RNS Number:8498Q
St. Ives PLC
14 October 2003
14th OCTOBER 2003
ST IVES plc - PRELIMINARY RESULTS
St Ives, the leading UK-based printing group, today announces Preliminary
Results for the 52 weeks ended 1 August 2003. Key points include:
2003 2002
* Turnover #437.2m #466.8m
* Profit before taxation, exceptional
items and goodwill amortisation #36.9m #36.1m
* Profit before taxation #34.6m #24.3m
* Earnings per share before
exceptional items and goodwill
amortisation 23.45p 24.33p
* Basic earnings per share 21.82p 15.40p
* Total dividends per share 17.15p 17.15p
Commenting on the Preliminary Results, Miles Emley, Chairman, St Ives plc said:
"Trading conditions were challenging throughout the year. We did well to make a
modest improvement in both margin and profit. Clays, our business serving the
UK book market, had a particularly good year. The Company's financial strength
is undiminished.
"There is little sign of any sustained upturn in activity, but in the longer
term we remain confident in the potential of the Company's strong competitive
position in its chosen markets."
Enquiries to: Miles Emley, Chairman St Ives plc
Brian Edwards, Managing Director 020 7928 8844
Martin Jackson / Fiona Bradshaw Citigate Dewe Rogerson
020 7638 9571
Results
The results for the 52 weeks ended 1 August 2003 show turnover of #437.2 million
(2002 - #466.8 million) and profit before taxation, exceptional items and
amortisation of goodwill of #36.9 million (2002 - #36.1 million). There was a
net exceptional cost of #119,000 (2002 - #9,549,000). Profit before taxation
was #34.6 million (2002 - #24.3 million). Earnings per share, before goodwill
amortisation and exceptional items were 23.45p (2002 - 24.33p). Basic earnings
per share were 21.82p (2002 - 15.40p).
Dividends
A final dividend of 12.15p per share is recommended, making total dividends of
17.15p per share in respect of the year, the same as for the previous year. If
approved, the final dividend will be paid on 4 December 2003 to shareholders on
the register on
7 November 2003.
Trading Conditions
Demand for books in the UK remained resilient and was reinforced by sales of a
number of best selling titles. In all our other markets trading conditions were
extremely challenging throughout the year. Demand was weak as a result of
reduced advertising expenditure, especially for longer run, less targeted
products, and was also subject to significant short term fluctuations, which
made it difficult to achieve satisfactory utilisation. Activity was
particularly low in the last quarter of our financial year, especially in
Germany and the USA. Corporate financial printing was consistently quiet. The
benefits of the cost reductions which we implemented last year were mainly
passed on to our customers in lower prices, brought about by reduced demand and
industry over capacity in all the geographic regions in which we operate.
Upward pressure on costs, largely resulting from changes in tax and employment
legislation, continued. In the circumstances, we did well to achieve turnover
which was only some 6 per cent below the previous year and make a modest
improvement in margin and profit. Overall, considerable progress in the UK and
the Netherlands was offset by weak performances in the USA and Germany.
Books
Clays had an excellent year and consolidated its position as the leading
supplier of monochrome books to the UK trade and general market. We were again
able to grow our market share because of the flexible service which we offer our
customers and, as in the past, produced a very high proportion of best selling
titles, most notably 'Harry Potter and the Order of the Phoenix' by J K Rowling
for Bloomsbury. We continue to supply nearly all the leading UK trade and
general publishers with cased and/or paperback books. During the year we
invested in additional pre-press equipment as well as web and sheet fed presses,
which enabled us to enhance our service offering further.
Direct Response and Commercial
UK
In the UK, demand for longer run, less specialist work has been patchy and
pricing weak. We sharpened our focus on time-sensitive, shorter run work and
have gained more of this business from both existing and new customers,
including the Government and Government agencies. As a result, although our
sales were down overall, more specialised work accounted for a higher proportion
and accordingly profit and margins improved. During the year we expanded our
production facilities offering personalisation and mailing services, by moving
to larger premises at our Romford site.
USA
In the USA sales to direct response and commercial markets were lower because of
reduced advertising and promotional expenditure especially in the travel,
automotive and leisure sectors and amongst customers requiring high quality
retail and direct mail catalogues. We experienced further pricing pressure and
significant short term variations in demand, giving rise to periods of poor
utilisation, especially in the last quarter of the financial year. In these
circumstances, it regrettably proved necessary to make a further reduction in
the number of employees.
Germany
Johler Druck continued to experience weak demand and competitive pricing in
economic conditions which have not been favourable. As a result sales were
lower and losses increased.
Financial
Activity in corporate financial markets remained extremely subdued throughout
the year in the UK, Europe and the USA, with the result that sales were below
the level of the previous year. Our continued reorganisation unfortunately
resulted in further reductions in staffing levels. We maintained our market
share, but the volume of business was not sufficient to enable us to trade
profitably in this market. We increased our share of the printing of Annual
Reports for FTSE companies. However, both in the UK and the USA some annual
report work was won at lower prices and to less demanding specifications than in
the previous year.
Magazines
UK
Magazine paginations have been very variable both amongst titles and from issue
to issue. Fashion and lifestyle titles were more robust than those dependent on
travel and leisure advertising. Sales were lower overall and demand was
particularly weak in the last quarter of the financial year. The pricing
environment remained extremely competitive. During the year we won some new
business but not so as to offset completely the effect on profitability of lower
paginations and some title closures. We are now fully invested in digital
computer-to-plate systems at all our sites, which will enable us further to
reduce the lead times which we can offer our customers and increase flexibility.
USA
In the USA, paginations were more stable but we experienced increasing pricing
pressure during the year. The benefits of the cost reductions implemented over
the last eighteen months through the consolidation of our operations in south
Florida were insufficient to offset fully the effect on profitability of lower
volumes and prices.
Multimedia
The market for music and multimedia products remained subdued. However we
increased sales, particularly of less time-sensitive products, which enabled us
to improve utilisation and profitability at all three of our sites. Growth in
demand for specialist packaging and DVD related products offset reduced demand
for standard audio CD packaging. The move to new premises in Blackburn was
completed towards the end of the previous financial year and the new factory is
now fully operational.
Board
We are pleased to welcome Patrick Martell to the board. He has been with the
group since 1980, for the last three years as Managing Director of our Book
Division, and was appointed an executive director on 2 August 2003. Graham
Menzies will leave the board at the AGM on 3 December 2003, having served just
over 6 years as a non-executive director. We are grateful to him for his advice
during the period of his membership of the board. We hope to be able to
announce the appointment of a further non-executive director shortly.
Balance Sheet
The balance sheet remains strong: at the year end, net assets were almost #241
million and net cash has almost doubled to #26.3 million. Capital expenditure
during the year was nearly #20 million (2002 - #35.6 million).
Outlook
The UK market for monochrome books is steady, although sales of best selling
titles are likely to have less impact than in the past year. In all our other
markets supply continues to exceed demand, pricing pressures are unabated and
there is no current indication of a sustained or significant upturn in levels of
activity. Our markets in the USA and Germany are especially challenging.
We continue to concentrate on customers and markets with exacting service and
quality requirements. Our Company's financial strength and our long standing
commitment to investment in people, systems and equipment, in order to enhance
service, improve productivity and maintain cost effectiveness, is more important
than ever in an environment where employment and other costs continue to rise.
In the short term, we are unlikely to be able to make more than modest progress,
but in the longer term we remain confident in the potential of our Company's
strong competitive position in its chosen markets.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
52 weeks to 1 August 2003 52 weeks to 2 August 2002
_____________________________________________ ________________________________________
Before Exceptional Before Exceptional
exceptional items and exceptional items and
items and goodwill items and goodwill
goodwill amortisation goodwill amortisation
amortisation (note 7) Total amortisation (note 7) Total
#'000 #'000 #'000 #'000 #'000 #'000
_________________ _________________ _____________ ________________ ________________ ____________
Turnover (note 2) 437,211 - 437,211 466,806 - 466,806
Cost of (328,150) (456) (328,606) (352,670) (4,316) (356,986)
sales
_________________ _________________ _____________ ________________ ________________ ____________
Gross profit 109,061 (456) 108,605 114,136 (4,316) 109,820
Sales and (28,635) (292) (28,927) (31,162) (537) (31,699)
distribution
costs
Administrative
expenses
_________________ _________________ _____________ ________________ ________________ ____________
Goodwill - (2,195) (2,195) - (2,250) (2,250)
amortisation
Exceptional - 404 404 - (4,013) (4,013)
items
Other (44,829) - (44,829) (47,862) - (47,862)
administrative
expenses
_________________ _________________ _____________ ________________ ________________ ____________
(44,829) (1,791) (46,620) (47,862) (6,263) (54,125)
Other 784 225 1,009 1,250 (683) 567
operating
income/(costs)
_________________ _________________ _____________ ________________ ________________ ____________
Operating 36,381 (2,314) 34,067 36,362 (11,799) 24,563
profit (note 2)
Interest 1,142 - 1,142 787 - 787
receivable
Interest (620) - (620) (1,074) - (1,074)
payable
_________________ _________________ _____________ ________________ ________________ ____________
Profit before 36,903 (2,314) 34,589 36,075 (11,799) 24,276
taxation
Taxation (note 3) (12,739) 633 (12,106) (11,067) 2,618 (8,449)
_________________ _________________ _____________ ________________ ________________ ____________
Profit after 24,164 (1,681) 22,483 25,008 (9,181) 15,827
taxation
Equity (17,643) - (17,643) (17,688) - (17,688)
dividends
(note 5)
_________________ _________________ _____________ ________________ ________________ ____________
Retained 6,521 (1,681) 4,840 7,320 (9,181) (1,861)
profit/(loss)
================= ================= ============= ================ ================ ============
Basic earnings - - 21.82p - - 15.40p
per share
(note 6)
============= ============
Diluted - - 21.81p - - 15.36p
earnings per
share (note 6)
============= ============
Earnings per 23.45p - - 24.33p - -
share before
exceptional
items and
goodwill
amortisation
(note 6)
================= ================
Dividend per - - 17.15p - - 17.15p
ordinary
share
============= ============
All transactions are derived from continuing activities.
CONSOLIDATED BALANCE SHEET
1 August 2003 2 August 2002
__________________ _____________________
#'000 #'000 #'000 #'000
Fixed assets
Intangible assets 38,644 40,839
Tangible assets 185,293 201,558
Investments 1,280 -
__________ __________
225,217 242,397
Current assets
Stocks 12,437 15,444
Debtors 70,768 69,391
Cash at bank and in hand 50,871 39,768
__________ __________
134,076 124,603
Creditors - due within one year (104,834) (113,525)
__________ __________
Net current assets 29,242 11,078
___________ ___________
Total assets less current 254,459 253,475
liabilities
Creditors - due after one (1,043) (1,189)
year
Provisions and deferred (11,586) (15,946)
taxation
Deferred income (1,113) (1,523)
__________ __________
(13,742) (18,658)
___________ ___________
240,717 234,817
=========== ===========
Capital and reserves
Called up share capital 10,323 10,317
Share premium account 45,645 45,455
Capital redemption reserve 1,238 1,238
Profit and loss account 183,511 177,807
___________ ___________
Equity shareholders' funds 240,717 234,817
=========== ===========
SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
52 weeks to 52 weeks to
1 August 2 August
2003 2002
#'000 #'000
____________ ____________
Net cash inflow from operating activities 59,959 73,196
Returns on investments and servicing of 400 (150)
finance
Tax paid (7,804) (14,731)
Capital expenditure and financial investment (22,433) (32,621)
Acquisitions - 332
Equity dividends paid (17,697) (17,619)
____________ ____________
Cash inflow before financing 12,425 8,407
Financing
Issue of ordinary share capital 196 1,948
Decrease in debt (1,282) (2,286)
____________ ____________
Increase in cash 11,339 8,069
============ ============
NOTES TO THE SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
Reconciliation of operating profit to net cash inflow from operating
activities
52 weeks to 52 weeks to
1 August 2 August
2003 2002
#'000 #'000
____________ ____________
Operating profit 34,067 24,563
Depreciation 34,390 33,847
Goodwill amortisation 2,195 2,250
Amortisation of own shares 633 -
Net non-cash provisions movement (1,738) 3,105
Profit on disposal of tangible fixed assets (1,009) (884)
Other non cash movements (455) (258)
Changes in working capital (7,003) 10,432
Other items (1,121) 141
____________ ____________
59,959 73,196
============ ============
NOTES TO THE SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
continued
52 weeks to 52 weeks to
1 August 2 August
2003 2002
#'000 #'000
____________ ____________
Reconciliation of net cash flow to movement in net
funds
Increase in cash in the year 11,339 8,069
Cash outflow from decrease in debt and lease 1,282 2,286
financing ____________ ____________
Change in net funds resulting from cash flows 12,621 10,355
Exchange adjustments 306 1,255
____________ ____________
Movement in net funds in the year 12,927 11,610
Opening net funds 13,350 1,740
____________ ____________
Closing net funds 26,277 13,350
============ ============
Analysis of net funds
2 August Cash Other Exchange 1 August
2002 flow non cash movement 2003
changes
#'000 #'000 #'000 #'000 #'000
__________ ________ __________ __________ __________
Cash at bank and in hand 39,768 11,339 - (236) 50,871
Debt due within one year (25,006) 352 (107) 549 (24,212)
Debt due after one year (100) - 107 (7) -
Finance leases (1,312) 930 - - (382)
__________ ________ __________ __________ __________
13,350 12,621 - 306 26,277
========== ======== ========== ========== ==========
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
52 weeks to 52 weeks to
1 August 2 August
2003 2002
#'000 #'000
____________ ____________
Profit after taxation 22,483 15,827
Exchange differences 801 (3,989)
Related taxation 63 1,512
____________ ____________
Total recognised gains and losses relating to 23,347 13,350
the year ============ ============
MOVEMENTS IN CONSOLIDATED SHAREHOLDERS' FUNDS
52 weeks to 52 weeks to
1 August 2 August
2003 2002
#'000 #'000
____________ ____________
Opening shareholders' funds 234,817 237,207
Total recognised gains and losses 23,347 13,350
Dividends (17,643) (17,688)
Issue of ordinary shares 196 1,948
____________ ____________
Closing shareholders' funds 240,717 234,817
============ ============
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
The preliminary financial statements have been prepared in accordance with
the accounting policies set out in, and are consistent with, the Group's
Annual Report for 2003.
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 1 August 2003
and for the fifty two weeks to 2 August 2002 has been extracted from the
Group's statutory accounts for the respective years. The Group's statutory
accounts for the fifty two weeks to 2 August 2002 have been filed with the
Registrar of Companies. The Group's statutory accounts for the fifty two
weeks to 1 August 2003 will be sent to all shareholders before 4 November
2003. The auditors' reports on the accounts of the Group for both years
were unqualified and did not contain a statement under either Section 237
(2) or Section 237(3) of the Companies Act 1985.
2. Analysis of turnover and operating profit
The geographical analysis of turnover by destination is stated below:
2003 2002
#'000 #'000
United Kingdom 285,923 295,261
United States of America 122,685 143,908
Rest of the World 28,603 27,637
__________ __________
437,211 466,806
========== ==========
The geographical analysis of turnover and operating profit/(loss) by origin
is stated below:
Turnover Operating profit/(loss)
___________________ _________________________
2003 2002 2003 2002
#'000 #'000 #'000 #'000
United Kingdom 291,282 303,362 39,279 26,310
United States of America 120,553 141,504 (1,066) 3,510
Rest of the World 25,376 21,940 (1,951) (3,007)
_________ _________ _________ ________
437,211 466,806 36,262 26,813
Goodwill amortisation - USA - - (2,195) (2,250)
_________ _________ _________ ________
437,211 466,806 34,067 24,563
========= ========= ========= ========
2. Analysis of turnover and operating profit (continued)
The geographical analysis of operating profit/(loss) before exceptional
items and goodwill amortisation is stated below:
2003 2002
#'000 #'000
United Kingdom 39,260 34,970
United States of (703) 3,613
America
Rest of the World (2,176) (2,221)
_________ _________
36,381 36,362
========= =========
The segmental analysis of turnover is stated below:
2003 2002
#'000 #'000
Books 70,145 56,017
Direct Response and Commercial 192,342 217,492
Financial 34,968 48,630
Magazines 113,163 123,109
Multimedia 26,593 21,558
_________ _________
437,211 466,806
========= =========
The directors consider that an analysis of profit on a segmental basis would
be seriously prejudicial to the interests of the Group and, as permitted by
SSAP25, no further disclosure is given.
3. Taxation
The tax charge is analysed below:
52 weeks to 52 weeks to
1 August 2 August
2003 2002
#'000 #'000
____________ ____________
United Kingdom taxation 13,134 8,621
Overseas taxation (1,028) (172)
____________ ____________
12,106 8,449
============ ============
4. Pensions
(a) SSAP24
The Group has continued to account for pensions in accordance with SSAP24.
The pension cost for the Group's UK schemes was #3,757,000 (2002 -
#4,120,000).
The triennial valuation of the principal scheme was carried out as at 6
April 2002, using the projected unit method, by Jonathan Punter, Fellow of
the Institute of Actuaries, Punter Southall & Co Ltd ('the scheme's
actuary'), who is independent of the Group. The principal actuarial
assumptions adopted for the purposes of both SSAP24 and determining the
funding rate in the valuation were: a long term interest rate (investment
return) of 7.0 per cent per annum before Normal Retirement Age ('NRA') and
6.0 per cent after NRA; salary increases of 3.5 per cent per annum and
limited price indexation of 2.5 per cent per annum. Pension increases were
allowed for in accordance with the rules of the scheme and past practice.
At the valuation date, the actuarial value of the assets on this basis was
sufficient to cover 88 per cent of the benefits that had accrued to members
equivalent to a deficit of #12.6 million. The market value of the scheme's
assets as at 6 April 2002 was #98.6 million. For the purpose of the
actuarial valuation, assets were taken at 97.7 per cent of the market
value.
The scheme's actuary recommended that the contribution rate of 8.25 per
cent of pensionable pay was appropriate. This recommendation was accepted
by the Company and the Trustee.
(b) FRS17
The actuarial valuation, adjusted for FRS17 and updated at 1 August 2003,
showed a deficit of #61,768,000 (#43,238,000 after the related deferred tax
asset). Contributions for the year of #3,581,000 were paid at the
recommended rate of 8.25 per cent of pensionable pay. Ordinarily the
contribution rate would not be reviewed until the next formal valuation of
the scheme, which is due no later than as at 6 April 2005. However, in
light of lower than expected investment returns the Company and the Trustee
are reviewing the options for dealing with the growing deficit. The scheme
was closed to new entrants with effect from 6 April 2002. As a result, the
current service cost calculated using the projected unit method will
increase over time (expressed as a percentage of pensionable pay) but will
be applied to a shrinking pensionable payroll.
(c) Other
A defined contribution scheme was established for joiners after 6 April
2002, to which the Group contributes at the rate of 4 per cent of
pensionable pay.
The pension cost relating to foreign schemes was #1,165,000 (2002 -
#1,188,000). The foreign schemes are defined contribution schemes and are
principally Section 401(k) Plans in the USA.
5. Dividends
The directors propose a final equity dividend of 12.15p for each ordinary
share payable to holders on the register on 7 November 2003. If approved,
the final dividend will be paid on 4 December 2003.
6. Earnings per share
The calculation of basic earnings per share is based on profits after
taxation as disclosed in the profit and loss account of #22,483,000 (2002 -
#15,827,000). Adjusted earnings per share is calculated by adding back
exceptional items and goodwill amortisation, as adjusted for taxation, to
the profit after taxation. Basic earnings per share and adjusted basic
earnings per share are calculated on a weighted average of 103,062,130
(2002 - 102,777,257) ordinary shares in issue during the year. The 500,000
(2002 - nil) EPP matching shares held on behalf of the Company have been
excluded from the earnings per share calculation.
The calculation of the diluted earnings per share is based on profit after
taxation as disclosed in the profit and loss account and on a diluted
weighted average of 103,101,320 (2002 - 103,011,170) shares during the
year.
The difference between the number of shares used in the basic and diluted
earnings per share calculation is 39,190 (2002 - 233,913) representing
dilutive share options held but not yet exercised. Dilution has been
restricted to share options where the individual option price is less than
the average market value of shares during the year, which was 344.03p (2002
- 414.39p).
An adjusted basic earnings per share has been presented in order to
highlight the underlying performance of the Group, and is calculated as set
out in the table below:
2003 2002
__________________________ __________________________
Earnings Earnings Earnings Earnings
per share per share
#'000 pence #'000 pence
Earnings and basic 22,483 21.82 15,827 15.40
earnings per share
Exceptional items and 1,681 1.63 9,181 8.93
goodwill amortisation
Adjusted earnings and
adjusted earnings ___________ __________ _________ _________
per share 24,164 23.45 25,008 24.33
=========== ========== ========= =========
7. Exceptional items and goodwill amortisation
2003 2002
______________________ ______________________
Total Related Total Related
taxation taxation
#'000 #'000 #'000 #'000
Exceptional items 119 532 9,549 2,528
Goodwill amortisation 2,195 101 2,250 90
_______ ________ ________ ________
2,314 633 11,799 2,618
======= ======== ======== ========
The exceptional items relate to major rationalisation measures including
redundancy costs,losses less realised gains on asset disposals, provision for
and release of lease termination and other closure costs.
2003 2002
#'000 #'000
Cashflows in respect of exceptional items:
Net cash outflow from operating activities - current year (804) (6,020)
- prior year (1,121) -
Disposal of tangible fixed assets 340 1,328
________ ________
Decrease in cash (1,585) (4,692)
======== ========
This information is provided by RNS
The company news service from the London Stock Exchange
END
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