11th Apr 2006 07:01
St. Ives PLC11 April 2006 11 April 2006 ST IVES plc Interim Results for the 26 weeks ended 27 January 2006 St Ives plc, the UK's leading printing group, announces interim results for the26 weeks ended 27 January 2006. Key Points • Revenue £205.2m (2005: £210.8m) • Pre tax profit £15.6m (2005: £20.6m) • Underlying* pre tax profit £12.8m (2005: £18.9m) • Basic earnings per share 10.24p (2005: 13.75p) • Underlying* earnings per share 8.36p (2005: 12.13p) • Interim dividend maintained at 5.00p per share *before restructuring costs and provision releases Commenting on the results, Chairman, Miles Emley said: "With most of our markets continuing to experience over-capacity and intensedownward pressure on pricing, we are increasing our focus on those parts of ourbusiness which supply customers with bespoke added value distribution, logisticsand fulfilment services in addition to printed products. These markets haveexperienced more stable conditions and will, we believe, continue to offer moreattractive returns. "Our record of investment is unrivalled in our industry, our financial strengthis second to none and our commitment to service is paramount. On the basis ofthese solid foundations, we expect to weather the current challenging conditionsmore successfully than our competitors and, in due course, to generate improvingreturns for our shareholders." For further information contact: St Ives plcMiles Emley, ChairmanBrian Edwards, Managing Director 020 7928 8844 SmithfieldJohn Antcliffe 020 7360 4900 Results The results for the twenty six weeks ended 27 January 2006 show revenue of£205.2 million (2005 - £210.8 million) and profit before taxation of £15.6million (2005 - £20.6 million). Profit before taxation and restructuring costsand provision releases was £12.8 million (2005 - £18.9 million). Restructuringcosts and provision releases (before taxation) amounted in total to a credit of£2.8 million, representing the profit on sale of surplus assets and the releaseof provisions no longer required for previous business consolidations. Basicearnings per share were 10.24p (2005 - 13.75p). Earnings per share beforeprovision releases and restructuring costs were 8.36p (2005 - 12.13p). For the first time our results are reported in accordance with InternationalFinancial Reporting Standards and the prior year's figures have been restatedaccordingly. In compliance with IFRS, segmental analysis is provided byreference to the three market segments which we supply - Media Products,Commercial Products and USA. Dividend An interim dividend of 5.00p per share (2005 - 5.00p per share) has beendeclared and will be paid on 19 May 2006 to shareholders on the register on 21April 2006. Trading Conditions Most of our markets continued to experience over-capacity and intense downwardpressure on pricing, especially in the case of longer-run and lesstime-sensitive products, both in the UK and the USA. Those parts of ourbusinesses supplying customers with particularly demanding service requirementsand complex distribution and fulfilment needs experienced more stableconditions. Our businesses in South Florida were disrupted for significantperiods by power outages and telecommunications failures as a result ofhurricanes in the autumn of 2005. Media Products Total revenue from Media Products was £99.2 million, 7.0 per cent below theprevious year. The reduced revenues reflected the transfer of the Crayfordpoint-of-sale business to SP Group at Redditch (included amongst CommercialProducts below), lower sales of music and multimedia products from our facilityin Holland and reduced sales of magazines and supplements. Profit beforeinterest, restructuring costs and provision releases from this sector was £13.9million, 4.0 per cent below the prior year. Books Book revenue was ahead of that achieved in the first half of last year; sales ofcased books to the UK trade market, for which we again produced a highproportion of best-selling titles, were particularly strong. Some downwardpressure on price was offset by increased volume, which enabled us to improveutilisation. Magazines Up to mid-December, magazine volumes were maintained at levels similar to thoseexperienced in the same period in the previous year, although pricing pressurecontinued. We retained all the magazine work previously produced at St IvesCaerphilly, which closed towards the end of our last financial year. Shortlybefore Christmas magazine paginations reduced significantly and the resultinglower level of activity and unsatisfactory utilisation continued into January.The benefits of the cost reductions implemented last year were offset by priceerosion and, more recently, weakening demand. Returns were below those achievedin the prior year. Music and Multimedia Revenue from special packaging mainly for DVD products grew, as music publishersand motion picture companies sought to exploit their back catalogues moreeffectively. This increase offset declining demand for standard musicpackaging. We also experienced a sharp reduction in demand, especially forcomputer games-related products, shortly before Christmas. Lower sales inHolland resulted from the decision of a major customer to produce more of itswork in-house. Improved returns in the UK reflected the transfer ofpoint-of-sale work to Redditch and the benefit of the cost reductions of theprior year which helped to improve utilisation, while returns in Holland fell asa result of lower levels of activity. Commercial Products Total revenue from Commercial Products was £72.7 million, 2.7 per cent above theprior year, which included revenue of £9.7 million from Johler Druck (disposedof in April 2005). The increase in sales reflected strong growth in ourpoint-of-sale business (as well as the transfer of the business previouslycarried out at Crayford) and some growth in commercial and direct responsesales, partly offset by a further reduction in financial printing activity,particularly for corporate financial markets. Profit before interest,restructuring costs and provision releases from this sector was £1.4 million, ascompared with £1.9 million in the prior year, reflecting further severe pricepressure in our less specialist markets and unsatisfactory utilisation. Direct Response and Commercial Revenue from direct response and commercial markets increased but mainly inlonger-run, more commoditised products and in the face of continuing fiercepricing pressure. Demand for direct mail and other more specialist products,especially from the financial services sector, was weak. As a result of thechange in the mix of business, returns deteriorated. Financial In both the UK and USA corporate financial print activity levels remainedsubdued and pricing reached unsustainable levels, especially for the few larger,high profile deals that did occur. In the face of lower sales brought about bycontinuing weakness in volumes and pricing, losses continued despite thereductions in our cost base achieved in prior years. Point-of-Sale Point-of-sale revenue has grown significantly, partly as a result of our winninga contract to supply Marks & Spencer with all its point-of-sale requirementswith effect from the beginning of August, but we have also increased levels ofbusiness undertaken for existing customers. The results reflect a full sixmonths' contribution from SP Group (only twenty weeks in the first half of theprevious year). Profit has grown, albeit more slowly than revenue, as weoperated at less than optimal efficiency while assimilating the businesstransferred from Crayford, taking on Marks & Spencer's printing plant at Burnleyand establishing our new logistics facility at Redditch. In addition, in therun-up to the Christmas period a number of customers made significant lastminute changes to their specifications which made utilisation a challenge. USA Total revenue from our US businesses serving commercial, point-of-sale andmagazine markets reduced in real terms by 5.0 per cent, reflecting the extremelycompetitive environment, but at £34.7 million was in line with last year whenconverted into sterling. Pricing pressure for non-recurring work was especiallyintense. As previously announced, our businesses in South Florida experiencedsignificant disruption as a result of hurricanes in the autumn of 2005, whichmade it necessary to place a considerable volume of work out at significant costin order to meet customers' needs. As a consequence we incurred a loss of £0.5million before interest, restructuring costs and provision releases, as comparedwith a profit of £2.4 million in the first half of the previous year. Balance Sheet, Cash Flow and Investment We continued to invest throughout our business to lower our cost of production.Capital expenditure, together with the cost of the acquisition of the premisesand plant comprising Marks & Spencer's printing facility at Burnley, amounted toapproximately £23 million in the half year under review. Nonetheless our operating cash flow and balance sheet remain strong. Net debtat the end of the half year amounted to £20.8 million, reduced from £23.5million at the start of the year, after dividend payments and despitesignificant capital expenditure, helped by proceeds from asset disposals. Outlook Over-capacity and fierce price competition continue to characterise most of ourmarkets on both sides of the Atlantic, especially for longer-run and lesstime-sensitive products. Against this background, we continue to invest in ourbusiness to reduce the cost of production and to develop additional serviceswhich will enable us to reduce our customers' overall costs while providing uswith improved returns. Wherever possible, we are providing bespoke added valueservices, usually involving complex distribution, logistics or fulfilmentsolutions for our customers. Examples of investment to this end include the newlogistics facility at Redditch and our new mailing operation at Roche, both ofwhich started operations during the half year under review. Since the periodend, we have launched St Ives Group Sales which will enable customers who sowish to access all the Group's facilities and services through a single portal.This initiative is fully supported by on-line systems which enable customersto manage their pre-press workflow and to access asset management, artworkcreation, order processing, inventory control and other applications inreal-time. Amongst Media Products, the outlook for book markets is steady and our ownmarket position remains unequalled. We expect the magazine market to remainextremely competitive and since the half year end as a result of ourunwillingness to agree to prices which we do not consider to be sustainablecertain contracts have not been renewed. In this market we are increasing ourfocus on shorter-run, more specialist titles for customers for whom consistentquality and reliable service are important. As always, there is limited forwardvisibility in the market for music and multimedia products, although we haverecently increased the proportion of our revenues from these products which areunder long-term agreements. Amongst Commercial Products, there is no sign of any improvement in the marketfor commercial, mail order and personalised products, although this is the areawhere we expect St Ives Group Sales to begin to make the most impact. Corporatefinancial markets in both the UK and USA continue to see low levels of activityand extremely competitive pricing. We are increasing our share of the marketfor company Annual Reports. The demand for point-of-sale products is steady andwe expect to grow our business further and improve our returns on the strengthof the range and responsiveness of our service. In the USA, the markets served by our commercial businesses remain intenselycompetitive. Our record of investment is unrivalled in our industry, our financial strengthis second to none and our commitment to service is paramount. On the basis ofthese solid foundations, we expect to weather the current challenging conditionsmore successfully than our competitors and, in due course, to generate improvingreturns for our shareholders. Miles EmleyChairman11 April 2006 CONSOLIDATED INCOME STATEMENT 26 weeks to 27 January 2006 ----------------------------------------------- Before Restructuring restructuring costs and 26 weeks 52 weeks costs and provision to to provision releases 28 January 29 July releases (note 6) Total 2005 2005 ------------ ------------ ----------- ------------ ----------- £'000 £'000 £'000 £'000 £'000Revenue (note 2) +----------+ +---------+ +---------+ +----------+ +---------+ Existing activities | 201,019 | | - | | 201,019 | | 210,815 | | 419,477 | Acquired activities | 4,132 | | - | | 4,132 | | - | | - | +----------+ +---------+ +---------+ +----------+ +---------+ 205,151 - 205,151 210,815 419,477Cost of sales (152,901) (113) (153,014) (155,431) (315,661) ------------ ------------ ----------- ------------ -----------Gross profit 52,250 (113) 52,137 55,384 103,816Sales and distribution costs (14,557) 8 (14,549) (14,160) (29,337)Administrative expenses (23,404) 300 (23,104) (20,585) (44,921)Other operating income +-----------+ +---------+ +---------+ +----------+ +---------+ Profit on disposal of fixed | | | | | | | | | | assets | - | | 2,084 | | 2,084 | | 626 | | 626 | Other income | 316 | | 481 | | 797 | | 366 | | 648 | +-----------+ +---------+ +---------+ +----------+ +---------+ 316 2,565 2,881 992 1,274 ------------ ------------ ----------- ------------ -----------Profit from operations (note 2) +-----------+ +---------+ +---------+ +----------+ +---------+ Existing activities | 14,167 | | 2,760 | | 16,927 | | 21,631 | | 30,832 | Acquired activities | 438 | | - | | 438 | | - | | - | +-----------+ +---------+ +---------+ +----------+ +---------+ 14,605 2,760 17,365 21,631 30,832 Loss on disposal of subsidiary - - - - (8,135) Investment income 4,627 - 4,627 4,189 8,336Finance costs (6,409) - (6,409) (5,254) (10,794) ------------ ------------ ----------- ------------ -----------Profit before taxation 12,823 2,760 15,583 20,566 20,239Income tax expense (note 3) (4,206) (828) (5,034) (6,426) (8,775) ------------ ------------ ----------- ------------ -----------Profit for the period 8,617 1,932 10,549 14,140 11,464 ============ ============ =========== ============ =========== Basic earnings per share (note 5) 10.24p 13.75p 11.14p =========== ============ =========== Diluted earnings per share (note 5) 10.24p 13.74p 11.13p =========== ============ =========== Comparative figures for the twenty six weeks to 28 January 2005 and fifty twoweeks to 29 July 2005 include restructuring costs and provision releases asdetailed in note 6. All transactions are derived from continuing activities. CONSOLIDATED BALANCE SHEET 27 January 28 January 29 July 2006 2005 2005 ------------ ----------- ------------ £'000 £'000 £'000ASSETSNon-current assets Property, plant and equipment 163,144 160,375 158,908 Goodwill 54,135 53,704 53,946 Other intangible assets 586 715 649 Deferred tax assets 17,340 14,556 16,173 Other non-current assets 139 234 140 ------------ ----------- ------------ 235,344 229,584 229,816 ------------ ----------- ------------Current assets Inventories 13,739 15,514 13,344 Trade and other receivables 77,501 77,251 77,762 Derivative financial instruments 11 - - Cash and cash equivalents 7,577 10,242 5,594 ------------ ----------- ------------ 98,828 103,007 96,700 ------------ ----------- ------------Total assets 334,172 332,591 326,516 ============ =========== ============ EQUITY AND LIABILITIESEquity Share capital 10,355 10,344 10,349 Other reserves 46,951 46,383 46,723 Retained earnings 101,395 120,919 107,265 ------------ ----------- ------------Total equity 158,701 177,646 164,337 ------------ ----------- ------------Non-current liabilities Retirement benefit obligations 73,590 58,515 66,584 Deferred tax liabilities 49 41 46 Deferred income 155 258 206 Other non-current liabilities 789 729 947 Long-term provisions 1,006 1,897 1,518 ------------ ----------- ------------ 75,589 61,440 69,301 ------------ ----------- ------------Current liabilities Trade and other payables 62,943 58,748 54,408 Short-term borrowings 28,388 24,259 29,086 Current tax payable 6,238 7,968 5,623 Deferred income 102 248 102 Short-term provisions 2,121 2,282 3,659 Derivative financial instruments 90 - - ------------ ----------- ------------ 99,882 93,505 92,878 ------------ ----------- ------------Total liabilities 175,471 154,945 162,179 ------------ ----------- ------------Total equity and liabilities 334,172 332,591 326,516 ============ =========== ============ This interim statement was approved by the board of directors on 11 April 2006. CONSOLIDATED CASH FLOW STATEMENT 26 weeks 26 weeks 52 weeks to to 28 to 27 January January 29 July 2006 2005 2005 ------------ ----------- ------------ £'000 £'000 £'000Operating activities Cash generated from operations (note 7) 35,958 17,935 41,788 Interest paid (757) (388) (711) Income taxes paid (3,716) (4,703) (8,882) ------------ ----------- ------------Net cash from operating activities 31,485 12,844 32,195 ------------ ----------- ------------Investing activities Acquisition of business (2,901) - - Acquisition of subsidiary - (29,742) (31,099) Purchase of property, plant and equipment (19,788) (12,547) (33,192) Purchase of other intangibles (214) (240) (379) Proceeds on disposal of property, plant and equipment 6,221 4,352 5,374 Disposal of subsidiary - - 685 Interest received 115 374 574 ------------ ----------- ------------Net cash used in investing activities (16,567) (37,803) (58,037) ------------ ----------- ------------ Financing activities Proceeds from issue of share capital 198 429 606 Loan notes redeemed (2,194) - (3,449) Dividends paid (12,520) (12,499) (17,648) Increase in bank overdrafts 1,613 - 4,344 ------------ ----------- ------------Net cash used in financing activities (12,903) (12,070) (16,147) ------------ ----------- ------------ Net increase/(decrease) in cash and cash equivalents 2,015 (37,029) (41,989)Cash and cash equivalents at beginning of period 5,594 47,455 47,455 Effect of foreign exchange rate changes (32) (184) 128 ------------ ----------- ------------Cash and cash equivalents at end of period (note 8) 7,577 10,242 5,594 ============ =========== ============ CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE 26 weeks to 26 weeks to 52 weeks to 27 January 28 January 29 July 2006 2005 2005 ------------ ----------- ------------ £'000 £'000 £'000 Exchange differences on translating foreign operations (109) 101 1,081Losses on cash flow hedges taken to equity (191) - -Actuarial losses on defined benefit pension schemes (5,518) (12,752) (21,078)Tax on items taken directly to equity 1,779 3,800 5,913 ------------ ----------- ------------Net expense recognised directly in equity (4,039) (8,851) (14,084) Transfer to profit and loss from equity of exchange differences on disposal of foreign operation - - (101)Transfer to initial carrying amount of non-financial hedged items on cash flow hedges 75 - -Tax on items transferred from equity (22) - -Profit for the period 10,549 14,140 11,464 ------------ ----------- ------------Total recognised income and expense 6,563 5,289 (2,721) =========== ============Transition adjustment on adoption of IAS 32 and IAS 39(notes 1, 11) 24 ------------ Total recognised income and expense for the period 6,587 ============ NOTES TO THE FINANCIAL STATEMENTS 1. Basis of preparation St Ives plc previously reported under UK Generally Accepted AccountingPrinciples ('UK GAAP') for periods up to and including the fifty two weeks to 29July 2005. In June 2002 the Council of the European Union announced that listedcompanies in Europe would be required to adopt International Financial ReportingStandards ('IFRS') for accounting periods beginning on or after 1 January 2005.The interim statements have therefore been prepared in accordance with IFRS. The accounting policies adopted and the restated comparative information for thetwenty six weeks to 28 January 2005 and fifty two weeks to 29 July 2005 are setout in a separate document, "Restated Financial Information for InternationalFinancial Reporting Standards", published on 31 January 2006. The sameaccounting policies have been consistently applied to the financial informationin the interim statements except where the Group has taken advantage of theexemption in International Financial Reporting Standard 1: "First-time Adoptionof International Financial Reporting Standards" ('IFRS 1') from the requirementto restate comparative information for International Accounting Standard 32: "Financial Instruments: Disclosure and Presentation" ('IAS 32') and InternationalAccounting Standard 39: "Financial Instruments: Recognition and Measurement" ('IAS 39'). These standards have been adopted from 30 July 2005 and the restatedopening balance sheet is set out in note 11. The interim statements are neither audited nor reviewed. The financialinformation in these statements does not comprise statutory accounts for thepurposes of Section 240 of the Companies Act 1985. The abridged information forthe fifty two weeks to 29 July 2005 has been prepared from the Group's statutoryaccounts for that period, restated for IFRS, which have been filed with theRegistrar of Companies. The auditors' report on the accounts of the Group forthat period was unqualified and did not contain a statement under either Section237(2) or Section 237(3) of the Companies Act 1985. 2. Segment reporting (a) Business segments 26 weeks to 27 January 2006 --------------------------------------------------------- Media Commercial Products Products USA Elimination Total ---------- --------- ---------- ---------- ---------- £'000 £'000 £'000 £'000 £'000Revenue External sales 98,800 71,715 34,636 - 205,151 Inter-segment sales 411 1,025 51 (1,487) - ---------- --------- ---------- ---------- ----------Total revenue 99,211 72,740 34,687 (1,487) 205,151 ========== ========= ========== ========== ========== Result Segment result 14,228 1,452 (546) - 15,134 Add back restructuring costs and provision releases (350) (26) - - (376) ---------- --------- ---------- ---------- ---------- Segment result before restructuring costs and provision releases 13,878 1,426 (546) - 14,758 ========== ========= ========== ========== Unallocated corporate expenses (net) (153) ---------- Profit from operations before restructuring costs and provision releases 14,605 Restructuring costs and provision releases 2,760 ---------- Profit from operations 17,365 Investment income 4,627 Finance costs (6,409) Income tax expense (5,034) ----------Profit for the period 10,549 ========== 26 weeks to 28 January 2005 --------------------------------------------------------- Media Commercial Products Products USA Elimination Total ---------- --------- ---------- ---------- ---------- £'000 £'000 £'000 £'000 £'000Revenue External sales 106,314 69,765 34,736 - 210,815 Inter-segment sales 351 1,035 105 (1,491) - ---------- --------- --------- ---------- ----------Total revenue 106,665 70,800 34,841 (1,491) 210,815 ========== ========== ========= ========== ========== Result Segment result 14,434 1,923 3,486 - 19,843 Add back restructuring costs and provision releases 21 18 (1,062) - (1,023) ---------- --------- ---------- ---------- ---------- Segment result before restructuring costs and provision releases 14,455 1,941 2,424 - 18,820 ========== ========== ========== ========== Unallocated corporate income (net) 1,162 ---------- Profit from operations before restructuring costs and provision releases 19,982 ---------- Restructuring costs and provision releases 1,649 ---------- Profit from operations 21,631 Investment income 4,189 Finance costs (5,254) Income tax expense (6,426) ----------Profit for the period 14,140 ========== 52 weeks to 29 July 2005 --------------------------------------------------------------- Media Commercial Products Products USA Elimination Total ---------- ---------- --------- ---------- ----------- £'000 £'000 £'000 £'000 £'000Revenue External sales 204,598 147,870 67,009 - 419,477 Inter-segment sales 821 2,346 198 (3,365) - ---------- ---------- --------- ---------- ----------- Total revenue 205,419 150,216 67,207 (3,365) 419,477 ========== ========== ========= ========== ===========Result Segment result 21,432 3,612 5,158 - 30,202 Add back restructuring costs and provision releases 7,238 3,067 (1,674) - 8,631 ---------- ---------- --------- ---------- ----------- Segment result before restructuring costs and provision releases 28,670 6,679 3,484 - 38,833 ========== ========== ========= ========== Unallocated corporate income (net) 1,844 ----------- Profit from operations before restructuring costs and provision releases 40,677 Restructuring costs and provision releases (9,845) ----------- Profit from operations 30,832 Disposal of subsidiary (8,135) Investment income 8,336 Finance costs (10,794) Income tax expense (8,775) -----------Profit for the period 11,464 =========== (b) Geographical segments 26 weeks to 27 January 2006 ---------------------------------------------- *United United States Rest of Kingdom of America the World Total --------- ---------- --------- --------- £'000 £'000 £'000 £'000 Revenue 156,561 41,773 6,817 205,151 ========= ========== ========= =========Result Segment result 17,733 (872) 504 17,365 Add back restructuring costs and provision releases (2,760) - - (2,760) --------- ---------- --------- --------- Segment result before restructuring costs and provision releases 14,973 (872) 504 14,605 ========= ========== ========= ========= 26 weeks to 28 January 2005 ---------------------------------------------------- *United United States Rest of Kingdom of America the World Total ---------- ---------- ---------- ---------- £'000 £'000 £'000 £'000 Revenue 149,039 43,207 18,569 210,815 ========== ========== ========== ==========Result Segment result 17,714 3,251 666 21,631 Add back restructuring costs and provision releases (587) (1,062) - (1,649) ---------- ---------- ---------- ---------- Segment result before restructuring costs and provision releases 17,127 2,189 666 19,982 ========== ========== ========== ========== 52 weeks to 29 July 2005 ----------------------------------------------------- *United United States Rest of Kingdom of America the World Total ---------- ---------- ---------- ---------- £'000 £'000 £'000 £'000 Revenue 307,421 84,282 27,774 419,477 ========== ========== ========== ==========Result Segment result 24,211 5,492 1,129 30,832 Add back restructuring costs and provision releases 11,803 (1,958) - 9,845 ---------- ---------- ---------- ---------- Segment result before restructuring costs and provision releases 36,014 3,534 1,129 40,677 ========== ========== ========== ========== \* The geographical segment United States of America includes St Ives FinancialInc, which is included in Commercial Products, and the USA business segment. 3. Income taxes The income tax charge is analysed below: 26 weeks to 26 weeks to 52 weeks to 27 January 28 January 29 July 2006 2005 2005 ---------- ---------- ---------- £'000 £'000 £'000 United Kingdom income tax 4,831 5,223 8,561Overseas income tax 203 1,203 214 ---------- ---------- ---------- 5,034 6,426 8,775 ========== ========== ========== The income tax charge for the twenty six weeks to 27 January 2006 is based onthe estimated annual charge for the fifty two weeks to 28 July 2006. 4. Dividends 26 weeks to 26 weeks to 52 weeks to 27 January 28 January 29 July 2006 2005 2005 ---------- ---------- ---------- per share £'000 £'000 £'000 Final dividend paid for the 52 weeks ended 30 July 2004 12.15p - 12,499 12,499Interim dividend paid for the 26 weeks to 28 January 2005 5.00p - - 5,149Final dividend paid for the 52 weeks ended 29 July 2005 12.15p 12,520 - - ---------- ---------- ---------- Dividends paid during the period 12,520 12,499 17,648 ========== ========== ==========Proposed interim dividend for the 26 weeks to 27 January 2006 5.00p 5,178 ========== 5. Earnings per share 26 weeks 26 weeks 52 weeks to to to 27 January 28 January 29 July 2006 2005 2005 ---------- ---------- ---------- million million million Basic weighted average number of shares 103.0 102.9 102.9Dilutive potential ordinary shares from share options - - 0.1 ---------- ---------- ----------Diluted weighted average number of shares 103.0 102.9 103.0 ========== ========== ========== 26 weeks to 26 weeks to 52 weeks to 27 January 2006 28 January 2005 29 July 2005 ------------------- ------------------- ------------------- Earnings Earnings Earnings Earnings per share Earnings per share Earnings per share --------- --------- --------- --------- --------- --------- £'000 pence £'000 pence £'000 pence Earnings and basic earnings per share 10,549 10.24 14,140 13.75 11,464 11.14Restructuring costs and provision releases (1,932) (1.88) (1,665) (1.62) 13,983 13.59 --------- --------- --------- --------- --------- ---------Adjusted earnings and adjusted earnings per share 8,617 8.36 12,475 12.13 25,447 24.73 ========= ========= ========= ========= ========= ========= Diluted earnings per share 10.24 13.74 11.13 ========= ========= ========= Adjusted earnings is calculated by adding back restructuring costs and provisionreleases, as adjusted for tax, to the profit for the period. 6. Restructuring costs and provision releases Restructuring costs and provision releases included within the income statementare as follows: 26 weeks to 26 weeks to 52 weeks to 27 January 28 January 29 July 2006 2005 2005 ---------- --------- ---------- £'000 £'000 £'000Income/(costs) Cost of sales (113) 354 (6,837) Sales and distribution costs 8 - (843) Administrative expenses 300 613 (2,863) Profit on disposal of fixed assets 2,084 626 626 Other income 481 56 72 Loss on disposal of subsidiary - - (8,135) ---------- --------- ---------- 2,760 1,649 (17,980) ========== ========= ========== Profit on disposal of fixed assets relates to properties sold. Other income isprofit on disposal of other fixed assets. 7. Reconciliation of cash generated from operations 26 weeks 26 weeks 52 weeks to to to 27 January 28 January 29 July 2006 2005 2005 ---------- ---------- ---------- £'000 £'000 £'000 Profit from operations 17,365 21,631 30,832Adjustments for: Depreciation of property, plant and equipment 13,453 14,989 29,701 Impairment of fixed assets - - 3,278 Gain on disposal of property, plant and equipment (2,881) (992) (1,274) Foreign exchange losses - 86 84 Deferred income (51) (200) (398) Share-based payment charge/(credit) 99 (327) (654) Decrease in provisions (2,044) (3,886) (3,839) ---------- ---------- ----------Operating cash flows before movements in working 25,941 31,301 57,730capital Increase in inventories (422) (3,285) (1,568) Decrease/(increase) in receivables 184 (4,771) (6,142) Increase/(decrease) in payables 10,255 (5,310) (8,232) ---------- ---------- ----------Cash generated from operations 35,958 17,935 41,788 ========== ========== ========== 8. Analysis of net debt 29 July Exchange 27 January 2005 Cash flow movements 2006 ---------- ---------- ---------- ---------- £'000 £'000 £'000 £'000 Cash and cash equivalents 5,594 2,015 (32) 7,577Bank overdrafts (4,386) (1,613) - (5,999)Debt due within one year (24,700) 2,194 117 (22,389) ---------- ---------- ---------- ---------- (23,492) 2,596 85 (20,811) ========== ========== ========== ========== 9. Movement in equity 26 weeks to 26 weeks to 52 weeks to 27 January 28 January 29 July 2006 2005 2005 ---------- ---------- ---------- £'000 £'000 £'000 Opening equity 164,337 184,754 184,754Transition adjustment on adoption of IAS 32 and IAS 39 24 - - ---------- ---------- ---------- Opening equity (restated) 164,361 184,754 184,754Foreign exchange adjustments (42) 75 671Losses on cash flow hedges (81) - -Profit for the period 10,549 14,140 11,464New shares issued 198 429 606Recognition of share-based payments 99 (327) (654)Actuarial losses on defined benefit pension schemes (3,863) (8,926) (14,755)Transfer to profit and loss from equity of exchange differences on disposal of foreign operation - - (101)Dividends (12,520) (12,499) (17,648) ---------- ---------- ---------- Closing equity 158,701 177,646 164,337 ========== ========== ========== 10. Retirement benefits The Group's pension obligations under International Accounting Standards 19: "Employee Benefits" ('IAS 19') are recognised on the balance sheet for the firsttime. The liability of £73,590,000 (£51,513,000 net of deferred tax) is higherthan at 30 July 2005 principally due to a fall in AA bond yields used todiscount liabilities from 5.0% to 4.7%. All other assumptions remain in linewith those at 30 July 2005. 11. Adoption of IAS 32 and IAS 39 Following the Group's adoption of IAS 32 and IAS 39 from 30 July 2005, we setout below the accounting policies under these standards and the impact on thefinancial information as at 30 July 2005. Accounting policy The Group's activities expose it primarily to the financial risks of changes inforeign currency exchange rates and interest rates. The Group uses derivativefinancial instruments to hedge its exposure to foreign exchange for the purchaseof capital equipment denominated in foreign currencies and the sale of goodssimilarly denominated. The use of financial derivatives is governed by the Group's policies approved bythe board of directors, which provide written principles on the use of financialderivatives consistent with the Group's risk management strategy. The Groupdoes not hold or issue derivative financial instruments for speculativepurposes. All derivatives are held at fair value in the balance sheet within 'derivativefinancial instruments' and are classified as current or non-current depending onthe maturity of the derivative. Changes in the fair value of derivative financial instruments that aredesignated and effective as cash flow hedges of forecast transactions arerecognised directly in equity and the ineffective portion is recognisedimmediately in the income statement. If the cash flow hedge of a firmcommitment or forecast transaction results in the recognition of an asset orliability, then, at the time the asset or liability is recognised, theassociated gains and losses on the derivative that had previously beenrecognised in equity are included in the initial measurement of the asset orliability. For the hedges that do not result in the recognition of an asset orliability, amounts deferred in equity are recognised in the income statement inthe same period in which the hedged item affects the net profit or loss. The gain or loss on hedging instruments relating to the effective portion of anet investment hedge is recognised in equity and the ineffective portion isrecognised immediately in the income statement. Gains or losses accumulated inequity are included in the income statement when the foreign operations aredisposed of. Changes in the fair value of derivative financial instruments that do notqualify for hedge accounting are recognised in the income statement as theyarise. Hedge accounting is discontinued when the hedging instrument expires or is sold,terminated, or exercised, or no longer qualifies for hedge accounting. At thattime, any cumulative gain or loss on the hedging instrument recognised in equityis retained in equity until the forecast transaction occurs. If a hedgetransaction is no longer expected to occur, the net cumulative gain or losspreviously recognised in equity is included in the income statement for theperiod. Impact of IAS 32 and IAS 39 At 30 July 2005 the fair values of forward contracts held at that date have beenrecorded on the balance sheet and directly in equity. The balance sheetincludes derivative financial instruments within current assets of £62,000 andwithin current liabilities of £38,000. Closing Opening balance IAS 32 and balance sheet IAS 39 sheet at 29 July adjustments at 30 July 2005 2005 ---------- ---------- ---------- £'000 £'000 £'000AssetsNon-current assets 229,816 - 229,816Current assets 96,700 62 96,762 ---------- ---------- ---------- 326,516 62 326,578 ========== ========== ========== Equity and liabilitiesEquity 164,337 24 164,361Non-current liabilities 69,301 - 69,301Current liabilities 92,878 38 92,916 ---------- ---------- ---------- 326,516 62 326,578 ========== ========== ========== During the period to 27 January 2006 losses on cash flow hedges of £191,000 weretaken to equity and £75,000 was transferred to the initial carrying amount ofnon-financial hedged items on cash flow hedges. The related deferred tax takendirectly to equity totalled £35,000. The resulting fair values of forwardcontracts held at 27 January 2006 were £11,000 recorded in current assets and£90,000 recorded in current liabilities on the balance sheet. 12. Reconciliation between UK GAAP and IFRS On 31 January 2006 the Group published its restated balance sheet for 30 July2004 and restated financial information for the twenty six weeks to 28 January2005 and fifty two weeks to 29 July 2005, as required by IFRS 1. This separatedocument is available on the Group's website, www.st-ives.co.uk, entitled "Restated Financial Information for International Financial Reporting Standards". The document includes explanations of the significant UK GAAP to IFRSdifferences and detailed IFRS accounting policies. A summary of the financialinformation presented in this document is provided below: Reconciliation of equity 29 July 28 January 31 July 2005 2005 2004 ---------- ---------- ---------- £'000 £'000 £'000 Total equity presented under UK GAAP 214,621 230,739 222,758Proposed dividend adjustment 12,517 5,147 12,491Employee benefits (64,450) (58,624) (49,583)Rolled over gains (1,234) (825) (825)Reversal of goodwill amortisation 2,773 1,289 -Share-based payments 110 (80) (87) ---------- ---------- ----------Total equity presented under IFRS 164,337 177,646 184,754 ========== ========== ========== Reconciliation of profit for the period 52 weeks 26 weeks to to 29 July 28 January 2005 2005 ---------- ---------- £'000 £'000 Profit for the period under UK GAAP* 2,780 13,326Rolled over gains (409) -Employee benefits (113) (115)Foreign exchange gains/(losses) 42 (60)Reversal of goodwill amortisation 2,773 1,289Reversal of goodwill previously written-off 6,806 -Share-based payments (415) (300) ---------- ----------Profit for the period under IFRS 11,464 14,140 ========== ========== *In the twenty six weeks to 28 January 2005 certain costs totalling £1,505,000have been reallocated from administrative expenses to sales and distributioncosts in order to ensure consistency of presentation. Reconciliation of cash flows There was no material effect on the cash flows of the Group on adopting IFRS. 13. 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