12th Apr 2005 07:00
St. Ives PLC12 April 2005 EMBARGOED FOR RELEASE 07:00 12 APRIL 2005 12 April 2005 ST IVES plc Interim Results for the 26 weeks ended 28 January 2005 St Ives plc, the UK's leading printing group, announces interim results for the26 weeks ended 28 January 2005. Key Points • Turnover £210.8m (2004: £208.8m)• Pre tax profit £19.8m (2004: loss £5.0m)• Underlying* pre tax profit £19.5m (2004: £17.1m)• Basic earnings per share 12.96p (2004: loss 10.58p)• Underlying* earnings per share 12.59p (2004: 10.81p)• Interim dividend maintained at 5.00p per share *pre exceptional items, goodwill amortisation and impairment Commenting on the results, Chairman, Miles Emley said: "The overall improvement in the underlying result was attributable torationalisation measures, a continued concentration on products with moredemanding requirements and an initial contribution from SP Group, acquired inSeptember 2004. "We will not maintain capacity or pursue market share for its own sake andremain committed to creating value for our shareholders. To this end, we willsharpen our focus on shorter-run, specialist work where short lead times andquick reprints, together with complex distribution, logistics and fulfilment,help to reduce our customers' costs while enabling us to make a satisfactoryreturn." For further information contact: St Ives plcMiles Emley, ChairmanBrian Edwards, Managing Director 020 7928 8844 SmithfieldJohn AntcliffeAnna Rainbow 020 7360 4900 Results The interim results for the 26 weeks ended 28 January 2005 show turnover of£210.8 million (2004 - £208.8 million) and profit before taxation, exceptionalitems and goodwill amortisation of £19.5 million (2004 - £17.1 million). Theoverall improvement in the underlying result was attributable to rationalisationmeasures undertaken last year, especially in the USA, as well as the initialcontribution from SP Group, which we acquired in mid-September 2004. Profitbefore taxation was £19.8 million (2004 - a loss of £5.0 million). Earnings pershare before exceptional items and goodwill amortisation were 12.59 pence (2004- 10.81 pence). Basic earnings per share were 12.96 pence (2004 - a loss of10.58 pence). Dividend An interim dividend of 5.00 pence (2004 - 5.00 pence) per share will be paid on20 May 2005 to shareholders on the register on 22 April 2005. Trading Conditions As indicated in the preliminary announcement of the Group's results for lastyear, many of our markets continued to experience fluctuating demand,deflationary pricing and significant over-capacity. These conditions wereespecially prevalent in markets for non-time-sensitive, commodity and longer-runproducts. Corporate finance markets remained quiet. Demand for books wasmaintained. Books Sales to book publishers were at similar levels to those in the previous year.We again produced a high proportion of best-selling titles, because of theresponsive service we are able to offer customers, and have increased sales ofancillary added-value services. Principally due to the strength of sterlingagainst the US dollar, exports were lower. Direct Response, Commercial and Point-of-Sale UK Weak demand from a broad range of customers resulted in reduced volumes ofmailings and personalised products, as well as other forms of commercial print.Price competition in the market for longer-run, commodity products wasespecially intense, because of continuing over-capacity in web offset. As aresult of these factors, it proved difficult to achieve satisfactory utilisationof our direct mail and commercial facilities at acceptable prices, and financialreturns were below those generated in the first half of the previous year. SP Group, which we acquired in mid-September and provides point-of-sale productsand services to retailers and international brand companies, performed in linewith expectations. In the four and a half months since its acquisition, itcontributed sales of £15.3 million, more than offsetting the reduction in othercommercial sales to the UK market, and operating profit before goodwillamortisation of £1.9 million. Germany Despite the absence of any improvement in demand and continued weak pricing inits markets, Johler Druck, our German subsidiary, achieved an increase in sales.Greater efficiencies and cost reductions led to a further reduction in thelevel of losses. We disposed of our interest in Johler Druck on 5 April 2005. USA In the USA, sales were reduced following the closure of our Rochester facilityin the second half of the previous financial year. Despite continuing pricingpressure, the benefits of the rationalisation were evident in improvedutilisation and a more suitable mix of work. Returns improved as a result. Financial There was no significant uplift in levels of activity in corporate financialmarkets in either the UK or USA. Despite further price competition, sales offund and company Annual Reports were higher than in the previous year, albeitdemand for these products is mainly in the second half of our financial year.As a result of earlier cost reduction initiatives, losses in the UK werereduced. Magazines UK Sales of magazines were at similar levels to the prior year. However continuingover-capacity led to further pressure on pricing and under-utilisation,especially of capacity more suited to longer-run products. USA Market conditions in the USA were similar to those in the UK. Our own sales andutilisation improved, however, leading to a better financial result. Multimedia Our sales to this market grew, despite continued pricing pressure. Sales ofspecial packaging products for both CD and DVD increased, while printing forstandard CD products reduced further. Improved sales and utilisation at ourfactory at Uden in Holland led to a better result there. Disposal We disposed of the whole of our interest in Johler Druck on 5 April 2005 for acash consideration of approximately £1.5 million, as its business no longerformed part of our strategic focus. The net asset value of Johler at 30 July2004 was £9.4 million and in the financial year ended on that date it made anoperating loss (before interest) of £935,000. In addition to the loss arisingon disposal at below net asset value, an amount of £5.9 million will be chargedas an exceptional item in respect of goodwill previously written off to reservesand now required to be written back and written off to the profit and lossaccount. Capacity and Investment In the light of the continuing over-capacity which exists in many of ourmarkets, we have been keeping the cost base of the Group under continuousreview. As part of the review, shortly after the end of the period we announcedthe proposed closure of our Caerphilly factory with the expected loss of some210 jobs. Consultations with the employees at Caerphilly continue. The closureof our sheetfed facility in Bristol and the cessation of perfect binding inLeeds both took effect during March. As previously announced, the costs ofthese and other measures are estimated to amount to £13 million (of which around£5 million is in cash and about £1 million represents the write-down of goodwillpreviously charged to reserves) and will be charged as an exceptional item inthe second half of the financial year. We will shortly be commissioning more productive replacement presses in ourfactories at Peterborough and Roche. The purpose of this investment, as withthe recent installation of a high speed stitching line at Peterborough, is toreduce our unit cost of production, to increase productivity and to enhance theflexibility and responsiveness of the service which we offer. We will continueto invest to reduce cost and improve service, but not to maintain capacity orpursue market share for its own sake where the risk and returns are noteconomic. Outlook Demand remains steady in the markets for books and for point-of-sale productsand services. There is no sign of any change in conditions in the market forcorporate financial print, where capital market activity which requires printeddocumentation remains at a low level. Sales of Annual Reports for mutual fundsand listed companies have been assisted by increased paginations as a result ofgreater disclosure requirements, although pricing remains competitive. Marketsfor music and multimedia products provide limited future visibility, butcontinue to be price competitive and over-supplied. Both in the UK and the USA,markets for magazine and commercial printing continue to experienceover-capacity and sometimes uneconomic pricing, especially for longer-run,non-time-sensitive products. Consequently, as already announced, it is unlikelythat the profit before exceptional items and goodwill amortisation for thecurrent year will exceed the result achieved in 2004. We will sharpen our focus on shorter-run, specialist work where short lead timesand quick reprints, together with complex distribution, logistics andfulfilment, help to reduce our customers' costs while enabling us to make asatisfactory return. Our cost base will be kept under review; and we will investfurther, where the returns justify it, to improve productivity, reduce our unitcost of production and enhance the service that we offer our customers. CONSOLIDATED PROFIT AND LOSS ACCOUNT 26 weeks to 28 January 2005 ____________ ____________ ____________ Before Exceptional exceptional items and 26 weeks 52 weeks items and goodwill to to goodwill amortisation 30 January 30 July amortisation (note 6) Total 2004 2004 ____________ ____________ ____________ _____________ _____________ £'000 £'000 £'000 £'000 £'000Turnover (note 2) _____________ ____________ ____________ _____________ _____________ Existing activities | 195,550 | | -| | 195,550 | | 208,828 | | 410,304 | Acquired activities | 15,265 | | -| | 15,265 | | - | | - | |_____________| |____________| |____________| |____________ | |_____________| 210,815 - 210,815 208,828 410,304Cost of sales (155,785) 354 (155,431) (158,603) (306,196) ____________ ____________ ____________ _____________ _____________Gross profit 55,030 354 55,384 50,225 104,108Sales and distribution costs (12,655) - (12,655) (13,363) (26,005)Administrative expenses _____________ ____________ _____________ _____________ _____________ Goodwill amortisation | | | | | | | | | - existing activities | - | | (707)| (707)| | (1,104)| | (1,810)| - acquired activities | - | | (582)| (582)| | - | | - | Goodwill impairment | - | | - | - | | (13,000)| | (13,000)| Exceptional items | - | | 613 | 613 | | (3,429)| | (2,913)| Other administrative | | | | | | | | | expenses | (23,262)| | - | (23,262)| | (23,451)| | (45,578)| |_____________| |____________| ____________| |_____________| |____________| (23,262) (676) (23,938) (40,984) (63,301)Other operating income/ (costs) 310 56 366 (1,374) (1,098)Operating profit/(loss) (note 2) ____________ ___________ ____________ _____________ _____________ Existing activities | 17,507 | | 316 | | 17,823 | | (5,496) | | 13,704 | Acquired activities | 1,916 | | (582)| | 1,334 | | - | | - | |____________| |___________| |____________| |____________ | |_____________| 19,423 (266) 19,157 (5,496) 13,704 Profit on disposal of fixed assets - 626 626 - - Interest receivable 373 - 373 728 1,645Interest payable (322) - (322) (213) (450) ____________ ____________ ____________ _____________ _____________Profit/(loss) on ordinary activities before taxation 19,474 360 19,834 (4,981) 14,899Tax on profit on ordinary activities (note 3) (6,524) 16 (6,508) (5,892) (11,899) ____________ ____________ ____________ _____________ _____________Profit/(loss) on ordinary activities after taxation 12,950 376 13,326 (10,873) 3,000Equity dividends (note 4) (5,155) - (5,155) (5,145) (17,637) ____________ ____________ ____________ _____________ _____________Retained profit/(loss) for the financial period transferred to/(from) reserves 7,795 376 8,171 (16,018) (14,637) ============ ============ ============ ============= ============= Basic earnings/(loss) per share (note 5) 12.96p (10.58p) 2.92p ============ ============= ============= Diluted earnings/(loss) per share (note 5) 12.95p (10.57p) 2.92p ============ ============= ============= Earnings per share before exceptional items and goodwill amortisation (note 5) 12.59p 10.81p 25.08p ============= ============= ============= Equity dividend per ordinary share 5.00p 5.00p 17.15p ============ ============= ============= Comparative figures for the twenty six weeks to 30 January 2004 and fifty twoweeks to 30 July 2004 include exceptional items as detailed in note 6. All transactions are derived from continuing activities. CONSOLIDATED BALANCE SHEET 28 January 30 January 30 July 2005 2004 2004 ____________ ____________ ____________ £'000 £'000 £'000Fixed assets Intangible assets 52,331 23,520 22,814 Tangible assets 161,089 169,087 163,165 Investments 1 - - ____________ ____________ ____________ 213,421 192,607 185,979 ____________ ____________ ____________ Current assets Stocks 15,514 14,376 11,554 Debtors - amounts falling due within one year 79,661 67,879 67,924 Debtors - amounts falling due after more than one year 22,892 - 22,896 Cash at bank and in hand 10,242 51,234 47,455 ____________ ____________ ____________ 128,309 133,489 149,829 Creditors: amounts falling due within one year (95,867) (85,190) (92,833) ____________ ____________ ____________ Net current assets 32,442 48,299 56,996 ____________ ____________ ____________ Total assets less current liabilities 245,863 240,906 242,975 Creditors: amounts falling due after more than one year (729) (882) (992)Provisions for liabilities and charges (13,889) (19,226) (18,519)Deferred income (506) (908) (706) ____________ ____________ ____________ Net assets 230,739 219,890 222,758 ============ ============ ============ Capital and reserves Called up share capital 10,344 10,329 10,331 Share premium account 46,325 45,852 45,909 Capital redemption reserve 1,238 1,238 1,238 ESOP reserve (1,913) (1,913) (1,913) Profit and loss account 174,745 164,384 167,193 ____________ ____________ ____________ Equity shareholders' funds 230,739 219,890 222,758 ============ ============ ============ This interim statement was approved by the board of directors on 12 April 2005. SUMMARISED CONSOLIDATED CASH FLOW STATEMENT 26 weeks to 26 weeks to 52 weeks to 28 January 30 January 30 July 2005 2004 2004 ____________ ____________ ____________ £'000 £'000 £'000Net cash inflow from operating activities before one-off pension payment 17,935 25,246 65,175 One-off pension payment - - (25,000) ____________ ____________ ____________ Net cash inflow from operating activities 17,935 25,246 40,175 Returns on investments and servicing of finance (14) 503 1,289 Taxation (4,703) (6,968) (12,061) Capital expenditure (8,435) (5,692) (14,935) Acquisitions Purchase of subsidiary undertaking (29,796) - - Net cash acquired with subsidiary undertaking 54 - - Subsequent cash inflow in respect of prior year acquisition - 1,020 1,020 Equity dividends paid (12,499) (12,487) (17,628) ____________ ____________ ____________ Net cash (outflow)/inflow before financing (37,458) 1,622 (2,140) Financing Issue of shares 429 213 272 Decrease in debt and lease financing - (492) (526) ____________ ____________ ____________ (Decrease)/increase in cash (37,029) 1,343 (2,394) ============ ============ ============ NOTES TO THE SUMMARISED CONSOLIDATED CASH FLOW STATEMENT 26 weeks to 26 weeks to 52 weeks to 28 January 30 January 30 July 2005 2004 2004 ____________ ____________ ____________ £'000 £'000 £'000Net cash inflow from operating activities Operating profit/(loss) 19,157 (5,496) 13,704 Depreciation 14,989 16,371 31,769 Goodwill amortisation 1,289 1,104 1,810 Goodwill impairment - 13,000 13,000 (Credit)/charge in respect of long term incentive schemes (634) 316 633 Other non cash movements (1,560) 7,223 8,687 Changes in working capital (12,414) (7,202) (1,977) Other items (2,892) (70) (27,451) ____________ ____________ ____________ 17,935 25,246 40,175 ============ ============ ============ Reconciliation of net cash flow to movement in net (debt)/funds (Decrease)/increase in cash in the period (37,029) 1,343 (2,394) Cash outflow from decrease in debt and lease financing - 492 526 ____________ ____________ ____________ Change in net funds resulting from cash flows (37,029) 1,835 (1,868) Loan notes issued on acquisition of subsidiary (3,450) - - Exchange adjustments 456 1,637 1,597 ____________ ____________ ____________ Movement in net funds in the period (40,023) 3,472 (271) Opening net funds 26,006 26,277 26,277 ____________ ____________ ____________ Closing net (debt)/funds (14,017) 29,749 26,006 ============ ============ ============ Acquisition excluding 30 July cash and Exchange 28 January 2004 Cash flow overdrafts movement 2005 ____________ ____________ ____________ ____________ ____________ £'000 £'000 £'000 £'000 £'000Analysis of net (debt)/funds Cash at bank and in hand 47,455 (37,029) - (184) 10,242 Bank loans due within one year (21,449) - (3,450) 640 (24,259) ____________ ____________ ____________ ____________ ____________ 26,006 (37,029) (3,450) 456 (14,017) ============ ============ ============ ============ ============ STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 26 weeks to 26 weeks to 52 weeks to 28 January 30 January 30 July 2005 2004 2004 ____________ ____________ ____________ £'000 £'000 £'000 Profit/(loss) after taxation 13,326 (10,873) 3,000Exchange differences 15 (4,057) (4,520)Related taxation - (1) 1,573 ____________ ____________ ____________ Total recognised gains and losses relating to the period 13,341 (14,931) 53 ============ ============ ============ MOVEMENTS IN CONSOLIDATED SHAREHOLDERS' FUNDS 26 weeks to 26 weeks to 52 weeks to 28 January 30 January 30 July 2005 2004 2004 ____________ ____________ ____________ £'000 £'000 £'000 Opening shareholders' funds 222,758 239,437 239,437Total recognised gains and losses 13,341 (14,931) 53Equity dividends (5,155) (5,145) (17,637)Issue of ordinary shares 429 213 272Long term incentive schemes (634) 316 633 ____________ ____________ ____________ Closing shareholders' funds 230,739 219,890 222,758 ============ ============ ============ NOTES TO THE FINANCIAL STATEMENTS 1. Basis of preparation The interim statements have been prepared in accordance with the accounting policies set out in the Group's Annual Report and Accounts for 2004. The interim statements are neither audited nor reviewed. The financial information set out in these statements does not comprise statutory accounts for the purposes of Section 240 of the Companies Act 1985. The abridged information for the fifty two weeks to 30 July 2004 has been prepared from the Group's statutory accounts for that period, which have been filed with the Registrar of Companies. The auditors' report on the accounts of the Group for that period was unqualified and did not contain a statement under either Section 237(2) or Section 237(3) of the Companies Act 1985. NOTES TO THE FINANCIAL STATEMENTS continued 2. Analyses of turnover and operating profit The geographical analysis of turnover and operating profit/(loss) by origin is stated below: 26 weeks to 26 weeks to 52 weeks to 28 January 30 January 30 July 2005 2004 2004 ____________ ____________ ____________ £'000 £'000 £'000 Turnover United Kingdom 149,039 141,911 288,052 United States of America 43,207 53,084 94,840 Rest of the World 18,569 13,833 27,412 ____________ ____________ ____________ 210,815 208,828 410,304 ============ ============ ============ Operating profit/(loss) before exceptional items and goodwill amortisation United Kingdom 16,625 16,041 36,704 United States of America 2,132 957 2,573 Rest of the World 666 (426) (818) ____________ ____________ ____________ 19,423 16,572 38,459 ============ ============ ============ Operating exceptional items excluding goodwill impairment United Kingdom (39) (130) (2,866) United States of America 1,062 (7,834) (7,079) Rest of the World - - - ____________ ____________ ____________ 1,023 (7,964) (9,945) ============ ============ ============ Operating profit/(loss) United Kingdom 16,586 15,911 33,838 United States of America 3,194 (6,877) (4,506) Rest of the World 666 (426) (818) ____________ ____________ ____________ 20,446 8,608 28,514 Goodwill amortisation - UK (582) - - Goodwill amortisation - USA (707) (1,104) (1,810) Goodwill impairment - USA - (13,000) (13,000) ____________ ____________ ____________ 19,157 (5,496) 13,704 ============ ============ ============ NOTES TO THE FINANCIAL STATEMENTS continued 2. Analyses of turnover and operating profit continued The segmental analysis of turnover is stated below: 26 weeks to 26 weeks to 52 weeks to 28 January 30 January 30 July 2005 2004 2004 ____________ ____________ ____________ £'000 £'000 £'000 Books 32,967 33,322 66,042 Direct Response, Commercial and Point-of-Sale 93,678 97,677 181,990 Financial 12,670 12,207 33,810 Magazines 52,832 50,447 104,033 Multimedia 18,668 15,175 24,429 ____________ ____________ ____________ 210,815 208,828 410,304 ============ ============ ============ The turnover of SP Group since acquisition of £15,265,000 is included in Direct Response, Commercial and Point-of-Sale in the table above for the current period. 3. Taxation The taxation charge is analysed below: 26 weeks to 26 weeks to 52 weeks to 28 January 30 January 30 July 2005 2004 2004 ____________ ____________ ____________ £'000 £'000 £'000 United Kingdom taxation 5,305 5,856 12,602 Overseas taxation 1,203 36 (703) ____________ ____________ ____________ 6,508 5,892 11,899 ============ ============ ============ The taxation charge for the period ended 28 January 2005 is based on the estimated charge for the fifty two weeks to 29 July 2005. 4. Equity dividends The directors have declared an interim equity dividend of 5.00p (2004 - 5.00p) net per share. The payment date will be 20 May 2005 and the record date will be 22 April 2005. NOTES TO THE FINANCIAL STATEMENTS continued 5. Earnings per share The calculation of the basic earnings/(loss) per share is based on profit after taxation as disclosed in the profit and loss account of £13,326,000 (2004: January - loss £10,873,000; July - profit £3,000,000). Earnings per share before exceptional items and goodwill amortisation is calculated by adding back exceptional items and goodwill amortisation, as adjusted for tax, to the profit after taxation. Basic earnings/(loss) per share and earnings per share before exceptional items and goodwill amortisation are calculated on a weighted average of 102.9 million (2004: January - 102.8 million; July - 102.8 million) shares in issue during the period. The calculation of the diluted earnings/(loss) per share is based on profit after taxation as disclosed in the profit and loss account and on a diluted weighted average of 102.9 million (2004: January - 102.9 million; July - 102.9 million) shares during the period. 6. Exceptional items and goodwill amortisation Goodwill amortisation of £1,289,000 (2004: January - £1,104,000; July - £1,810,000) was charged in the twenty six weeks ended 28 January 2005. The exceptional items, excluding goodwill impairment, included within the profit and loss account are as follows: 26 weeks to 26 weeks to 52 weeks to 28 January 30 January 30 July 2005 2004 2004 ____________ ____________ ____________ £'000 £'000 £'000 Income/(costs) Cost of sales 354 (2,853) (5,265) Sales and distribution costs - (184) (377) Administrative expenses 613 (3,429) (2,913) Other operating income/(costs) 56 (1,498) (1,390) ____________ ____________ ____________ Operating exceptional items 1,023 (7,964) (9,945) Profit on disposal of fixed assets 626 - - ____________ ____________ ____________ 1,649 (7,964) (9,945) ============ ============ ============ 7. Acquisition of business On 13 September 2004 the whole of the issued share capital of SP Group Holdings Limited ('SP Group') was acquired on a debt free basis. The initial consideration for the acquisition was £33 million, payable as to £29.8 million in cash and as to the balance through the issue of floating rate loan notes. Additional consideration of up to £3.92 million will (if applicable) become payable in cash or loan notes in the early summer of 2005, if the profit before interest and goodwill amortisation of SP Group for the year ending 31 March 2005 is £4.9 million. Reduced additional consideration will be payable if the profit before interest and goodwill amortisation for the year ending 31 March 2005 is more than £4.3 million, but less than £4.9 million. NOTES TO THE FINANCIAL STATEMENTS continued 8. Post balance sheet events On 21 February 2005 it was proposed that, subject to appropriate consultation with its workforce, all production would cease at St Ives Caerphilly Limited. The cost of closure of the factory, together with the costs of certain other actions initiated since the period end, is estimated to be £13 million. These costs will be charged as exceptional in the second half of the current financial year. On 5 April 2005 we disposed of the whole of our interest in Johler Druck GmbH ('Johler') for a cash consideration of approximately £1.5 million. The net asset value of Johler at 30 July 2004 was £9.4 million and in the financial year ended on that date it made an operating loss (before interest) of £935,000. In addition to the loss arising on disposal at below net asset value, an amount of £5.9 million will be charged as an exceptional item in respect of goodwill previously written off to reserves and now required to be written back and written off to the profit and loss account. The exceptional costs relating to this transaction will be charged in the second half of the financial year. 9. A copy of the interim statement will be sent to all shareholders. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
KCT.L