RNS Number:1695R
Litho Supplies PLC
13 September 2005
LITHO SUPPLIES Plc
Results for the six months ended 30 June 2005
HIGHLIGHTS
Litho Supplies Plc, the leading supplier of consumable products, analogue and
digital equipment and related services to the printing, graphic arts and
corporate markets in the UK, announces its results for the six months ended 30
June 2005.
Overview:
* Sales of #22.82m (2004: #23.66m) generating pretax profits of #0.55m (2004:
#0.51m), an increase of 7.84%.
* Basic earnings per share were 2.11p (2004: 1.02p)
* Strong control of working capital and costs resulted in a cash balance at
30 June 2005 of #2.99m after expenditure on acquisitions.
* The board declares an interim dividend of 1.875p per share (2004: 1.80p),
an increase of 4.17%.
Litho Supplies Chief Executive Michael Hammond said:
"During a period of challenging market conditions in the printing sector our
interim results reflect a satisfactory performance, with growth in the sale of
digital and pressroom consumable products. We continue to focus the business in
line with market demands and offer customers an excellent portfolio of
equipment, consumable products and related services."
Contacts:
Michael Hammond, Chief Executive Tel: 01332 873921
Gerry Mitchell, Financial Director Tel: 0117 9724455
CHAIRMAN'S INTERIM STATEMENT
RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2005
The unaudited interim results for the six months ended 30 June 2005 show pretax
profits of #0.57m (#0.66m), after adding back #0.02m (#0.15m) of costs
associated with the reorganisation of the business. The profit before tax after
reorganisation expenses was #0.55m (#0.51m) and sales for the period were
#22.82m (#23.66m).
The interim results for the six months ended 30 June 2005 and the comparative
figures for the period ended 30 June 2004 and year ended 31 December 2004 have
been restated using International Financial Reporting Standards (IFRS).
Basic earnings per share for the six months ended 30 June 2005 were 2.11p
(1.02p).
I am pleased to report further success in the reduction of stock levels, which
together with continued control of costs, resulted in a cash balance at 30 June
2005 of #2.99m compared with #3.81m at 30 June 2004. The cash balance at 30
June 2005 was after funding the acquisitions of United Graphics Limited and
System Builders and Internet (SBI).
Given that trading conditions remained very challenging during the first half of
2005 I am satisfied with the overall progress.
The board is declaring an interim dividend of 1.875p (1.80p) per share, an
increase of 4.17%. The dividend will be paid on 31 October 2005 to shareholders
on the register on 30 September 2005. The ex-dividend date is 28 September 2005.
The board will also consider, if conditions are right, implementing the powers
granted by the shareholders at the 2005 AGM to purchase further shares for
cancellation.
The interim results for the six months ended 30 June 2005 which have been
prepared using IFRS, whilst not having a material impact on the Group's profit
before tax, has resulted in a higher pension cost charge and a small charge in
relation to the cost of share options. Details of the impact of the adoption of
IFRS is provided in note 5.
TRADING PERFORMANCE
UK analogue and digital consumable product sales, which remain the core activity
of the business, were #17.71m (#17.43m).
In the 2004 annual report, I mentioned that one of our major competitors had
gone into administrative receivership. The eventual closure of this business
towards the end of the first half offered us selective opportunities to gain
some new accounts as a result of which sales of our analogue consumable products
showed some growth towards the end of the period. We also benefited from the
addition of new business in the south east of England following the acquisition
of United Graphics Limited on 14 March 2005.
Sales of digital consumable products continued to grow, being 10% higher than in
the first six months of 2004, and we also enjoyed some growth of sales within
our pressroom division.
Sales of flexographic consumable products to the packaging and labelling market
and sales of wide format inkjet materials continue to make a useful contribution
to our overall business, although there was considerable pressure on prices in
both these markets.
Our telesales operation, specialist catalogue sales, new web site and online
ordering facility have all contributed well in the first half and provide
opportunities for the future.
After a successful Northprint exhibition in April 2005, we were anticipating
that our Electronics division would maintain the success of the previous year
but sales of #4.95m (#5.93m) were below expectations due to more competitive
conditions and some large orders being held back until the second half of the
year. In October 2005 we shall be exhibiting at Digital Print World at Earls
Court in London.
Following the reorganisation of Murodigital, which I referred to in the 2004
annual report, I am pleased to announce an improved result with new binding
equipment, imported on an exclusive basis, coupled with added value equipment,
providing a total office solution. Both activities contributed satisfactorily in
competitive market conditions.
PROSPECTS
The results for the first half were in line with our plans. For the future, with
the caveat that market conditions, particularly in the Electronics division,
remain extremely competitive, I would expect the company to be able to maintain
modest growth in the second half compared with the first half of this year.
The acquisition of United Graphics Limited, based in Kent, has strengthened our
position in London and the south east of England, while the acquisition of SBI
is a useful addition for our Electronics division with new expertise for the
creation and development of websites and internet linked services. Both
acquisitions have also enabled us to strengthen our management in strategic
areas of the business and I welcome both teams to the Group.
The balance sheet remains strong. We are not complacent, however, and continue
to seek further reductions in stockholdings and debtor balances. We also
continue to examine opportunities for bolt-on acquisitions as they become
available on terms which make good business sense.
Once again I wish to thank all of our customers and suppliers for their
continuing support and I particularly thank all of our employees for their
loyalty and hard work.
B C Clark
Chairman
13 September 2005
Litho Supplies Plc
Consolidated Income Statement
6 months 6 months Year
ended ended ended
30 June 30 June 31 Dec
2005 2004 2004
#'000 #'000 #'000
Continuing operations
Revenue
Sale of goods 22,821 23,661 45,042
Cost of sales 19,030 19,785 37,582
Gross profit 3,791 3,876 7,460
Distribution costs 1,051 1,098 2,209
Administrative expenses 2,220 2,165 4,145
Reorganisation costs 17 152 475
Profit from continuing operations
before tax and net finance income 503 461 631
Finance costs 2 - -
Finance income 51 48 138
Profit before tax 552 509 769
Income tax expense 99 286 372
Profit for the period 453 223 397
Attributable to:
Equity holders of the company 453 223 397
Earnings per share
-basic 2.11p 1.02p 1.83p
-diluted 2.00p 1.00p 1.83p
Litho Supplies Plc
Consolidated Balance Sheet
30 June 30 June 31 Dec
2005 2004 2004
#'000 #'000 #'000
Assets
Non-current assets
Property, plant and equipment 471 471 445
Intangible assets 1,092 555 567
Deferred tax asset 1,993 2,024 1,909
3,556 3,050 2,921
Current assets
Inventories 5,988 6,201 6,043
Trade receivables 12,850 13,033 10,649
Other current assets 995 967 960
Cash and cash equivalents 2,988 3,807 4,517
22,821 24,008 22,169
Total assets 26,377 27,058 25,090
Equity
Equity attributable to equity holders
of the parent
Share capital 2,146 2,179 2,146
Share premium 13,420 13,420 13,420
Other reserves 500 461 497
Retained earnings (8,602) (7,621) (7,743)
Total equity 7,464 8,439 8,320
Liabilities
Non-current liabilities
Provisions 6,803 6,339 6,005
6,803 6,339 6,005
Current liabilities
Trade and other payables 10,290 10,601 9,192
Income tax payable 184 262 135
Provisions 1,636 1,417 1,438
12,110 12,280 10,765
Total liabilities 18,913 18,619 16,770
Total equity and liabilities 26,377 27,058 25,090
Litho Supplies Plc
Consolidated Statement of Changes in Equity
Share Share Retained Other Total
Capital Premium Earnings Reserves Equity
#'000 #'000 #'000 #'000 #'000
At 1 January 2004 2,179 13,420 (7,608) 461 8,452
Actuarial gains - - 145 - 145
Profit for the period - - 223 - 223
Total recognised income
for the period - - 368 - 368
Dividends - - (381) - (381)
At 30 June 2004 2,179 13,420 (7,621) 461 8,439
Actuarial gains - - 261 - 261
Profit for the period - - 174 - 174
Total recognised income
for the period - - 435 - 435
Share option expense - - - 3 3
Dividends - - (392) - (392)
Repurchase of shares (33) - (165) 33 (165)
At 31 December 2004 2,146 13,420 (7,743) 497 8,320
Actuarial losses - - (920) - (920)
Profit for the period - - 453 - 453
Total recognised expense
for the period - - (467) - (467)
Share option expense - - - 3 3
Dividends - - (392) - (392)
At 30 June 2005 2,146 13,420 (8,602) 500 7,464
Litho Supplies Plc
Consolidated Cash Flow
6 months 6 months Year
ended ended ended
30 June 30 June 31 Dec
2005 2004 2004
#'000 #'000 #'000
Cash flows from operating activities
Cash flows generated from operations (516) 1,770 3,098
Income tax paid (134) (142) (240)
Net cash flows from operating activities (650) 1,628 2,858
Cash flows from investing activities
Proceeds from sale of property,
plant and equipment 4 14 22
Interest received 58 41 129
Interest paid (2) - -
Purchase of property, plant and equipment (45) (46) (93)
Purchase of intangible assets - - (12)
Acquisitions (490) - -
Net cash flows from investing activities (475) 9 46
Cash flows from financing activities
Payment of finance lease liabilities (12) - -
Payment for repurchase of shares - - (165)
Dividends paid to equity holders of the company (392) (381) (773)
Net cash flows from financing activities (404) (381) (938)
Net (decrease)/increase in cash and
cash equivalents (1,529) 1,256 1,966
Cash and cash equivalents at start of period 4,517 2,551 2,551
Cash and cash equivalents at end of period 2,988 3,807 4,517
NOTES:
1. ACCOUNTING POLICIES
Litho Supplies Plc has previously prepared its financial statements under UK
generally accepted accounting principles (UK GAAP). From 2005 the Group is
required to prepare its consolidated financial statements in accordance with
IFRS as adopted by the European Union (EU).
The results for the six months ended 30 June 2005 represent the first interim
financial statements the Group has prepared in accordance with its accounting
policies under IFRS. The first annual report under IFRS will be for the year
ending 31 December 2005.
A revised summary of significant accounting policies under IFRS are detailed
below. All other accounting policies are on the basis of those set out in the
Group's statutory accounts for the year ended 31 December 2004.
a) Goodwill
Goodwill represents the excess of the cost of the business combination over the
acquirer's interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities. Goodwill is included in intangible
assets. Following initial recognition, goodwill is measured at cost less any
accumulated impairment losses. Goodwill is stated at the carrying amount at 1
January 2004 for all acquisitions made prior to that date and at cost for
subsequent acquisitions. Goodwill is not amortised but is reviewed for
impairment, annually or more frequently if events or changes in circumstances
indicate that the carrying value may be impaired.
As at the acquisition date, any goodwill acquired is allocated to each of the
cash-generating units expected to benefit from the combination's synergies.
Impairment is determined by assessing the recoverable amount of the
cash-generating unit, to which the goodwill relates. Where the recoverable
amount of the cash-generating unit is less than the carrying amount, an
impairment loss is recognised.
b) Pensions
The Group operates a defined benefit scheme. The liability recognised in the
balance sheet in respect of this scheme is the present value of the defined
benefit obligations at the balance sheet date less the fair value of the scheme
assets. The defined benefit obligation is calculated at the end of each
reporting period by independent actuaries. The cost of providing benefits are
charged to the income statement with actuarial gains and losses in the period
being taken directly to equity.
The Group also operates a defined contribution group personal pension plan.
Contributions are charged to the income statement as they become payable in
accordance with the rules of the scheme.
c) Share Options
IFRS 2 'Share-based Payment' requires an expense to be recognised where the
Group buys goods or services in exchange for shares or rights over shares ('
equity-settled transactions'), or in exchange for other assets equivalent in
value to a given number of shares or rights over shares ('cash-settled
transactions'). The main impact of IFRS 2 on the Group is the expensing of
directors' and employees' share options and other share-based incentives by
using an option-pricing model.
The fair value of the employees' services rendered in exchange for the grant of
options is recognised as an expense. The total amount to be expensed rateably
over the vesting period is determined by reference to the fair value of the
options at the grant date, excluding the impact of any vesting conditions. The
vesting conditions are included in assumptions about the number of options that
are expected to be exercisable. The estimate is revised at each balance sheet
date and the difference is charged or credited to the income statement, with a
corresponding adjustment to equity. The proceeds received on exercise of the
options net of any directly attributable transaction cost are credited to
equity.
The Group has adopted IFRS 2 for accounting periods beginning on 1 January 2004.
2. FINANCIAL STATEMENTS
The financial information in this interim statement for the six months ended 30
June 2005 and the comparative figures for the six months ended 30 June 2004 do
not constitute statutory accounts as defined in Section 240 of the Companies Act
1985. The financial information for the full preceding year is based on the
statutory accounts for the financial year ended 31 December 2004, as restated
under IFRS. Those statutory accounts as prepared under UK GAAP, upon which the
auditors issued an unqualified opinion, have been delivered to the Registrar of
Companies.
3. ACQUISITIONS
On 15 March 2005, the Group acquired 100% of the voting shares of United
Graphics Limited, a private limited company based in the UK. The operations of
United Graphics Limited from the date of acquisition have been amalgamated
within the Group and are not easily identifiable, and have not been reported
separately as they are not material in relation to the overall results of the
Group. The company supplies graphic arts materials and equipment. The net cash
consideration paid by the Group in respect of this acquisition was #479,000.
The Group also acquired SBI, an unincorporated business based in the UK, on 7
February 2005. The business supplies computer and electronic equipment and
related services. The operations of SBI from the date of acquisition have been
amalgamated within the Group and are not easily identifiable, and have not been
reported separately as they are not material in relation to the overall results
of the Group. The consideration in respect of this acquisition was #51,750.
4. EARNINGS PER SHARE
The earnings per share have been calculated as follows:
6 months 6 months Year
ended ended ended
30 June 30 June 31 Dec
2005 2004 2004
Profit available for equity shareholders #453,000 #223,000 #397,000
Basic:
Weighted average number of shares of 10p each
in issue 21,461,148 21,786,148 21,724,468
Earnings per share 2.11p 1.02p 1.83p
Diluted:
Weighted average number of shares of 10p each
in issue 22,596,148 22,406,148 21,724,468
Earnings per share 2.00p 1.00p 1.83p
The number of dilutive potential shares from unexercised executive share options
granted as at 30 June 2005 was 1,135,000 and as at 30 June 2004 was 620,000.
5. Transition to IFRS
Reconciliation of Balance Sheet at 1 January 2004
Effect of
UK transition
Notes GAAP to IFRS IFRS
#'000 #'000 #'000
Assets
Non-current assets
Property, plant and equipment 516 - 516
Intangible assets 555 - 555
Deferred tax asset a 700 1,379 2,079
1,771 1,379 3,150
Current assets
Inventories 6,658 - 6,658
Trade receivables 11,923 - 11,923
Other current assets 687 - 687
Cash and cash equivalents 2,551 - 2,551
21,819 - 21,819
Total assets 23,590 1,379 24,969
Equity
Equity attributable to equity holders
of the parent
Share capital 2,179 - 2,179
Share premium 13,420 - 13,420
Other reserves 461 - 461
Retained earnings a,b,c (4,771) (2,837) (7,608)
Total equity 11,289 (2,837) 8,452
Liabilities
Non-current liabilities
Provisions b 1,926 4,597 6,523
1,926 4,597 6,523
Current liabilities
Trade and other payables 8,606 - 8,606
Income tax payable 173 - 173
Provisions c 1,596 (381) 1,215
10,375 (381) 9,994
Total liabilities 12,301 4,216 16,517
Total equity and liabilities 23,590 1,379 24,969
The following explains the material adjustments to the balance sheet:
a. A deferred tax asset is recognised on the additional pension liability
recognised under IAS 19.
b. Additional pension scheme provisions recognised in accordance with IAS 19.
c. Dividends are only accounted for on an approved basis, rather than a
declared basis as previously required under UK GAAP.
Reconciliation of Balance Sheet at 30 June 2004
Effect of
UK transition
Notes GAAP to IFRS IFRS
#'000 #'000 #'000
Assets
Non-current assets
Property, plant and equipment 471 - 471
Intangible assets d 536 19 555
Deferred tax asset a 700 1,324 2,024
1,707 1,343 3,050
Current assets
Inventories 6,201 - 6,201
Trade receivables 13,033 - 13,033
Other current assets 967 - 967
Cash and cash equivalents 3,807 - 3,807
24,008 - 24,008
Total assets 25,715 1,343 27,058
Equity
Equity attributable to equity holders
of the parent
Share capital 2,179 - 2,179
Share premium 13,420 - 13,420
Other reserves 461 - 461
Retained earnings a,b,c,d (4,831) (2,790) (7,621)
Total equity 11,229 (2,790) 8,439
Liabilities
Non-current liabilities
Provisions b 1,842 4,497 6,339
1,842 4,497 6,339
Current liabilities
Trade and other payables 10,601 - 10,601
Income tax payable 234 28 262
Provisions c 1,809 (392) 1,417
12,644 (364) 12,280
Total liabilities 14,486 4,133 18,619
Total equity and liabilities 25,715 1,343 27,058
The following explains the material adjustments to the balance sheet:
a. A deferred tax asset is recognised on the additional pension liability
recognised under IAS 19.
b. Additional pension scheme provisions recognised in accordance with IAS 19.
c. Dividends are only accounted for on an approved basis, rather than a
declared basis as previously required under UK GAAP.
d. No amortisation is charged on goodwill.
Reconciliation of Balance Sheet at 31 December 2004
Effect of
UK transition
Notes GAAP to IFRS IFRS
#'000 #'000 #'000
Assets
Non-current assets
Property, plant and equipment 445 - 445
Intangible assets d 529 38 567
Deferred tax asset a 622 1,287 1,909
1,596 1,325 2,921
Current assets
Inventories 6,043 - 6,043
Trade receivables 10,649 - 10,649
Other current assets 960 - 960
Cash and cash equivalents 4,517 - 4,517
22,169 - 22,169
Total assets 23,765 1,325 25,090
Equity
Equity attributable to equity holders
of the parent
Share capital 2,146 - 2,146
Share premium 13,420 - 13,420
Other reserves 494 3 497
Retained earnings a,b,c,d (5,148) (2,595) (7,743)
Total equity 10,912 (2,592) 8,320
Liabilities
Non-current liabilities
Provisions b 1,718 4,287 6,005
1,718 4,287 6,005
Current liabilities
Trade and other payables 9,192 - 9,192
Income tax payable 113 22 135
Provisions c 1,830 (392) 1,438
11,135 (370) 10,765
Total liabilities 12,853 3,917 16,770
Total equity and liabilities 23,765 1,325 25,090
The following explains the material adjustments to the balance sheet:
a. A deferred tax asset is recognised on the additional pension liability
recognised under IAS 19.
b. Additional pension scheme provisions recognised in accordance with IAS 19.
c. Dividends are only accounted for on an approved basis, rather than a
declared basis as previously required under UK GAAP.
d. No amortisation is charged on goodwill.
Reconciliation of Movement in Retained Earnings
6 months 6 months Year
ended ended ended
30 June 30 June 31 Dec
2005 2004 2004
#'000 #'000 #'000
Brought forward under UK GAAP (5,148) (4,771) (4,771)
Accounting policy changes under IFRS:
Employee benefit scheme (4,287) (4,597) (4,597)
Dividends 392 381 381
Goodwill amortisation 38 - -
Share based payments (3) - -
Income tax 1,265 1,379 1,379
Revised brought forward under IFRS (7,743) (7,608) (7,608)
Profit for the period 453 223 397
Dividends in the period (392) (381) (773)
Actuarial (losses)/gains (920) 145 406
Repurchase of shares - - (165)
(8,602) (7,621) (7,743)
6. DIVIDENDS
The dividends paid in May 2005 and May 2004 were 1.825p per share and 1.75p per
share respectively.
The board is declaring an interim dividend for 2005 of 1.875p per share to
shareholders on the register on 30 September 2005 and will be paid on 31 October
2005. These financial statements do not reflect this dividend payable.
7. PROVISIONS FOR LIABILITIES AND CHARGES
6 months 6 months Year
ended ended ended
30 June 30 June 31 Dec
2005 2004 2004
#'000 #'000 #'000
Balance at 1 January 6,005 1,926 1,926
Restatement under IAS 19 - 4,597 4,597
Pension cost for the period 111 151 301
Contributions during the period (233) (190) (413)
Actuarial losses/(gains) 920 (145) (406)
6,803 6,339 6,005
This information is provided by RNS
The company news service from the London Stock Exchange
END
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