883)

-

(4,437)

(148)

(4,585)

Total comprehensive income for the period

-

-

-

(554)

(3,883)

15,297

10,860

478

11,338

Transactions with owners in their capacity as owners

 

 

 

 

 

 

 

 

 

Equity-settled share-based payments

-

-

-

-

-

1,491

1,491

-

1,491

Tax on equity-settled share-based payments

-

-

-

-

-

314

314

-

314

Recognition of non-controlling interests

-

-

-

-

-

-

-

121

121

Options exercised

44

-

-

-

-

(44)

-

-

-

Equity dividends paid

-

-

-

-

-

(5,868)

(5,868)

-

(5,868)

Exchange differences on opening balances

(274)

(4,037)

(2,268)

-

-

-

(6,579)

-

(6,579)

At 30 September 2019 (restated(a))

4,863

70,925

39,851

(401)

(12,016)

117,526

220,748

5,293

226,041

 

YEAR ENDED 31 MARCH 2020

 

 

 

 

 

 

 

 

 

 

 

Attributable to the owners of the Parent Company

 

 

 

 

 

Share

 

 

 

 

 

 

 

 

 

premium

 

 

 

 

 

 

 

 

 

and capital

 

 

 

 

 

Non-

 

 

Share

redemption

Merger

Hedging

Translation

Retained

Shareholders'

controlling

 

 

capital

reserve

reserve

reserve

reserve

earnings

equity

interests

Total

 

$000

$000

$000

$000

$000

$000

$000

$000

$000

At 31 March 2019 (restated(a))

5,093

74,962

42,119

153

(8,133)

108,763

222,957

5,266

228,223

Impact of adopting IFRS 16

-

-

-

-

-

(2,427)

(2,427)

(572)

(2,999)

Restated equity at 1 April 2019

5,093

74,962

42,119

153

(8,133)

106,336

220,530

4,694

225,224

Profit for the year

-

-

-

-

-

16,461

16,461

942

17,403

Other comprehensive income/(expense)

-

-

-

167

3,744

-

3,911

(590)

3,321

Total comprehensive income for the year

-

-

-

167

3,744

16,461

20,372

352

20,724

Transactions with owners in their capacity as owners

 

 

 

 

 

 

 

 

 

Equity-settled share-based payments

-

-

-

-

-

(287)

(287)

-

(287)

Tax on equity-settled share-based payments

-

-

-

-

-

213

213

-

213

Derecognition of non-controlling interests

-

-

-

-

-

-

-

(403)

(403)

Shares issued

1,117

150,145

-

-

-

-

151,262

-

151,262

Options exercised

45

-

-

-

-

(45)

-

-

-

Equity dividends paid

-

-

-

-

-

(8,975)

(8,975)

-

(8,975)

Exchange differences on opening balances

(281)

(9,690)

(1,944)

-

-

-

(11,915)

-

(11,915)

At 31 March 2020 (restated(a))

5,974

215,417

40,175

320

(4,389)

113,703

371,200

4,643

375,843

 

CONDENSED CONSOLIDATED BALANCE SHEET

AS AT 30 SEPTEMBER 2020

 

 

 

 

 

 

 

 

 

Unaudited

as at 30

Sep 2020

Unaudited restated(a)

as at 30

Sep 2019 

Restated(a)

as at 31

Mar 2020

Restated(a)

as at 31

Mar 2019

 

Note

$000

$000

$000

$000

Non-current assets

 

 

 

 

 

Property, plant and equipment

 

90,383

50,769

92,622

51,786

Intangible assets

 

140,315

106,482

140,504

110,503

Right-of-use assets

 

105,882

43,771

82,742

-

Long-term assets

 

6,308

-

6,223

-

Deferred tax assets 

 

22,351

5,126

18,135

4,693

Total non-current assets

 

365,239

206,148

340,226

166,982

Current assets

 

 

 

 

 

Inventory

 

187,717

157,703

141,911

90,442

Trade and other receivables

 

281,556

200,664

110,047

64,641

Income tax receivable

 

15,138

-

18,377

-

Derivative financial assets

9

556

511

412

168

Cash and cash equivalents

6

76,770

145,117

83,200

110,910

Total current assets

 

561,737

503,995

353,947

266,161

Total assets

2

926,976

710,143

694,173

433,143

Equity

 

 

 

 

 

Share capital

 

6,256

4,863

5,974

5,093

Share premium

 

223,327

69,277

213,755

73,220

Capital redemption reserve

 

1,737

1,648

1,662

1,742

Merger reserve

 

41,974

39,851

40,175

42,119

Hedging reserve

 

56

(401)

320

153

Translation reserve

 

(9,204)

(12,016)

(4,389)

(8,133)

Retained earnings

 

126,954

117,526

113,703

108,763

Equity attributable to owners of the Parent Company

 

391,100

220,748

371,200

222,957

Non-controlling interests

 

6,647

5,293

4,643

5,266

Total equity

 

397,747

226,041

375,843

228,223

Non-current liabilities

 

 

 

 

 

Loans and borrowings

7

(389)

899

(219)

1,847

Lease liabilities

 

99,946

42,097

78,418

-

Deferred income

 

586

678

561

976

Provisions

 

5,422

3,094

5,161

3,472

Other financial liabilities

 

9,354

868

6,784

2,362

Deferred tax liabilities

 

1,572

906

1,314

900

Total non-current liabilities

 

116,491

48,542

92,019

9,557

Current liabilities

 

 

 

 

 

Bank overdraft

6

45,180

125,522

31,003

85,614

Loans and borrowings

7

55,219

124,755

(3)

1,239

Lease liabilities

 

19,799

7,531

16,995

-

Deferred income

 

496

437

162

129

Provisions

 

1,150

1,149

2,717

1,417

Income tax payable

 

13,522

7,417

5,482

6,202

Trade and other payables

 

230,494

147,732

121,962

76,135

Other financial liabilities

 

46,878

21,017

47,993

24,627

Total current liabilities

 

412,738

435,560

226,311

195,363

Total liabilities

2

529,229

484,102

318,330

204,920

Total equity and liabilities

 

926,976

710,143

694,173

433,143

               

 

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

SIX MONTHS ENDED 30 SEPTEMBER 2020

 

 

 

 

 

 

 

Unaudited six months ended 30 Sep 2020

Unaudited restated(a)

six months ended 30 Sep 2019

Twelve

months restated(a)

ended 31

Mar 2020

 

Note

$000

$000

$000

Cash flows from operating activities

 

 

 

 

Profit for the period

 

12,279

15,923

17,403

Adjustments for:

 

 

 

 

Depreciation and impairment of property, plant and equipment

 

6,678

3,845

8,880

Depreciation of right-of-use assets

 

9,370

4,043

8,911

Amortisation of intangible assets

 

4,258

2,444

4,816

Finance expenses

 

2,265

2,616

5,479

Income tax charge/(credit)

 

4,801

4,535

(18,276)

Loss/(profit) on disposal of a business

 

208

-

(1,836)

(Profit)/loss on sales of property, plant and equipment

 

(10)

9

(246)

Loss on disposal of intangible fixed assets

 

1

-

1

Equity-settled share-based payments

 

2,477

1,908

(252)

Operating profit after adjustments for non-cash items

 

42,327

35,323

24,880

Change in trade and other receivables

 

(169,524)

(143,430)

9,841

Change in inventory

 

(42,133)

(71,244)

1,532

Change in trade and other payables, provisions and deferred income

 

105,217

74,861

1,592

Cash (used by)/generated from operations

 

(64,113)

(104,490)

37,845

Tax received/(paid)

 

2,857

(2,984)

(5,993)

Interest and similar charges paid

 

(1,927)

(2,092)

(5,090)

Net cash (outflow)/inflow from operating activities

 

(63,183)

(109,566)

26,762

Cash flow from investing activities

 

 

 

 

Proceeds from sale of property, plant and equipment

 

30

25

767

Acquisition of businesses (net of cash acquired)

 

-

-

(112,251)

Acquisition of intangible assets

 

(737)

(1,126)

(3,738)

Acquisition of property, plant and equipment

 

(2,729)

(4,041)

(10,463)

Net cash outflow from investing activities

 

(3,436)

(5,142)

(125,685)

Cash flows from financing activities

 

 

 

 

Proceeds from issue of share capital

 

-

-

152,535

Repayment of secured borrowings

 

(1,025)

(627)

(1,917)

Net movement in previous credit facilities

 

-

48,230

48,230

Repayment of previous credit facilities

 

-

(48,230)

(48,230)

Net movement in new credit facilities

 

55,730 

123,903

-

Payment of lease liabilities

 

(8,772)

(3,868)

(8,430)

Loan arrangement fees

 

-

(737)

(1,571)

Equity dividends paid

 

-

(5,868)

(8,975)

Net cash inflow from financing activities

 

45,933

112,803

131,642

Net (decrease)/increase in cash and cash equivalents

 

(20,686)

(1,905)

32,719

Cash and cash equivalents at beginning of the period

 

52,197

25,296

25,296

Effect of exchange rate fluctuations on cash held

 

79

(3,796)

(5,818)

Cash and cash equivalents at end of the period

6

31,590

19,595

52,197

 

(a) the Group's reporting currency has moved to US Dollars following the acquisition of CSS in March 2020 which increased the US dollar revenues to over 70% of the Group and therefore primary statements have been restated from sterling to US dollar. See note 14 to this interim report for the comparative primary statements from the prior year as previously presented in sterling. In addition, all prior year comparative notes to the accounts have been restated throughout this report.

 

NOTES TO THE INTERIM FINANCIAL STATEMENTS

SIX MONTHS ENDED 30 SEPTEMBER 2020

 

1  Accounting policies

 

Basis of Preparation

The financial information contained in this interim report does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006 and is unaudited.

 

The Group interim report has been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the EU ('Adopted IFRS'). The financial information for the year ended 31 March 2020 is extracted from the statutory accounts of the Group for that financial year and has been restated into US dollar. See the Presentation Currency section below for further detail.  The auditor's report was (i) unqualified; (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report; and (iii) did not contain a statement under Section 498 (2) of the Companies Act 2006. The interim report does not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual financial statements for the year ended 31 March 2020. The audited annual accounts have been delivered to the Registrar of Companies.

 

The preparation of financial statements that conform with adopted IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results may ultimately differ from those estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and future periods if relevant.

 

For the purposes of these financial statements 'Design Group' or 'the Group' means IG Design Group plc ('the Company') and its subsidiaries. The Company's ordinary shares are listed on the Alternative Investment Market ('AIM').

 

Seasonality of the Business

The business of the Group is seasonal and although revenues accrue relatively evenly  in both halves of the year, working capital requirements including inventory levels increase steadily in the first half from July and peaks in October as manufacturing and distribution of Christmas products  builds ahead of shipping. The second half of the year sees the borrowing of the Group decline and move to typically a cash positive position as we collect our debtors through January to March. 

 

Presentation Currency

The Company has changed the presentation currency of the Group from pound sterling to US dollar effective 1 April 2020. Following the acquisition of CSS Industries Inc., a significant majority of the Group earnings is now denominated in US dollars. Management believes that the presentation currency change will give investors and other stakeholders a clearer understanding of the Group's financial performance over time. In addition, the change will reduce the volatility of the Group's earnings due to foreign exchange movements, in relation to the translation of foreign currency balances.

 

The currency translation reserve was set to zero at 1 April 2006 on transition to IFRS and has been restated as if the  Group had reported in US dollars since that date.  Share capital, share premium, capital redemptions reserve, merger reserve and hedging reserve are translated into US dollars at the rates of exchange at the balance sheet date and the resulting exchange differences are included in other reserves.

 

The functional currency of the parent company remains as sterling as it is located in the United Kingdom and substantially all of its cash flows, assets and liabilities are denominated in sterling, as well as its share capital.  As such, the Parent Company's functional currency differs to that of the Group's reporting currency.

 

Since the change in reporting currency has been applied retrospectively all comparative numbers in these consolidated interim accounts have been restated into US dollar.  Note 14 sets out the key primary statements with both sterling and US dollar comparatives for the six months ended 30 September 2019 and year ended 31 March 2020.  

 

Going Concern

Cash balances and borrowings are detailed in notes 6 and 7.

 

On 5 June 2019, to meet the funding requirements of the Group, the business refinanced with a banking group comprising HSBC, NatWest, BNP Paribas, Sun Trust and PNC Bank as part of a three year deal. This facility was then subsequently amended and extended on 17 January 2020 with the same banking group to accommodate the acquisition of CSS Industries Inc. The facilities run to May 2022 and comprise of a revolving credit facility ('RCF') of $95.0 million, a further flexible RCF of up to £130.0 million flexible to meet the Group's working capital requirements during peak manufacturing, and a maximum limit of $18.0 million invoice financing  arrangement in Hong Kong. We also have access to supplier financing arrangements from certain customers which we utilise at certain times of the year. These arrangements are subject to the continuing support of the customers banking partners and therefore could be withdrawn at short notice.

 

The Directors have prepared detailed plans and forecasts for a period of at least twelve months from the date of signing these financial statements. The plans reflect the seasonal operating cycle of the business and assume continuity of supply chain. They also benefit from the diverse geographic spread of the Group and the high proportion of revenues generated from retailers who have remained open during the Covid-19 crisis.  The base case forecasts broadly assume a recovery over the remainder of this financial year but to a generally recessionary environment. The Group is currently trading ahead of forecasts used to consider the going concern assessment. The forecasts show the Group has more than sufficient liquidity. In light of the ongoing Covid-19 pandemic, these forecasts have been sensitised to reflect severe but plausible adverse downturns in the current assumptions including the impact of the second wave of the pandemic and associated lockdown in the UK and Europe as well as the cyber incident in the US. Management has also produced a maximum stress forecast which has been deliberately engineered to challenge the Group's liquidity and leverage covenant positions during the forecast period. Further analysis has been prepared in relation to the mitigating actions open to the Group in the event of a scenario which is worse than the sensitivities already modelled. These mitigating actions include short term sales action, cutting discretionary spend further, headcount reductions and reduction in investment such as capex.

 

These forecasts and additional analysis including mitigating actions demonstrated that the Group has sufficient excess headroom for the Group to meet its obligations as they fall due for a forecast period of more than twelve months beyond the date of signing these accounts.

 

Based on these models, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future, and accordingly have adopted the going concern basis in preparing the consolidated financial statements. This disclosure has been prepared in accordance with the Financial Reporting Council's UK Corporate Governance Code.

 

Significant accounting policies

The accounting policies adopted in the preparation of the interim report are consistent with those followed in preparation of the Group's annual financial statements for the year ended 31 March 2020.

 

2 Segmental information

The Group has one material business activity being the design, manufacture and distribution of Celebration, Craft & creative play, Stationery, Gifting and 'Not-for-resale' consumable products.

 

Following the acquisition of CSS, the business has been restructured with the consolidation of the UK, European and Australian businesses under one operating segment: International. As such the Board has re-evaluated the reporting segments for the Group and for management purposes the Group is now organised into two geographic reporting segments. These are the segments as reported to, and evaluated by, the Chief Operating Decision Makers for the Group.

 

The acquisition of CSS Industries Inc. has seen additional entities in various locations around the world including Asia, Australia, UK, India and Mexico. Management review the results for CSS as one consolidated unit and this forms part of the Americas segment for the purpose of segmental reporting. 

 

Inter segment pricing is determined on an arm's length basis. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

 

Financial performance of each segment is measured on adjusted operating profit before management recharges. Interest and tax are managed on a Group basis and not split between reportable segments. However, the related financial liability and cash has been allocated out into the reportable segments as this is how they are managed by the Group.

 

Segment assets are all non - current and current assets, excluding deferred tax and income tax, which are shown in the eliminations column. Inter - segment receivables and payables are not included within segmental assets and liabilities as they eliminate on consolidation.

 

 

 

 

 

 

 

 

 

 

 

Central &

 

 

 

Americas(a)

International

eliminations

Group

 

 

$000

$000

$000

$000

Six months ended 30 September 2020

 

 

 

 

 

Revenue 

- external

321,572

113,063

-

434,635

 

- inter segment

-

2,443

(2,443)

-

Total segment revenue

 

321,572

115,506

(2,443)

434,635

Segment result before adjusting items and management recharges

 

19,550

15,140

(2,224)

32,466

Adjusting items (note 3)

 

 

 

 

(13,121)

Operating profit

 

 

 

 

19,345

Finance expenses

 

 

 

 

(2,265)

Income tax

 

 

 

 

(4,801)

Profit for six months ended 30 September 2020

 

 

 

 

12,279

Balances at 30 September 2020

 

 

 

 

 

Segment assets

 

563,866

282,583

80,527

926,976

Segment liabilities

 

(316,758)

(148,970)

(63,501)

(529,229)

Capital expenditure additions

 

 

 

 

 

 

- property, plant and equipment

1,519

1,210

-

2,729

 

- intangible assets

700

37

-

737

 

- right-of-use assets

29,639

679

-

30,318

Depreciation - property, plant and equipment

 

3,917

2,760

1

6,678

Amortisation - intangible assets

 

3,988

270

-

4,258

Depreciation - right-of-use assets

 

6,756

2,579

35

9,370

 

 

 

 

 

 

                   

 

 

 

 

 

 

 

 

 

 

 

 

Central &

 

 

 

Americas(a)

International

eliminations

Group

 

 

$000

$000

$000

$000

Six months ended 30 September 2019

 

 

 

 

 

Revenue 

- external

183,837

125,383

-

309,220

 

- inter segment

-

2,999

(2,999)

-

Total segment revenue

 

183,837

128,382

(2,999)

309,220

Segment result before adjusting items and management recharges

 

17,600

13,222

(2,167)

28,655

Adjusting items (note 3)

 

 

 

 

(5,581)

Operating profit

 

 

 

 

23,074

Finance expenses

 

 

 

 

(2,616)

Income tax

 

 

 

 

(4,535)

Profit for the six months ended 30 September 2019

 

 

 

 

15,923

Balances at 30 September 2019

 

 

 

 

 

Segment assets

 

293,067

282,311

134,765

710,143

Segment liabilities

 

(195,082)

(164,295)

(124,725)

(484,102)

Capital expenditure additions

 

 

 

 

 

 

- property, plant and equipment

1,021

3,016

4

4,041

 

- intangible assets

894

146

86

1,126

 

- right-of-use assets

640

2,663

33

3,336

Depreciation - property, plant and equipment

 

1,243

2,599

3

3,845

Amortisation - intangible assets

 

2,120

324

-

2,444

Depreciation - right-of-use assets

 

1,787

2,223

33

4,043

                   

 

 

 

 

 

 

 

 

 

 

 

 

 

Central &

 

 

 

Americas(a)

International

eliminations

Group

 

 

$000

$000

$000

$000

Year ended 31 March 2020

 

 

 

 

 

Revenue

- external

355,917

268,423

-

624,340

 

- inter segment

-

7,071

(7,071)

-

Total segment revenue

 

355,917

275,494

(7,071)

624,340

Segment result before adjusting items and management recharge

20,064

24,877

(4,017)

40,924

Adjusting items (note 3)

 

 

 

 

(36,318)

Operating profit

 

 

 

 

4,606

Finance expenses

 

 

 

 

(5,479)

Income tax

 

 

 

 

18,276

Profit for the year ended 31 March 2020

 

 

 

 

17,403

Balances at 31 March 2020

 

 

 

 

 

Segment assets

 

423,642

210,380

60,151

694,173

Segment liabilities

 

(199,584)

(95,410)

(23,336)

(318,330)

Capital expenditure additions

 

 

 

 

 

- property, plant and equipment

3,372

7,087

4

10,463

 

- property, plant and equipment on acquisition of business

40,570

-

-

40,570

 

- intangible assets

3,419

236

83

3,738

 

- intangible assets on acquisition of business

5,960

-

-

5,960

 

- right-of-use assets

790

6,515

33

7,338

 

- right-of-use assets on acquisition of business

40,650

-

-

40,650

Depreciation - property, plant and equipment

3,034

5,411

3

8,448

Impairment

 

-

432

-

432

 

 

 

 

 

 

Amortisation - intangible assets

 

4,341

475

-

4,816

Depreciation - right-of-use assets

 

4,222

4,619

70

8,911

                           

 

(a)  Including overseas entities for the Americas operating segment

 

 

3 Operating profit and adjusting items

 

 

 

 

 

 

 

 

Unaudited six months ended 30 Sep 2020

Unaudited six months ended 30 Sep 2019

Twelve months ended 31 Mar 2020

 

 

$000

$000

$000

Operating profit analysed as:

 

 

 

 

Adjusted operating profit

 

32,466

28,655

40,924

Adjusting items

 

(13,121)

(5,581)

(36,318)

Operating profit

 

19,345

23,074

4,606

 

Adjusting items

 

 

 

 

 

 

 

 

Six months ended 30 September 2020

Cost of sales

Selling expenses

Admin expenses

Loss on sale of subsidiary

Other finance expenses

Total

 

$000

$000

$000

$000

$000

$000

Losses/(gains) and transaction costs relating to acquisitions and disposals of businesses1

-

-

674

208

-

882

Acquisition integration and restructuring costs2

33

-

5,478

-

-

5,511

Impairment of assets3

-

52

-

-

-

52

Incremental Covid-19 costs4

926

-

1,048

-

-

1,974

Amortisation of acquired intangibles5

-

-

2,225

-

-

2,225

LTIP charge6

-

-

2,477

-

-

2,477

Adjusting items

959

52

11,902

208

-

13,121

 

 

Six months ended 30 September 2019

 

Cost

of sales

 

Selling expenses

 

Admin expenses

Loss

on sale of subsidiary

Other

finance expenses

Total

 

$000

$000

$000

$000

$000

$000

Losses/(gains) and transaction costs relating to acquisitions and disposals of businesses1

-

-

685

-

-

685

Acquisition integration and restructuring costs2

563

-

642

-

-

1,205

Amortisation of acquired intangibles 5

-

-

1,783

-

-

1,783

LTIP charge6

-

-

1,908

-

-

1,908

Adjusting items

563

-

5,018

-

-

5,581

 

 

 

 

 

 

 

 

 

Year ended 31 March 2020

 

Cost

of sales

 

Selling expenses

 

Admin expenses

Profit

on sale of subsidiary

Other

finance expenses

Total

 

$000

$000

$000

$000

$000

$000

Losses/(gains) and transaction costs relating to acquisitions and disposals of businesses1

32

-

5,918

(1,836)

-

4,114

Acquisition integration and restructuring costs2

7,066

-

4,960

-

-

12,026

Impairment of assets3

8,021

3,789

-

-

-

11,810

Incremental Covid-19 costs4

327

-

292

-

-

619

Amortisation of acquired intangibles 5

-

-

3,573

-

-

3,573

LTIP credits6

-

-

(252)

-

-

(252)

US tariffs7

4,428

-

-

-

-

4,428

Adjusting items

19,874

3,789

14,491

(1,836)

-

36,318

 

 

Adjusting items are separately presented by virtue of their nature, size and/or incidence (per each operating segment). These items are material items of an unusual or non-recurring nature which represent gains or losses and are presented to allow for the review of the performance of the business in a consistent manner and in line with how the business is managed and measured on a day-to-day basis and allow the reader to obtain a clearer understanding of the underlying results of the ongoing Group's operations. They are typically gains or costs associated with events that are not considered to form part of the core operations, or are considered to be a 'non-recurring' event (although they may span several accounting periods).

 

These costs/(gains) relating to the period ended 30 September 2020 are broken down as follows;

 

1 Losses/(gains) and transaction costs relating to acquisitions and disposals of businesses

Costs directly associated with acquisitions, including legal and advisory fees on deals, form part of our reported results on an IFRS basis. These costs however, in the Board's view, form part of the capital transaction, and as they are not attributed to investment value under IFRS 3, they are included as an adjusting item. Similarly, where acquisitions have employee related payments (exclusive of LTIPs) which lock in and incentivise legacy talent, we also include these costs as Adjusting items. Furthermore, gains or losses on the disposal of businesses, including any transaction costs associated with the disposal are treated as Adjusting items.

 

In the period, costs of $133,000 associated with the acquisition of CSS were incurred relating to advisor fees. In addition, $542,000 of acquisition related employee payments from the Impact Innovations Inc. transaction in 2019 which lock in and incentivise legacy talent. Finally, an additional $207,000 of transaction costs associated with the disposal of Zhejiang Shaoxing Royal Arts and Crafts Co. Ltd ('Shaoxing') were incurred.

As at 30 September 2019, the Group incurred $685,000 of transaction costs primarily relating to acquisition related employee payments from the Impact Innovations Inc. transaction in 2019 which lock in and incentivise legacy talent as well as other M&A related costs. As at 31 March 2020 the total net cost incurred by the Group was $4.1 million, including costs associated with the acquisition of CSS Industries Inc. along with the profit on disposal of Shaoxing.

 

2 Acquisition integration and restructuring costs

In order to realise synergies from acquisitions, integration projects are undertaken that aim to deliver future savings and efficiencies for the Group. These are projects outside of the normal operations of the business and typically incur one-time costs to ensure successful implementation. As such the Board considers it is appropriate that costs associated with projects of this nature be included as Adjusting items.

 

The main costs relate to the integration of CSS into the enlarged DG Americas as new team structures have been put in place. There have also been associated temporary staff costs and recruitment costs as roles are being filled. These costs amounted to $3.4 million in the period.

The CSS business includes a large portfolio of owned and leased sites, and part of the integration project includes the consolidation of these locations resulting in the impairment of lease assets and the ongoing costs associated with the closure of sites as well as the lease liability interest costs. In the period, the site in Nashville, Tennessee was closed and the associated impairment of the lease asset and ongoing costs associated with the mothballing of the site as well as the lease liability interest costs have been treated as Adjusting items amounting to $1.4 million in the period. This is consistent with the treatment adopted when other sites have been closed.

 

The UK undertook a reorganisation in light of Covid-19 for which the costs have been treated as Adjusting items. In addition, in Australia a similar reorganisation was made in the first half of the financial year. The total costs associated with the reorganisations in the period was $798,000.

 

As at 30 September 2019, the Group had incurred $1.2 million of acquisition integration costs, and by 31 March 2020 $12.0 million of costs relating to the integration of manufacturing facilities in Memphis, transition and retention costs as well as costs relating to the CSS integration.

 

3 Impairment of assets

In light of the impact of Covid-19 on the business, a review of inventory, trade receivables and fixed assets was undertaken at the year end. Inventories were assessed at 31 March 2020 for the net realisable value and an impairment of $7.4 million was taken in relation to aged and obsolete inventory. Similarly trade receivables were assessed for their expected credit loss in line with IFRS 9 and an impairment of $3.8 million was taken. In addition, an impairment of $667,000 was taken as at 31 March 2020 in relation to inventory related assets and certain fixed assets.

 

As at 30 September 2020, this assessment continues, and for trade receivables any impairment taken at the year end that was not required has been reversed ($3.1 million) alongside any additional debtors as at the reporting date who are now considered higher risk for which an impairment has been taken ($3.9 million). Inventories continue to be assessed for net realisable value, with sell- through of provided inventory of $1.8 million being netted against further inventory risk of $1.2 million recognised. Given the seasonality of our business and the high proportion of Christmas related sales, further assessment will be undertaken by the end of the financial year.

 

4 Incremental Covid-19 costs

The Covid-19 outbreak has developed rapidly in 2020, with measures taken around the world to contain the virus affecting economic activity. The Group has been affected in every territory in which we operate and the impact on the general economic environment and the reduced demand of goods from our customers as well as the closures of our businesses has had a significant impact. Certain costs relating to incremental direct labour have been identified that have impacted the financial results of the business during the year to date, equal to $2.0 million. The most significant element of these costs totalled $1.3 million relating to additional labour costs across our manufacturing facilities in the USA, Mexico and India. The US government assistance provided support to the workforce focused on payments direct to the individual rather than through the employer and as such no government assistance has been received directly by the Americas business during the period. Furthermore, an unintended impact of the US government assistance direct to the individual is that additional costs have been incurred to encourage employees to return to work rather than remain at home receiving the government assistance.  Similarly in Mexico and India, government mandates has meant that no workforce reductions have been allowed by law and labour costs, that otherwise would not have been, have been incurred as a result. Other incremental costs include $432,000 of costs associated with direct labour inefficiencies and shorter shifts in our manufacturing sites to allow for clean down and sanitising all equipment and areas before the subsequent shift move in as well as $228,000 of additional cleaning and PPE costs.

Management have taken a judgement not to include government assistance received in the period as an Adjusting item, as whilst the amounts received were incremental, the underlying employee expenditure would likely not have been incurred if the government assistance was not received.

In the year ended 31 March 2020, $619,000 of direct incremental costs associated with Covid-19 had been incurred by the Group.

 

5 Amortisation of acquired intangibles

Under IFRS, as part of the acquisition of a company, it is necessary to identify intangible assets such as customer relationships and brands which form part of the intangible value of the acquired business but are not part of the acquired balance sheet. These intangible assets are then amortised to the income statement over an appropriately judged period. These are not operational costs relating to the running of the acquired business and are directly related to the accounting for the acquisition. These include tradenames and brands acquired as part of the acquisition of Impact Innovations Inc. and CSS Industries Inc. in the USA and Biscay Pty Greetings Ltd in Australia. As such we include these as Adjusting items. Note that the trade names acquired as part of the acquisition of The Lang Companies Inc. were fully amortised in the prior year.

 

In addition, in accordance with IFRS 3, on acquisition, businesses need to be fair valued, which can result in an uplift to stock on hand relating to sales orders already attached to the acquired stock. This uplift will distort the margins associated with the stock, and typically unwinds quickly as stock is sold soon after acquisition. The unwind of the stock uplift ($0.6 million) associated with the CSS acquisition is included as an Adjusting item, consistent with the treatment adopted with the Impact acquisition. This has fully unwound as at 30 September 2020.

 

6 LTIP charges

As part of our senior management remuneration, the Group operate a Long Term Incentive Plan ('LTIP') in the form of options for ordinary shares of the Group. In accordance with accounting principles, despite this plan not being a cash cost to the business a share based payments charge or credit is taken to the income statement. We consider that these charges and the associated social security charges do not form part of the underlying operational costs and therefore include these as Adjusting items.

 

The LTIP charge for the period to 30 September 2020 is $2.4 million which consists of a principal IFRS 2 charge of $2.2 million and an employer's social security charge of $0.2 million.

 

As at 30 September 2019, $1.9 million of LTIP charges had been incurred and by the 31 March 2020, these charges had been reversed and instead a credit of ($0.3) million had been taken.

 

The cash flow effect on adjusting items

There was $10.4 million net outflow on the current period's cash flow (H1 2020: $1.9 million) which included $4.5 million (H1 2020: $591,000) of outflow deferred from last year.

 

4 Other operating income

 

 

 

 

 

 

Unaudited six months ended 30 Sep 2020

Unaudited six months ended 30 Sep 2019

Twelve months ended 31 Mar 2020

 

$000

$000

$000

Grant income received

64

317

380

Sub-lease rentals credited to the income statement

178

177

358

Government assistance

3,578

-

-

Other

89

9

189

Total other operating income

3,909

503

927

 

5 Taxation

Recognised in the income statement

 

 

 

 

 

Unaudited six months ended 30 Sep 2020

Unaudited six months ended 30 Sep 2019

Twelve months ended 31 Mar 2020

 

$000

$000

$000

Current tax (charge)/credit

 

 

 

Current income tax (charge)/credit

(8,625)

(4,533)

14,458

Deferred tax credit/(charge)

 

 

 

Relating to origination and reversal of temporary differences

3,824

(2)

3,818

Total tax in the income statement

(4,801)

(4,535)

18,276

Total tax (charge)/credit on adjusting items

 

 

 

Total tax on profit before adjusting items

(7,677)

(5,860)

(7,113)

Total tax on adjusting items

2,876

1,325

8,053

Adjusting item - tax credit (US tax loss carryback)

-

-

17,336

Total tax in income statement

(4,801)

(4,535)

18,276

 

6 Cash and cash equivalents/bank overdrafts

 

 

 

 

 

Unaudited six months ended 30 Sep 2020

Unaudited six months ended 30 Sep 2019

Twelve months ended 31 March 2020

 

$000

$000

$000

Cash and cash equivalents

76,770

145,117

83,200

Bank overdrafts

(45,180)

(125,522)

(31,003)

Cash and cash equivalents per cash flow statement

31,590

19,595

52,197

 

 

Net cash 

 

 

 

 

 

Unaudited six months ended 30 Sep 2020

Unaudited six months ended 30 Sep 2019

Twelve months ended 31 Mar 2020

 

$000

$000

$000

Cash and cash equivalents

31,590

19,595

52,197

Bank loans and overdrafts

(55,802)

(126,268)

(987)

Loan arrangement fees

972

614

1,209

Net (debt)/cash as used in the financial review

(23,240)

(106,059)

52,419

 

The bank loans and overdrafts are secured by a fixed charge on certain of the Group's land and buildings, a fixed charge on certain of the Group's book debts and a floating charge on certain of the Group's other assets. See note 7 for further details of the Group's loans and borrowings.

 

7 Loans and borrowings

This note provides information about the contractual terms of the Group's interest - bearing loans and borrowings.

 

 

 

 

 

Unaudited six months ended 30 Sep 2020

Unaudited six months ended 30 Sep 2019

Twelve months ended 31 Mar 2020

 

$000

$000

$000

Non-current liabilities

 

 

 

Secured bank loans

-

1,149

432

Loan arrangement fees

(389)

(250)

(651)

 

(389)

899

(219)

Current liabilities

 

 

 

Asset backed loan

10,451

11,248

-

Revolving credit facilities

45,279

112,655

-

Current portion of secured bank loans

72

1,216

555

Bank loans and borrowings

55,802

125,119

555

Loan arrangement fees

(583)

(364)

(558)

 

55,219

124,755

(3)

 

Secured bank loans

On 5 June 2019, the Group entered into a new three year Group facility with a club of five banks chosen to reflect and support the geographical spread of the Group. The banks within the club are HSBC, NatWest, BNP Paribas, Sun Trust and PNC.

 

On 17 January 2020 a facility increase was agreed to support the acquisition of CSS Industries Inc. on 3 March 2020 and to accommodate the enlarged Group.

 

The facilities, which run to May 2022, comprises of:

 

· a revolving credit facility ('RCF A') of $95.0 million;

· a further flexible revolving credit facility ('RCF B') with availability varying from month to month of up to £130.0 million. This RCF is flexed to meet our working capital requirements during those months when inventory is being built within our annual business cycle and is $nil when not required, minimising carry costs; and

· an invoice financing arrangement in Hong Kong maximum limit $18.0 million but dependent on level of eligible receivables

 

In total, the accessible facilities are approximately $276.7 million (maximum $281.4 million) and are more than sufficient to cover our peak requirements. Being partially denominated in US dollar they also provide a hedge against currency movements. The facilities, which do not amortise with time, include an additional uncommitted amount to finance potential acquisitions.

 

Invoice financing arrangements are secured over the trade receivables that they are drawn on. The RCF facilities are secured with a fixed and floating charge over all other assets of the Group. Revolving credit facilities are classified as current liabilities as the Group expects to settle these amounts within 12 months.

 

There are financial covenants, tested quarterly, attached to the existing facilities as follows:

 

· interest cover, being the ratio of adjusted earnings before interest, depreciation and amortisation (EBITDA), as defined by the banking facility, to interest on a rolling twelve‑month basis; and

· leverage, being the ratio of debt to adjusted EBITDA, as defined by the banking facility, on a rolling twelve-month basis.

 

Covenants are measured on pre IFRS16 accounting definitions.

 

There is a further covenant tested monthly in respect of the working capital RCF by which available asset cover must not fall below agreed levels relative to amounts drawn.

 

In January 2018, the Group's Australia business obtained a secured loan from Westpac of $6.5 million (AU$9.0 million). This is repayable monthly over a five year period. It is subject to a variable interest rate linked to the Australian base rate. $1.0 million was repaid during the period which, along with $110,000 exchange movement results in a balance at 30 September 2020 of $72,000 (AU$100,000). The Australia business also borrows from Westpac for financing working capital and the current facility level is AU$5.0 million from January to June and AU$10.0 million July to December.

 

Loan arrangement fees represent the unamortised costs in arranging the Group facilities. These fees are being amortised on a straight line basis over the terms of the facilities.

 

 

 

 

 

 

 

8 Earnings per share

 

 

 

 

 

 

 

 

 

 

Unaudited six months ended 30 Sep 2020

Unaudited six months ended 30

 Sep 2019

Twelve

months ended 31 Mar 2020

 

$000

$000

$000

Earnings

 

 

 

Earnings attributable to equity holders of the Company

11,222

15,297

16,461

Adjustments

 

 

 

Adjusting items (net of non-controlling interest effect)

13,199

5,485

35,964

Tax charge/(relief) on adjustments (net of non-controlling interest effect)

(2,899)

(1,296)

(7,946)

Adjusting item - tax credit (US tax loss carryback)

-

-

(17,336)

Adjusted earnings

21,522

19,486

27,143

Weighted average number of shares

 

 

 

Basic weighted average number of shares outstanding

97,700

79,960

82,605

Dilutive effect of employee share option plans

327

441

476

Diluted weighted average ordinary shares

98,027

80,401

83,081

Earnings per share (cents)

 

 

 

Basic earnings per share

11.5

19.1

19.9

Adjustment

10.5

5.3

12.9

Basic adjusted earnings per share

22.0

24.4

32.8

Diluted earnings per share

11.4

19.0

19.8

Diluted adjusted earnings per share

22.0

24.2

32.7

 

Adjusted earnings per share is provided to reflect the underlying earnings performance of the Group.

 

 

 

 

 

In thousands of shares

Unaudited six months ended 30 Sep 2020

Unaudited six months ended 30 Sep 2019

Twelve months ended 31 Mar 2020

Issued ordinary shares at 1 April

96,367

78,366

78,366

Shares held by Employee Benefit Trust

-

-

-

Shares relating to share options

1,333

1,594

1,594

Shares issued in respect of share placing

-

-

2,645

Weighted average number of shares at the end of the period

97,700

79,960

82,605

 

Diluted earnings per share

The diluted earnings per share is calculated taking into account LTIP awards whose specified conditions were satisfied at the end of the reporting period of 327,000 (H1 2020: 441,000) share options. At 30 September 2020 the diluted number of shares was 98.0 million (H1 2020: 80.4 million).

 

9 Financial instruments

Derivative financial instruments

The fair value of forward exchange contracts is assessed using valuation models taking into account market inputs such as foreign exchange spot and forward rates, yield curves and forward interest rates.

 

Fair value hierarchy

Financial instruments which are recognised at fair value subsequent to initial recognition are grouped into Levels 1 to 3 based on the degree to which the fair value is observable. The three levels are defined as follows:

 

· Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;

· Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly; and

· Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

 

All other financial assets and liabilities are measured at amortised cost.

 

The Group held the following financial instruments at fair value at 30 September 2020:

 

 

 

 

 

Unaudited six months ended 30 Sep 2020

Unaudited  six months ended 30 Sep 2019

Twelve months ended 31 Mar 2020

Forward exchange contracts carrying amount

$000

$000

$000

 

 

 

 

Derivative financial assets

556

511

412

Derivative financial liabilities

(538)

(814)

(9)

 

10 Capital commitments

At 30 September 2020, the Group had outstanding authorised capital commitments to purchase plant and equipment for $1.1 million (H1 2020: $4.6 million).

 

11 Related parties

As at 30 September 2020, there are no changes to the related parties or types of transactions as disclosed at 31 March 2020.

 

12 Acquisitions and disposals of subsidiaries

Acquisitions in the prior year

 

On 3 March 2020, the Group acquired 100% of the equity of CSS Industries, Inc. ("CSS"), a creative consumer products company, focused on the craft, gift and seasonal categories predominately within the US.

 

As disclosed in the financial statements as at 31 March 2020, the provisional effect of acquisition of CSS is as follows:

 

Provisional

 

fair values

 

recognised

 

on acquisition

 

$000

Property, plant and equipment

40,570

Right-of-use assets

40,650

Intangible assets

5,960

Inventories

56,630

Trade and other receivables

65,296

Doubtful debt provision

(2,231)

Cash

10,538

Trade and payables

(75,186)

Provisions

(5,167)

Income taxes

(3,828)

Deferred tax

8,797

Lease liabilities

(47,344)

Net identifiable assets and liabilities

94,685

Consideration paid in shares

-

Consideration paid in cash

122,789

Total consideration

122,789

Goodwill

28,104

 

Contingent liabilities of £3.6 million were recognised as part of the business combination relating to reinstatement costs of

leased buildings, potential change of control penalties, potential environmental claims and potential litigation. The liabilities

have the potential to unwind over one to five years and contain estimates. There has been no material movement in these liabilities as at 30 September 2020.

 

In addition, as  at 30 September 2020, no measurement period adjustment has been made. A review of the provisional acquisition accounting as stated in the financial statements to 31 March 2020 is ongoing, with particular focus on inventory as the business sells through any acquired inventory. As this assessment needs to be ongoing throughout the year, if appropriate, any measurement period adjustments will be made in the second half of the year.

 

13 Non-adjusting post balance sheet events

 

After the end of the reporting period, and prior to the authorisation of this interim report on 24 November 2020, the Group has declared an interim dividend of 3.0 pence (3.9 cents) per share (H1 2020: 3.0 pence (3.7 cents)). 

 

14 Presentation currency

 

The Company has changed the presentation currency of the Group from pound sterling to US dollars effective 1 April 2020. Following the acquisition of CSS Industries Inc., a significant majority of the Group earnings is now denominated in US dollars. Management believes that the presentation currency change will give investors and other stakeholders a clearer understanding of the Design Group's financial performance over time. In addition, the change will reduce the volatility of the Group's earnings due to foreign exchange movements, in relation to the translation of foreign currency balances.

 

Detailed below are the key primary statements with both pound sterling and US dollar comparatives for both six months ended 30 September 2019 and the year ended 31 March 2020.

 

CONSOLIDATED INCOME STATEMENT

 

 

 

 

 

 

 

 

  Unaudited

  six months

   ended

  30 Sep 2019

  Unaudited

  six months

  ended

   30 Sep 2019

 

  Twelve

  months   ended

  31 Mar 2020

  Twelve  months

  ended

  31 Mar 2020

 

  $000

  £000

 

  $000

  £000

Revenue

  309,220

  248,371

 

  624,340

  494,234

Cost of sales

  (246,186)

  (197,597)

 

  (530,109)

  (419,131)

Gross profit

  63,034

  50,774

 

  94,231

  75,103

Selling expenses

  (13,374)

  (10,658)

 

  (33,766)

  (26,523)

Administration expenses

  (27,089)

  (21,336)

 

  (58,868)

  (46,409)

Other operating income

  503

  398

 

  927

  735

Profit on disposal of property, plant and equipment

  -

  -

 

  246

  188

Profit on disposal of subsidiary

  -

  -

 

  1,836

  1,486

Operating profit

  23,074

  19,178

 

  4,606

  4,580

Finance expenses

  (2,616)

  (2,083)

 

  (5,479)

  (4,317)

Profit /(loss) before tax

  20,458

  17,095

 

  (873)

  263

Income tax (charge)/credit

  (4,535)

  (3,792)

 

  18,276

  14,547

Profit for the period

  15,923

  13,303

 

  17,403

  14,810

Attributable to:

 

 

 

 

 

Owners of the Parent Company

  15,297

  12,799

 

  16,461

  14,060

Non-controlling interests

  626

  504

 

  942

  750

   

Earnings per ordinary share

   

 

 

 

 

 

 

 

  Unaudited

  six months

  ended

  30 Sep 2019

  Unaudited

  six months

  ended

   30 Sep 2019

 

  Twelve   months   ended

  31 Mar 2020

  Twelve   months   ended

  31 Mar 2020

Basic

  19.1c

  16.0p

 

  19.9c

  17.0p

Diluted

  19.0c

  16.0p

 

  19.8c

  16.9p

 

Adjusted Earnings per ordinary share

   

 

 

 

 

 

 

 

  Unaudited

  six months

  ended

  30 Sep 2019

  Unaudited

  six months

  ended

  30 Sep 2019

 

  Twelve   months   ended

  31 Mar 2020

  Twelve   months   ended

  31 Mar 2020

Basic

  24.4c

  20.2p

 

  32.8c

  27.0p

Diluted

  24.2c

  20.1p

 

  32.7c

  26.9p

 

EXECUTIVE REVIEW INCOME STATEMENT

 

 

 

 

 

 

 

 

  Unaudited

  six months

  ended

  30 Sep 2019

  Unaudited

  six months

  ended

  30 Sep 2019

 

  Twelve   months   ended

  31 Mar 2020

  Twelve   months   ended

  31 Mar 2020

 

  $m

  £m

 

  $m 

  £m

Revenue

  309.2

  248.4

 

  624.3

  494.2

Gross profit

  63.6

  51.3

 

  114.1

  90.9

Overheads

  (34.9)

  (27.7)

 

  (73.2)

  (57.5)

Adjusted operating profit

  28.7

  23.6

 

  40.9

  33.4

Finance expenses

  (2.6)

  (2.1)

 

  (5.5)

  (4.3)

Adjusted profit /(loss) before tax

  26.1

  21.5

 

  35.4

  29.1

Adjusting items

  (5.6)

  (4.4)

 

  (36.3)

  (28.8)

Profit /(loss) before tax

  20.5

  17.1

 

  (0.9)

  0.3

Income tax credit/(charge)

  (4.6)

  (3.8)

 

  18.3

  14.5

Profit for the period

  15.9

  13.3

 

  17.4

  14.8

 

CONSOLIDATED BALANCE SHEET

 

 

 

 

 

 

 

 

 

  Unaudited

  six months

  ended

  30 Sep 2019

  Unaudited

  six months

  ended

  30 Sep 2019

 

  Twelve   months   ended

  31 Mar 2020

  Twelve   months   ended

  31 Mar 2020

 

  $000

  £000

 

  $000

  £000

Non-current assets

 

 

 

 

 

Property, plant and equipment

  50,769

  41,276

 

  92,622

  74,695

Intangible assets

  106,482

  86,570

 

  140,504

  113,309

Right-of-use assets

  43,771

  35,586

 

  82,742

  66,728

Long-term assets

  -

  -

 

  6,223

  5,019

Deferred tax assets 

  5,126

  4,167

 

  18,135

  14,624

Total non-current assets

  206,148

  167,599

 

  340,226

  274,375

Current assets

 

 

 

 

 

Inventory

  157,703

  128,213

 

  141,911

  114,445

Trade and other receivables

  200,664

  163,143

 

  110,047

  88,748

Income tax receivable

  -

  -

 

  18,377

  14,820

Derivative financial assets

  511

  415

 

  412

  332

Cash and cash equivalents

  145,117

  117,982

 

  83,200

  67,098

Total current assets

  503,995

  409,753

 

  353,947

  285,443

Total assets

  710,143

  577,352

 

  694,173

  559,818

Equity

 

 

 

 

 

Share capital

  4,863

  3,954

 

  5,974

  4,818

Share premium

  69,277

  56,323

 

  213,755

  172,383

Capital redemption reserve

  1,648

  1,340

 

  1,662

  1,340

Merger reserve

  39,851

  32,399

 

  40,175

  32,399

Hedging reserve

  (401)

  (326)

 

  320

  258

Translation reserve

  (12,016)

  2,375

 

  (4,389)

  7,383

Retained earnings

  117,526

  83,400

 

  113,703

  80,794

Equity attributable to owners of the Parent Company

  220,748

  179,465

 

  371,200

  299,375

Non-controlling interests

  5,293

  4,305

 

  4,643

  3,744

Total equity

  226,041

  183,770

 

  375,843

  303,119

Non-current liabilities

 

 

 

 

 

Loans and borrowings

  899

  731

 

  (219)

  (177)

Lease liabilities

  42,097

  34,225

 

  78,418

  63,241

Deferred income

  678

  552

 

  561

  452

Provisions

  3,094

  2,516

 

  5,161

  4,163

Other financial liabilities

  868

  706

 

  6,784

  5,471

Deferred tax liabilities

  906

  736

 

  1,314

  1,059

Total non-current liabilities

  48,542

  39,466

 

  92,019

  74,209

Current liabilities

 

 

 

 

 

Bank overdraft

  125,522

  102,051

 

  31,003

  25,004

Loans and borrowings

  124,755

  101,427

 

  (3)

  (2)

Lease liabilities

  7,531

  6,123

 

  16,995

  13,705

Deferred income

  437

  355

 

  162

  131

Provisions

  1,149

  934

 

  2,717

  2,191

Income tax payable

  7,417

  6,030

 

  5,482

  4,399

Trade and other payables

  147,732

  120,109

 

  121,962

  98,357

Other financial liabilities

  21,017

  17,087

 

  47,993

  38,705

Total current liabilities

  435,560

  354,116

 

  226,311

  182,490

Total liabilities

  484,102

  393,582

 

  318,330

  256,699

Total equity and liabilities

  710,143

  577,352

 

  694,173

  559,818

                   

 

CONSOLIDATED CASH FLOW STATEMENT

 

 

 

 

 

 

 

 

  Unaudited

  six months

  ended

  30 Sep 2019

  Unaudited

  six months

  ended

  30 Sep 2019

 

  Twelve   months   ended

  31 Mar 2020

  Twelve   months   ended

  31 Mar 2020

 

  $000

  £000

 

  $000

  £000

Cash flows from operating activities

 

 

 

 

 

Profit for the year

  15,923

  13,303

 

  17,403

  14,810

Adjustments for:

 

 

 

 

 

Depreciation and impairment

  3,845

  3,041

 

  8,880

  6,994

Depreciation of right-of-use assets

  4,043

  3,208

 

  8,911

  7,014

Amortisation of intangible assets

  2,444

  1,944

 

  4,816

  3,796

Finance expenses

  2,616

  2,083

 

  5,479

  4,317

Income tax charge/(credit)

  4,535

  3,792

 

  (18,276)

  (14,547)

Profit on disposal of subsidiary

  -

  -

 

  (1,836)

  (1,486)

Loss/(profit) on disposal of property, plant and equipment

  9

  7

 

  (246)

  (188)

Loss on disposal of intangible fixed assets

  -

  -

 

  1

  1

Equity-settled share-based payments

  1,908

  1,513

 

  (252)

  (202)

Operating profit after adjustments for non-cash items

  35,323

  28,891

 

  24,880

  20,509

Change in trade and other receivables

  (143,430)

  (116,210)

 

  9,841

  629

Change in inventory

  (71,244)

  (56,065)

 

  1,532

  705

Change in trade and other payables, provisions and deferred income

  74,861

  61,502

 

  1,592

  5,913

Cash (used by)/generated from operations

  (104,490)

  (81,882)

 

  37,845

  27,756

Tax paid

  (2,984)

  (2,297)

 

  (5,993)

  (4,749)

Interest and similar charges paid

  (2,092)

  (1,672)

 

  (5,090)

  (3,996)

Net cash (outflow)/inflow from operating activities

  (109,566)

  (85,851)

 

  26,762

  19,011

Cash flow from investing activities

 

 

 

 

 

Proceeds from sale of property, plant and equipment

  25

  21

 

  767

  595

Acquisition of businesses (net of cash acquired)

  -

  -

 

  (112,251)

  (87,696)

Acquisition of intangible assets

  (1,126)

  (908)

 

  (3,738)

  (2,997)

Acquisition of property, plant and equipment

  (4,041)

  (3,171)

 

  (10,463)

  (8,133)

Net cash outflow from investing activities 

  (5,142)

  (4,058)

 

  (125,685)

  (98,231)

Cash flows from financing activities

 

 

 

 

 

Proceeds from issue of share capital

  -

  -

 

  152,535

  116,924

Repayment of secured borrowings

  (627)

  (497)

 

  (1,917)

  (1,505)

Net movement in previous credit facilities

  48,230

  37,976

 

  48,230

  37,976

Repayment of previous credit facilities

  (48,230)

  (37,976)

 

  (48,230)

  (37,976)

Net movement in new credit facilities

  123,903

  100,734

 

  -

  --

Payment of lease liabilities

  (3,868)

  (3,055)

 

  (8,430)

  (6,622)

Loan arrangement fees

  (737)

  (598)

 

  (1,571)

  (1,234)

Equity dividends paid

  (5,868)

  (4,732)

 

  (8,975)

  (7,104)

Net cash inflow from financing activities

  112,803

  91,852

 

  131,642

  100,459

Net (decrease)/increase in cash and cash equivalents

  (1,905)

  1,943

 

  32,719

  21,239

Cash and cash equivalents at beginning of the period

  25,296

  19,458

 

  25,296

  19,458

Effect of exchange rate fluctuations on cash held

  (3,796)

  (5,470)

 

  (5,818)

  1,397

Cash and cash equivalents at end of the period

  19,595

  15,931

 

  52,197

  42,094

             

 

ADJUSTED CONSOLIDATED CASH FLOW STATEMENT

 

 

 

 

 

 

 

 

Unaudited six months

ended

 30 Sep 2019

Unaudited six months

ended

 30 Sep 2019

 

Twelve months ended

31 Mar 2020

Twelve months ended

31 Mar 2020

 

$m

£m

 

$m

£m

Adjusted EBITDA

37.2

30.4

 

59.5

48.1

Movements in working capital

(139.8)

(110.7)

 

(5.3)

(7.5)

Adjusted cash (used by)/generated from operations

(102.6)

(80.3)

 

54.2

40.6

Adjusting items

(1.9)

(1.6 )

 

(16.6)

(13.1)

Cash (used by)/generated from operations

(104.5)

(81.9)

 

37.6

27.5

Capital expenditure (net of disposals of property, plant and equipment)

(5.1)

(4.1)

 

(13.7)

(10.7)

Business acquired (including cash on acquisition)

-

-

 

(112.3)

(87.7)

Tax paid

(3.0)

(2.3)

 

(6.0)

(4.7)

Interest paid

(2.1)

(1.7)

 

(5.1)

(4.0)

Payments of lease liabilities

(3.9)

(3.1)

 

(8.4)

(6.6)

Dividends paid (including those paid to non controlling interests)

(5.9)

(4.7)

 

(9.0)

(7.1)

Proceeds from issue of share capital

-

-

 

152.5

116.9

FX and other

(3.8)

(5.5)

 

(5.4)

1.6

Movement in net (debt)/cash

(128.3)

(103.3)

 

30.2

25.2

Opening net cash

22.2

17.1

 

22.2

17.1

Closing net (debt)/cash

(106.1)

(86.2)

 

52.4

42.3

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 

 

 

 

 

 

 

Unaudited six months

 ended

30 Sep 2019

Unaudited six months

 ended

 30 Sep 2019

 

Twelve

months

 ended

31 Mar 2020

Twelve months ended

31 Mar 2020

 

 

$000

£000

 

$000

£000

 

Profit for the period

15,923

13,303

 

17,403

14,810

 

Other comprehensive income:

 

 

 

 

 

 

Exchange difference on translation of foreign operations (net of tax)

(4,031)

860

 

3,112

5,450

 

Recycling translation reserves on disposal of subsidiary

-

-

 

42

34

 

Transfer to profit and loss on maturing cash flow hedges (net of tax)

(490)

(377)

 

(490)

(377)

 

Net unrealised (loss)/gain on cash flow hedges (net of tax)

(64)

(67)

 

657

517

 

Other comprehensive income for the period, net of tax items which may be reclassified to profit and loss in subsequent periods

(4,585)

 

416

 

 

3,321

5,624

 

Total comprehensive income for the year, net of tax

11,338

13,719

 

20,724

20,434

 

Attributable to:

 

 

 

 

 

 

Owners of the Parent Company

10,860

13,123

 

20,372

19,976

 

Non-controlling interests

478

596

 

352

458

 

 

11,338

13,719

 

20,724

20,434

 

                   



CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

SIX MONTHS ENDED 30 SEPTEMBER 2019 - US dollar

 

 

 

 

 

 

 

 

 

 

 

Attributable to the owners of the Parent Company

 

 

 

 

 

Share

 

 

 

 

 

 

 

 

 

premium

 

 

 

 

 

 

 

 

 

and capital

 

 

 

 

 

Non-

 

 

Share

redemption

Merger

Hedging

Translation

Retained

Shareholders'

controlling

 

 

capital

reserve

reserve

reserve

reserve

earnings

equity

interests

Total

 

$000

$000

$000

$000

$000

$000

$000

$000

$000

At 31 March 2019

5,093

74,962

42,119

153

(8,133)

108,763

222,957

5,266

228,223

Impact of adopting IFRS 16

-

-

-

-

(2,427)

(2,427)

(572)

(2,999)

Restated equity at 31 March 2019

5,093

74,962

42,119

153

(8,133)

106,336

220,530

4,694

225,224

Profit for the year

-

-

-

-

-

15,297

15,297

626

15,923

Other comprehensive income

-

-

-

(554)

(3,883)

-

(4,437)

(148)

(4,585)

Total comprehensive income for the year

-

-

-

(554)

(3,883)

15,297

10,860

478

11,338

Transactions with owners in their capacity as owners

 

 

 

 

 

 

 

 

 

Equity-settled share-based payments

-

-

-

-

-

1,491

1,491

-

1,491

Tax on equity-settled share-based payments

-

-

-

-

-

314

314

-

314

Recognition of non-controlling interests

-

-

-

-

-

-

-

121

121

Options exercised

44

-

-

-

-

(44)

-

-

-

Equity dividends paid

-

-

-

-

-

(5,868)

(5,868)

-

(5,868)

Exchange differences on opening balances

(4,037)

(2,268)

-

-

-

(6,579)

-

(6,579)

At 30 September 2019

4,863

70,925

39,851

(401)

(12,016)

117,526

220,748

5,293

226,041

                             

 

SIX MONTHS ENDED 30 SEPTEMBER 2019 - Sterling

 

 

 

 

 

 

 

 

 

 

 

Attributable to the owners of the Parent Company

 

 

 

 

 

Share

 

 

 

 

 

 

 

 

 

premium

 

 

 

 

 

 

 

 

 

and capital

 

 

 

 

 

Non-

 

 

Share

redemption

Merger

Hedging

Translation

Retained.

Shareholders'

controlling

 

 

capital

reserve

reserve

reserve

reserve

earnings

equity

interests

Total

 

£000

£000

£000

£000

£000

£000

£000

£000

£000

At 31 March 2019

3,918

57,663

32,399

118

1,607

75,801

171,506

4,051

175,557

Impact of adopting IFRS 16

-

-

-

-

-

(1,867)

(1,867)

(440)

(2,307)

Restated equity at 31 March 2019

3,918

57,663

32,399

118

1,607

73,934

169,639

3,611

173,250

Profit for the year

-

-

-

-

-

12,799

12,799

504

13,303

Other comprehensive income

-

-

-

(444)

768

-

324

92

416

Total comprehensive income for the year

-

-

-

 

(444)

768

12,799

13,123

596

13,719

Transactions with owners in their capacity as owners

 

 

 

 

 

 

 

 

 

Equity-settled share-based payments

-

-

-

-

-

1,180

1,180

-

1,180

Tax on equity-settled share-based payments

-

-

-

-

-

255

255

-

255

Recognition of non-controlling interests

-

-

-

-

-

-

-

98

98

Options exercised

36

-

-

-

-

(36)

-

-

-

Equity dividends paid

-

-

-

-

-

(4,732)

(4,732)

-

(4,732)

At 30 September 2019

3,954

57,663

32,399

(326)

2,375

83,400

179,465

4,305

183,770

                       

 

YEAR ENDED 31 MARCH 2020 - US dollar

 

 

 

 

 

 

 

 

 

 

 

Attributable to the owners of the Parent Company

 

 

 

 

 

Share

 

 

 

 

 

 

 

 

 

premium

 

 

 

 

 

 

 

 

 

and capital

 

 

 

 

 

Non-

 

 

Share

redemption

Merger

Hedging

Translation

Retained

Shareholders'

controlling

 

 

capital

reserve

reserve

reserve

reserve

earnings

equity

interests

Total

 

$000

$000

$000

$000

$000

$000

$000

$000

$000

At 31 March 2019

5,093

74,962

42,119

153

(8,133)

108,763

222,957

5,266

228,223

Impact of adopting IFRS 16

-

-

-

-

-

(2,427)

(2,427)

(572)

(2,999)

Restated equity at 1 April 2019

5,093

74,962

42,119

153

(8,133)

106,336

220,530

4,694

225,224

Profit for the year

-

-

-

-

-

16,461

16,461

942

17,403

Other comprehensive income

-

-

-

167

3,744

-

3,911

(590)

3,321

Total comprehensive income for the year

-

-

-

167

3,744

16,461

20,372

352

20,724

Transactions with owners in their capacity as owners

 

 

 

 

 

 

 

 

 

Equity-settled share-based payments

-

-

-

-

-

(287)

(287)

-

(287)

Tax on equity-settled share-based payments

-

-

-

-

-

213

213

-

213

Derecognition of non-controlling interests

-

-

-

-

-

-

-

(403)

(403)

Shares issued

1,117

150,145

-

-

-

-

151,262

-

151,262

Options exercised

45

-

-

-

-

(45)

-

-

-

Equity dividends paid

-

-

-

-

-

(8,975)

(8,975)

-

(8,975)

Exchange differences on opening balances

(281)

(9,690)

(1,944)

-

-

-

(11,915)

-

(11,915)

At 31 March 2020

5,974

215,417

40,175

320

(4,389)

113,703

371,200

4,643

375,843

                       

 

YEAR ENDED 31 MARCH 2020 - Sterling

 

 

 

 

 

 

 

 

 

 

 

Attributable to the owners of the Parent Company

 

 

 

 

 

Share

 

 

 

 

 

 

 

 

 

premium

 

 

 

 

 

 

 

 

 

and capital

 

 

 

 

 

Non-

 

 

Share

redemption

Merger

Hedging

Translation

Retained

Shareholders'

controlling

 

 

capital

reserve

reserve

reserve

reserve

earnings

equity

interests

Total

 

£000

£000

£000

£000

£000

£000

£000

£000

£000

At 31 March 2019

3,918

57,663

32,399

118

1,607

75,801

171,506

4,051

175,557

Impact of adopting IFRS 16

-

-

-

-

-

(1,867)

(1,867)

(440)

(2,307)

Restated equity at 1 April 2019

3,918

57,663