Half Yearly Report

30 July 2014

4imprint Group plc

Half year results for the period ended 28 June 2014

4imprint Group plc (the 'Group'), a leading international direct marketer of promotional products, announces today its half year results for the period ended 28 June 2014

Financial highlights

* Underlying is before share option related charges, defined benefit pension charges and exceptional items.

** Based on translation of North American results to Sterling at H1 2013 average US$ rate: 1.54 (H1 2014: 1.67).

† Restated to include delivery receipts and other income in revenue and to classify SPS as a discontinued operation.

Operational highlights

· Strong organic growth, revenue and profit ahead of expectations

· Continued organic growth in North America - US$ revenue 23% ahead of H1 2013

- More than 360,000 orders received, 21% ahead of H1 2013

- Customer acquisition and re-order rates both strong

· UK Direct Marketing revenue 22% ahead of H1 2013

· Robust financial position, net cash £26.13m, after SPS net disposal proceeds of £5.93m

· Ongoing pension deficit risk reduction project to insure additional pension liabilities

John Poulter, Executive Chairman, commenting on the results, said:

"The Group delivered an exceptionally strong first half as a result of continued market share growth. Indications for the second half year are that good performance, consistent with our stated strategic growth objectives will continue."

- Ends -

There will be a presentation to discuss the results at 8 a.m. this morning at Espirito Santo's offices (10 Paternoster Square, London EC4M 7LS). If you wish to attend, please contact Ollie Hoare, on 07824 142725.

For further information, please contact:

4imprint Group

4imprint is a leading direct marketer of promotional products in the USA, Canada, the UK and Ireland. The direct marketing business is headquartered in Oshkosh, Wisconsin, USA and 96% of its revenue is generated in the USA and Canada. The business serves UK and Irish customers out of its base in Manchester, England.

The strategy is to continue to drive organic growth, gaining market share in the large ($24bn) and highly fragmented US and Canadian markets as well as continuing to drive growth in its smaller UK based business.

4imprint sells an extensive range of customised products to individuals in businesses and organisations of all sizes, processing hundreds of thousands of individually customised orders each year. Organic growth is delivered using a variety of increasingly sophisticated bespoke online and offline marketing techniques backed by proprietary technology. 4imprint provides an easy and convenient order process, allowing customers to purchase in a simple and secure way online or via telephone, with the assistance of a highly skilled customer service team and backed by its service level guarantees. Thousands of products are available to millions of potential customers and items are imprinted and shipped directly to 4imprint's customers from the suppliers.

4imprint has grown significantly ahead of the market, consistently gaining market share. Growth has been achieved organically, driven by revenue investment in marketing, technology and people. Even after this investment the business generates substantial operating cash inflow, driven by low fixed and working capital requirements.

Chairman's statement

The Group delivered an exceptionally strong first half as a result of continued market share growth.

Our well established data and analytics-based marketing processes were reinforced by the expansion of existing and introduction of new online marketing techniques. Combined, these generated an encouraging growth in orders and revenue. Strong profit and cash performance followed.

In the half year, the Group took a further step in its long term strategy to reduce risk in its legacy pension scheme and concluded a Flexible Early Retirement Offer to eligible members. In addition the Group has embarked on a larger project to use its cash resources to procure a buy-out (initially via a buy-in) of the substantial existing liabilities for pensions in payment. On conclusion, this would result in a much reduced risk exposure with significant reduction in both the deficit and routine contributions.

Outlook

Indications for the second half year are that good performance, consistent with our stated strategic growth objectives will continue.

30 July 2014

Operating and financial review

Operating review - continuing operations

* Underlying is before share option related charges, defined benefit pension charges and exceptional items.

† Restated to classify SPS as a discontinued operation.

The Group produced a strong revenue and underlying operating profit performance despite an adverse Sterling/US dollar movement in the period. Continued organic growth delivered Group revenue for the first half of the year 14% ahead of H1 2013 (23% at constant currency) and Group underlying operating profit increased by 36% (49% at constant currency).

North America

Revenue in US dollars increased 23% over 2013 to $185.10m, representing another period of strong organic growth. Industry sources estimate that over this reporting period the North American promotional products market as a whole expanded by circa 7%, indicating that most of 4imprint's growth derives from market share gains in this highly fragmented market.

New customer activity in the first half has been particularly robust. Nearly 87,000 new customers were acquired in the period, resulting in an increase in new customer orders of 21%. This growth was driven by further expansion of online marketing initiatives identified in the second half of 2013 and supported by the implementation of sophisticated bid management software for pay-per-click advertising. This effort was underpinned by expanded print catalogue circulation which remains a key part of the prospect marketing mix.

Orders from existing customers increased by 21% year-on-year and represent 65% of the total orders received. The retention metrics in the business remain consistent, even as the number of new customers acquired has increased. Deeper analysis of the customer file and information gathering on customer preferences has helped with the targeting and effectiveness of the popular Blue Box™ sample mailings. In addition, many of the online marketing programmes the business engages in are also effective tools in retaining existing customers.

Operating profit in US dollars increased 41% over prior year. Thousands of products are offered to customers, and with such a wide product base gross margins have remained stable. Marketing spend increased by 23% to drive organic revenue growth and other overheads remain well controlled.

The business is highly cash generative and US$20.18m of pre tax operating cash was generated in the first half of the year.

UK and Ireland

Revenue increased by 22% over the same prior year period as the business focuses on growing the customer file.

New customer orders in the period increased by 37%, driven by essentially the same marketing techniques employed in the North American business, as well as a programme to expand the product range. Retention rates were also consistent, with existing customer orders increasing by 23% over prior year.

Head office costs

Head office costs comprised Board costs, UK corporate office and other plc related costs.

Financial review

* Underlying is before share option related charges, defined benefit pension charges and exceptional items.

† Restated to classify SPS as a discontinued operation.

Underlying profit before tax from continuing operations was £5.85m (H1 2013: £4.28m), an increase of 37%. At constant currency the increase would be 49%.

Exchange

The average US dollar rate for the half year was $1.67 (H1 2013: $1.54; FY 2013: $1.56). The closing US dollar rate at 28 June 2014 was $1.70 (29 June 2013: $1.52; FY 2013: $1.65).

The movement in the half year average exchange rate decreased revenue by £8.94m and operating profit by £0.55m on translation of revenue and profit into Sterling. The movement in the closing rates reduced US dollar denominated overseas subsidiary assets by £0.41m.

Share option charges

The Group charged £0.31m (H1 2013: £0.38m) in respect of IFRS 2, 'Share-based payments'. This related to UK and US SAYE schemes, together with the Performance Share Plan. The decreased charge was due to the vesting and exercise of 1.4 million shares in May 2014, under the Performance Share Plan.

Current options outstanding are 140,000 shares under the Performance Share Plan and 225,000 SAYE awards.

Net finance income

Net finance income in the half year was £0.05m (H1 2013: £0.02m), reflecting the Group's cash balance invested in short term deposits.

Taxation

The tax charge for continuing operations for the half year was £1.27m at a rate of 29% (H1 2013: 29%; FY 2013: 27%), which represents the expected tax rate for the full year 2014. The charge related to taxation payable on profit earned in USA, together with the unwinding of the UK deferred tax asset, principally in relation to payments into the UK defined benefit pension scheme.

The tax charge for underlying profit from continuing operations was 27% (H1 2013: 27%; FY 2013: 25%).

Earnings per share

Underlying basic earnings per share from continuing operations was 15.99p (H1 2013: 12.02p), an increase of 33%. At constant currency, underlying EPS from continuing operations would have been 1.45p higher.

Basic earnings per share from continuing operations was 11.55p (H1 2013: 8.62p). Including the impact of the discontinued operation basic earnings per share was 11.70p (H1 2013: 9.81p).

Dividends

The Board has declared an interim dividend of 6.20p (H1 2013: 5.60p), an increase of 11%. The dividend will be paid on 12 September 2014 at a cash cost of £1.73m.

Discontinued operation

On 10 February 2014, the Group completed the sale of SPS, its UK based manufacturing operation, to the SPS senior management, backed by Maven Capital Partners, a private equity firm. The consideration was £7.25m (increased by £0.24m relating to the amount of working capital, debt and cash at completion). Net cash proceeds from disposal were £5.93m after costs, including a bonus payable to the SPS senior management on completion of the disposal.

Up to the date of disposal SPS made an operating loss of £0.06m and profit on disposal of the business was £0.10m (representing release of a provision made for estimated loss on disposal in 2013).

In accordance with IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations', SPS has been presented as a discontinued operation in 2014 and 2013.

Cash flow

The Group had net cash of £26.13m at 28 June 2014, an increase of £10.37m from the prior year end. Net cash at 28 June 2014 was represented by:

The Group has US$13.0m of working capital facilities with its principal US bank, JPMorgan Chase. The interest rate is US$ LIBOR plus 1.5%, and the facilities expire on 31 August 2015.

Cash flow is summarised as follows:

The Group delivered a strong cash flow performance in the first half of 2014, generating £7.59m of free cash flow. The Direct Marketing business cash generation profile remained strong and £12.17m of pre tax operating cash flow was delivered in the first half of 2014, benefiting from a £5.42m working capital inflow which is due to timing.

Cash inflow in respect of the sale of SPS and trading to the date of disposal was £5.80m and the 2013 final dividend totalling £3.02m was paid in May 2014.

Defined benefit pension scheme

The Group sponsors a legacy UK defined benefit pension scheme, closed to new members and future accruals. The Scheme has 1,151 pensioners (of which 411 had insured benefits) and 535 deferred pensioners.

At 28 June 2014, the deficit of the Scheme on an IAS 19 basis increased to £18.74m (FY 2013: £16.61m). On an IAS 19 basis liabilities were £77.20m and assets were £58.46m, a further £18.26m of pensioner liabilities were insured by a buy-in policy.

* Principally due to a decrease in the discount rate from 4.48% to 4.04%.

In line with its strategy of continuing to reduce the risk of the legacy defined benefit pension scheme to the Group, in H1 2014 the Group completed a flexible early retirement offer which was made to eligible deferred pensioners. 41 deferred pensioners accepted the offer and the total liability transferred was £5.23m, this was a take up rate of 27% by number of people and 45% by value. The total cash cost of the offer to the Company, including fees, was £0.49m and the settlement charge (non-cash) on transfer was £0.29m.

The Group is pursuing further risk reduction in the pension scheme and has embarked on a project to procure a buy-out (initially via a buy-in) of the substantial liabilities for pensions in payment. The cash cost of this exercise to the Company, based on June 2014 market conditions, would be circa £22m spread over 2014 and 2015.

If completed, around three quarters of the overall liabilities would be on an insured basis. Based on June 2014 market conditions, this could be expected to reduce the deficit by approximately half and to permit a reduction in routine contributions.

Balance sheet and Shareholders' funds

Net assets at 28 June 2014 were £14.32m, a decrease of £2.46m:

Shareholders' funds decreased as profit generated in the period of £3.14m was offset by actuarial losses on the pension scheme net of tax of £(2.47)m, dividends paid £(3.02)m and other movements £(0.11)m.

Treasury Policy

Treasury policy is to manage centrally the financial requirements of the Group. The Group operates cash pooling arrangements separately for its North American operations and its UK operations. The Group enters into forward contracts to buy or sell currency relating to specific receivables and payables as well as remittances from its overseas subsidiaries. The Group holds the majority of its cash on deposit with its principal UK banker and working capital requirements of the North American business are funded by a facility with its principal US banker.

Critical accounting policies

Critical accounting policies are those that require significant judgements or estimates and potentially result in materially different results under different assumptions or conditions. It is considered that the Group's critical accounting policy is in respect of pensions.

Risks

The Group may be affected by a number of risks. These risks have not changed since the year end and are detailed on pages 11 and 12 of the Group's Annual Report 2013, a copy of which is available on the Group's website: http://investors.4imprint.com. The risks include economic and market risks, technological risks and operational risks.

Kevin Lyons-Tarr Gillian Davies

Executive Director Group Finance Director

30 July 2014

Condensed consolidated income statement (unaudited)

† See note 6

Condensed consolidated statement of comprehensive income (unaudited)

Condensed consolidated balance sheet (unaudited)

Condensed consolidated statement of changes in Shareholders' equity (unaudited)

Condensed consolidated cash flow statement (unaudited)

Notes to the interim financial statements

1 General information

4imprint Group plc is a public limited company incorporated and domiciled in the UK and listed on the London Stock Exchange. Its registered office is 7/8 Market Place, London, W1W 8AG.

The condensed consolidated interim financial statements were authorised for issue in accordance with a resolution of the Directors on 30 July 2014.

These condensed consolidated interim financial statements do not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the period ended 28 December 2013 were approved by the Board of Directors on 5 March 2014 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006.

The financial information contained in this report has neither been audited nor reviewed, pursuant to Auditing Practices Board guidance on Review of Interim Financial Information, by the auditors.

2 Basis of preparation

These condensed consolidated interim financial statements for the half year ended 28 June 2014 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and IAS 34 'Interim Financial Reporting', as adopted by the European Union, and should be read in conjunction with the Group's financial statements for the period ended 28 December 2013, which were prepared in accordance with International Financial Reporting Standards as adopted by the European Union.

After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue to operate for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Interim Report and financial statements.

3 Accounting policies

The accounting policies applied in these condensed consolidated interim financial statements are consistent with those of the annual financial statements for the period ended 28 December 2013, as described in those annual financial statements. New accounting standards applicable for the first time in this reporting period have no impact on the Group's results.

The tax charge for the interim period is accrued based on the best estimate of the tax charge for the full financial year.

4 Estimates

The preparation of the interim financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experiences and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

5 Financial risk management

The Group's activities expose it to a variety of financial risks: currency risk; credit risk; liquidity risk; and capital risk.

The condensed consolidated interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements; they should be read in conjunction with the Group's annual financial statements as at 28 December 2013. There have been no changes in any risk management policies since this date.

6 Restatement

The 2013 half year income statements and notes have been restated to reclassify SPS as a discontinued operation. The reclassification has no net impact on the profit for the period. The amounts reclassified as discontinued operations are shown by line item in note 15. Additionally revenue has been restated to include income from delivery receipts and other income which has been moved from operating expenses, where it was offset against the costs of these activities.

7 Segmental analysis

The chief operating decision maker has been identified as the Board.

The operations of the Group are reported in one primary operating segment.

8 Exceptional items

The pension costs related to a flexible early retirement offer (FERO) undertaken in the first half of the year and preliminary work into further risk reduction exercises. The costs include costs paid by the Company of £188,000 (FY 2013: £178,000), a £286,000 IAS 19 settlement charge in respect of the FERO and £137,000 (FY 2013: £76,000) incurred and paid by the defined benefit pension scheme.

9 Taxation

The taxation charge for continuing operations for the period to 28 June 2014 was 29%, the estimated rate for the full year (H1 2013: 29%; FY 2013: 27%). Tax paid in the period was £106,000 (H1 2013: £nil; FY 2013: £1,735,000).

10 Earnings per share

Basic, underlying and diluted

The basic, underlying and diluted earnings per share are calculated based on the following data:

The basic weighted average number of shares excludes shares held in the employee share trust. The effect of this is to reduce the average by 247,152 (H1 2013: 265,183; FY 2013: 272,936).

The interim dividend for 2014 of 6.20p per ordinary share (interim 2013: 5.60p; final 2013: 11.40p) will be paid on 12 September 2014 to ordinary Shareholders on the register at the close of business on 15 August 2014.

12 Employee pension schemes

The Group operates defined contribution pension plans for the majority of its UK and US employees. The regular contributions are charged to the income statement as they are incurred.

The Group also sponsors a legacy UK defined benefit pension Scheme which is closed to new members and future accruals. The funds of the Scheme are administered by a trustee company and are independent of the Group's finances.

The last full actuarial valuation was carried out by a qualified independent actuary as at 5 April 2013 and this has been updated on an approximate basis to 28 June 2014 on an IAS 19 basis. There have been no changes in the valuation methodology adopted for this period's disclosures compared to previous periods' disclosure.

The amounts recognised in the income statement are:

The principal assumptions applied by the actuaries at 28 June 2014 were:

The mortality assumptions adopted at 28 June 2014 imply the following life expectancies at age 65:

Analysis of the movement in the balance sheet liability:

13 Analysis of net cash

14 Cash generated from operations

Cash flow in respect of the discontinued operation included above was £(126,000) (H1 2013: £(160,000); FY 2013: £994,000).

15 Discontinued operation

On 10 February 2014, the Group completed the sale of SPS to the SPS senior management team, backed by Maven Capital Partners. The consideration was £7.25m (subject to post completion adjustments relating to the levels of working capital, debt and cash at completion).

The profit/(loss) from the discontinued operation was as follows:

* To date of sale.

The loss on remeasurement of SPS assets was calculated based on the best estimates of the adjusted consideration net of costs of disposal and expected net assets of the disposal group at the time of completion.

Included within the cash flow statement are the following cash flows from discontinued operations:

The £1,250,000 consideration received in 2013 related to deferred consideration in respect of the sale of the Brand Addition business in 2012.

16 Share capital

During the period 1,220,583 shares, with a nominal value of £470,000, were issued to the 4imprint Employee Benefit Trust for a consideration of £470,000 to satisfy exercises of share options under the Group share schemes (H1 2013: 168,281 shares issued; FY 2013: 168,281 shares issued). 1,422,000 options were exercised in the period and transferred from the Trust.

17 Capital commitments

The Group had no capital commitments contracted but not provided for in these financial statements

(29 June 2013: £64,000; 28 December 2013: £229,000).

18 Related party transactions

The Group did not participate in any related party transactions that require disclosure.

Statement of Directors' responsibilities

The Directors confirm that, to the best of their knowledge, these condensed consolidated interim financial statements have been prepared in accordance with IAS 34 as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7 and 4.2.8, namely:

· An indication of the important events that have occurred during the first half year and their impact on the condensed consolidated interim financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year.

· Material related-party transactions in the first half year and any material changes in the related-party transactions described in the last annual report.

The Directors of 4imprint Group plc are as listed in the Group's Annual Report for 28 December 2013. A list of current Directors of 4imprint Group plc is also maintained on the Group website: http://investors.4imprint.com.

By order of the Board

30 July 2014