TIDMFOUR
RNS Number : 7240V
4imprint Group PLC
16 April 2021
16 April 2021
4imprint Group plc (the "Company")
Publication and Posting of the Annual Report and Accounts
2020
The Company has published its Annual Report and Accounts 2020
("Annual Report"), together with a Notice of Annual General Meeting
and Form of Proxy, and these documents have been posted to
Shareholders.
Copies of the Annual Report and Notice of Annual General Meeting
are available on the Company's website,
https://investors.4imprint.com.
Copies of the Annual Report, Notice of Annual General Meeting
and Form of Proxy have been submitted to the National Storage
Mechanism and will shortly be available at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
The Annual General Meeting (the "AGM") of the Company is
scheduled to be held at 11.00 on 18 May 2021 at 4imprint, 5 Ball
Green, Cobra Court, Trafford Park, Manchester, M32 0QT.
However, in light of the continuing COVID-19 situation and the
public health guidance and social distancing measures issued by the
Government, we intend to hold the AGM with the minimum attendance
required to form a quorum and Shareholders will not therefore be
able to attend the AGM in person.
The situation is constantly evolving, and the Government may
change current restrictions or guidance. Any changes to the
arrangements for our AGM (including any change to the location,
time or date of the meeting) will be communicated to Shareholders
in accordance with our Articles of Association and by Stock
Exchange Announcement, as early as possible before the date of the
meeting
Given Shareholders will unfortunately not be able to attend the
AGM in person, we strongly recommend that all Shareholders complete
and submit a proxy form in accordance with the instructions set out
in the Shareholder Notes to the Notice of Annual General Meeting.
Shareholders are also encouraged to submit any questions that they
would have raised at the AGM in advance, and we will publish the
answers to those questions on our website, as set out in the Notice
of Annual General Meeting.
A condensed set of the financial statements for the 53 weeks
ended 2 January 2021, together with information on important events
that occurred during that financial period and their impact on the
financial statements, were contained in the Final Results RNS
announcement made on 16 March 2021. That information, together with
the information set out in the appendices to this announcement,
which is extracted from the Annual Report, constitute the material
required by DTR 6.3.5R which is required to be communicated in full
unedited text through a Regulatory Information Service. This
announcement is not a substitute for reading the Annual Report.
In the appendices, "Group" is 4imprint Group plc and its
subsidiaries, and page references are to pages in the Annual Report
and Accounts 2020.
For further information, please contact:
Emma Taylor
Company Secretary
4imprint Group plc
Tel: 020 3709 9680
E-mail: agm@4imprint.com
Appendices
A. Statement of Directors' Responsibilities in respect of the Financial Statements
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable United
Kingdom law and regulations.
Company law requires the Directors to prepare financial
statements for each financial period. Under that law the Directors
have elected to prepare the Group and Company financial statements
in accordance with International Accounting Standards in conformity
with the requirements of the Companies Act 2006 and International
Financial Reporting Standards adopted pursuant to Regulation (EC)
No.1606/2002 as it applies in the European Union ("IFRSs"). Under
company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of
the state of affairs of the Group and the Company and of the profit
or loss of the Group for that period.
In preparing the financial statements, the Directors are
required to:
-- Select suitable accounting policies in accordance with IAS 8
'Accounting Policies, Changes in Accounting Estimates and Errors'
and then apply them consistently
-- Make judgments and accounting estimates that are reasonable and prudent
-- Present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information
-- Provide additional disclosures when compliance with the
specific requirements in IFRSs is insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the Group's and Company's financial position and
financial performance
-- In respect of the Group's and Company's financial statements,
state whether IFRSs have been followed, subject to any material
departures disclosed and explained in the financial statements
-- Prepare the financial statements on the going concern basis
unless it is appropriate to presume that the Group and Company will
not continue in business
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group and
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Group and Company and enable
them to ensure that the financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding the
assets of the Group and Company and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report, Directors' Report,
Remuneration Report and Corporate Governance Statement that comply
with that law and those regulations. The Directors are responsible
for the maintenance and integrity of the corporate and financial
information included on the Company's website.
Each of the Directors, whose names and functions are listed in
the Board of Directors on pages 46 and 47, confirm, to the best of
their knowledge:
-- That the consolidated financial statements, prepared in
accordance with IFRSs, give a true and fair view of the assets,
liabilities, financial position and profit of the Company and
undertakings included in the consolidation taken as a whole
-- That the Annual Report, including the Strategic Report,
includes a fair review of the development and performance of the
business and the position of the Company and undertakings included
in the consolidation taken as a whole, together with a description
of the principal risks and uncertainties that they face
-- That they consider the Annual Report, taken as a whole, is
fair, balanced and understandable and provides the information
necessary for Shareholders to assess the Group's position,
performance, business model and strategy
Emma Taylor
Company Secretary
16 March 2021
B. Principal risks & uncertainties
The list below is extracted in full and unedited from the Annual
Report and Accounts 2020, pages 26 to 31.
Outlined below are the current principal potential risks and
uncertainties to the successful delivery of the Group's strategic
goals. The list is not exhaustive and other, as yet unidentified,
factors may have an adverse effect.
Economic, market and environmental risks
Macroeconomic conditions
Description of risk
The business conducts most of its operations in North America
and would be affected by a downturn in general economic
conditions in this region or negative effects from tension
in international trade. In previous economic downturns
(excluding the COVID-19 pandemic), the promotional products
market has typically softened broadly in line with the
general economy.
Potential impact
* Customer acquisition and retention could fall, Link to strategy
impacting revenue in current and future periods. * Organic revenue growth
* The growth and profitability levels called for in the * Cash generation and profitability
Group strategic plan may not be achieved.
* Cash generation could be reduced broadly
corresponding to a reduction in profitability.
Mitigating activities
* Management monitors economic and market conditions to Direction
ensure that appropriate and timely adjustments are * The COVID-19 pandemic has had a significant negative
made to marketing and other budgets. impact on demand for our products due to the overall
economic impact of the pandemic as well as the
resulting restrictions/concerns around
* The customer proposition in terms of promotions, meetings/gatherings
price, value and quality of product can be adjusted
to resonate with customer requirements and budgets in
changing economic climates. * International trade tensions and political
instability have increased economic volatility in the
US
* The Group's balance sheet funding policy aims to
provide operational and financial flexibility to
facilitate continued investment in the business * Brexit uncertainty in the UK has led to lack of
through different economic cycles. business confidence
Significantly increased
Markets & competition
Description of risk
The promotional products markets in which the business
operates are intensely competitive. New or disruptive business
models looking to break down the prevailing distributor/supplier
structure may become a threat. Buying groups and online
marketplaces may allow smaller competitors access to improved
pricing and services from suppliers. Private equity interest
in the promotional products industry has increased in recent
years, offering potential funding for existing competitors
or new entrants. The effects of the COVID-19 pandemic may
reduce the use of promotional products in the future.
Potential impact
* Aggressive competitive activity or a disruptive new Link to strategy
model could result in pressure on prices, margin * Market leadership
erosion and loss of market share, impacting the
financial results.
* Organic revenue growth
* The Group's strategy based on achieving organic
revenue growth in fragmented markets may need to be * Cash generation and profitability
reassessed.
* Customer acquisition and retention could fall,
impacting revenue in current and future periods.
Mitigating activities
* An open-minded culture and an appetite for technology Direction
are encouraged, with the aim of positioning the * The competitive landscape to date has been relatively
business at the forefront of innovation in the consistent in our main markets
industry.
* No disruptive model has yet gained much traction in
* Management closely monitors competitive activity in the industry
the marketplace.
= Unchanged
* Price, satisfaction and service level guarantees are
an integral part of the customer proposition.
Negative customer feedback is investigated and
addressed rapidly.
* Management regularly surveys customers and engages in
research to monitor changing customer interests and
perceptions. Merchandising and supply chain teams, in
collaboration with our suppliers, have experience in
rapidly adapting the product range to meet evolving
consumer demand. Management is prepared to test
and/or add additional products to meet changing
customer service requirements.
Currency exchange
Description of risk
There is some exposure to currency exchange risk. Although
the business trades predominantly in US dollars, it also
transacts business in Canadian dollars, Sterling and Euros,
leading to some currency risk on trading. In addition,
head office costs, pension scheme commitments, purchases
of own shares and dividends are payable in Sterling. Consequently,
the business may be adversely impacted by movements in
the Sterling/US dollar exchange rate when it repatriates
cash to the UK and on translation of Sterling costs into
US dollars.
Potential impact
* The financial results of trading operations, and Link to strategy
therefore overall profitability, may be negatively * Cash generation and profitability
affected.
* Robust financial structure
* The financial condition and cash position of the
Group may differ materially from expectations. In an
extreme scenario, the Group's strategic objectives
around capital structure and core dividend
commitments could be disrupted.
Mitigating activities
* The Group reports its results in US dollars, Direction
minimising currency impact on reported revenue, * Political instability, interest rate policy and trad
operating profit and net assets since trading e
operations are concentrated mainly in North America. tensions (US) and the consequences of Brexit (UK)
have led to increased volatility in currency markets
* The Group can use forward contracts to hedge
anticipated cash receipts from its overseas Increased
operations, giving some certainty of amounts
receivable in Sterling.
Climate change & environment
Description of risk
Climate change potentially affects our operations, facilities,
supply chain, team members, communities and our customers
in a variety of ways. As such, it presents a multitude
of risks to the business and threatens our ability to achieve
our strategic objectives.
Potential impact
* Extreme weather-related events that impact our Link to strategy
customers and/or our suppliers can have 'episodic' * Cash generation and profitability
negative impact on revenue, customer acquisition and
retention, and they can also cause increases to our
product and distribution costs. Some of our suppliers * Building a sustainable business
are located in geographic areas that are subject to
increased risk for these events.
* The transition to a low-carbon economy presents
several key risks:
* Potential for increased operational costs related to
mitigation efforts, increased regulatory compliance
and carbon taxes.
* Increased product costs charged by our suppliers due
to increased input costs and regulatory compliance.
* Customers will increasingly require a wider range of
low-carbon, sustainable product options that may be
difficult to identify and source, negatively
impacting demand.
* Increasingly stakeholders will demand that companies
are actively and appropriately addressing climate
change and there is an increased level of
reputational risk for companies that are perceived
not to be doing so.
Mitigating activities
* The flexible nature of our 'drop-ship' model allows Direction
for relatively rapid adjustment to episodes of * There is an increasing sense of urgency globally,
extreme weather. The business has very low customer and
concentration which helps mitigate an element of the as such, the risks in this area will increase as
risk as well. well
* The business has set a goal to become 'carbon Increased
neutral' by no later than December 2022 and
management is actively monitoring and measuring
progress towards this goal.
* Our merchandising teams actively collaborate with our
suppliers to continuously curate our range of
products to adapt and meet the needs and tastes of
our customers.
Operational risks
Business facility disruption
Description of risk
The 4imprint business model means that operations are concentrated
in centralised office and distribution facilities. The
performance of the business could be adversely affected
if activities at one of these facilities were to be disrupted,
for example, by pandemic, fire, flood, loss of power or
internet/telecommunication failure.
Potential impact
* The inability to service customer orders over any Link to strategy
extended period would result in significant revenue * Market leadership
loss, deterioration of customer acquisition and
retention metrics and diminished return on marketing
investment. * Organic revenue growth
* A significant portion of our apparel orders are * Cash generation and profitability
embroidered in-house at our distribution centre,
therefore disruption at this facility would impact
our ability to fulfil these orders.
* The Group's reputation for excellent service and
reliability may be damaged.
Mitigating activities
* Back-up and business continuity procedures are in Direction
place to ensure that customer service disruption is * The COVID-19 pandemic raises the risk of potential
minimised. shutdown of one or all of our facilities
* Websites are cloud-based, and data is backed up Increased
immediately to off-site servers.
* Relationships are maintained with third party
embroidery contractors to provide an element of
back-up in the event of facility unavailability.
* A significant proportion of our office and customer
service staff can work from home, mitigating some
risk should offices become unavailable.
Disruption to the product supply chain or delivery service
Description of risk
As a consequence of the Group's 'drop-ship' distribution
model, trading operations could be interrupted if: (i)
the activities of a key supplier were disrupted and it
was not possible to source an alternative supplier in the
short term; (ii) a key supplier's own supply chain is compromised
by 'force majeure' events in the country of original product
manufacture, for example natural disasters, social/political
unrest or pandemic; or (iii) the primary parcel delivery
partner used by the business suffered significantly degraded
service levels. As the Group continues to grow, the volume
of orders placed with individual suppliers becomes significant.
Potential impact
* Inability to fulfil customer orders would lead to Link to strategy
lost revenue and a negative impact on customer * Market leadership
acquisition and retention statistics.
* Organic revenue growth
* The Group's reputation for excellent service and
reliability may be damaged.
* Cash generation and profitability
* Building a sustainable business
Mitigating activities
* A rigorous selection process is in place for key Direction
suppliers, with evaluation and monitoring of quality, * Risk inherent in increasing supplier concentration
production capability and capacity, ethical standards
,
financial stability and business continuity planning. * COVID-19 pandemic has increased risk
* Very close relationships are maintained with key Increased
suppliers, including a detailed shared knowledge of
factory locations, operations and capabilities in the
country of original product manufacture, allowing
swift understanding of and appropriate reaction to
events.
* Dialogue with key suppliers has been increased during
the pandemic to monitor for signs of distress.
* Wherever possible, relationships are maintained with
suitable alternative suppliers for each product
category.
* Secondary relationships are in place with alternative
parcel carriers.
Disturbance in established marketing techniques
Description of risk
The success of the business relies on its ability to attract
new and retain existing customers through a variety of
marketing techniques. These methods may become less effective
as follows:
* Offline: The flow of print catalogues and sample
packages would be disrupted by the incapacity of the
US Postal Service to make deliveries, for example due
to natural disasters or labour activism. Pandemic
conditions that lead to increased levels of people
working from remote locations may diminish the
effectiveness of this technique.
* Online: Search engines are an important source for
channelling customer activity to 4imprint's websites.
The efficiency of search engine marketing could be
adversely affected if the search engines were to
modify their algorithms or otherwise make substantial
changes to their practices.
* TV/Video/Brand: Fluctuations in available inventory
may cause the price of this technique to increase
beyond our acceptable thresholds. The evolving nature
of how consumers access this type of content can
change our ability to effectively access our
audience.
In addition, the evolving landscape around data privacy
legislation potentially affects our ability to access and
analyse customer data information.
Potential impact
* If sustained over anything more than a short time Link to strategy
period, an externally driven decrease in the * Market leadership
effectiveness of key marketing techniques would cause
damage to the customer file as customer acquisition
and retention fall. This would affect order flow and * Organic revenue growth
revenue in the short term and the productivity of the
customer file over a longer period, impacting growth
prospects. * Cash generation and profitability
* Restrictive data privacy legislation could decrease
the yield on our marketing activities and might
increase compliance costs and the possibility of
lawsuits.
Mitigating activities
* Offline: Developments in the US Postal Service are Direction
closely monitored through industry associations and * Marketing diversification continues via the
lobbying groups. Alternative parcel carriers are successful integration of a brand component to the
continuously evaluated. marketing portfolio
* Online: Management stays very close to new * The COVID-19 pandemic has negatively impacted offline
developments and emerging platforms in the online response rates
space. Efforts are focused on anticipating changes
and ensuring compliance with both the requirements of
providers and applicable laws. Increased
* TV/Video/Brand: Given that this is the newest element
of our marketing portfolio, our utilisation of this
technique is still in the early stages of its
development, allowing for a high degree of
flexibility.
* Data privacy requirements are monitored closely and
assessed.
Reliance on key personnel
Description of risk
Performance depends on the ability of the business to continue
to attract, motivate and retain key staff. These individuals
possess sales and marketing, merchandising, supply chain,
IT, financial and general management skills that are key
to the continued successful operation of the business.
Potential impact
* The loss of key employees or inability to attract Link to strategy
appropriate talent could adversely affect the Group's * Market leadership/revenue growth
ability to meet its strategic objectives, with a
consequent negative impact on future results.
* Cash generation and profitability
* Building a sustainable business
Mitigating activities
* The business is proactive in aiming to deliver a Direction
first class working environment. In addition, * The business has been able to attract and retain
competitive employment terms and incentive plans are appropriate talent
designed with a view to attracting and retaining key
personnel.
= Unchanged
* Succession planning, both at Board and operational
levels.
Technological risks
Failure or interruption of information technology systems
and infrastructure
Description of risk
The business is highly dependent on the efficient functioning
of its IT infrastructure. An interruption or degradation
of services at any 4imprint operational facility would
affect critical order processing systems and thereby compromise
the ability of the business to deliver on its customer
service proposition.
Potential impact
* In the short-term, orders would be lost and delivery Link to strategy
deadlines missed, decreasing the efficiency of * Market leadership
marketing investment and impacting customer
acquisition and retention.
* Organic revenue growth
* Revenue and profitability are directly related to
order flow and would be adversely affected as a * Cash generation and profitability
consequence of a major IT failure.
* Depending on the severity of the incident,
longer-term reputational damage could result.
Mitigating activities
* There is significant ongoing investment in both the Direction
IT team supporting the business and the hardware and * The IT platform is mature, and performance has been
software system requirements for a stable and secure efficient and resilient, including through the
operating platform. COVID-19 pandemic with high levels of staff working
from home
* Back-up and recovery processes are in place,
including immediate replication of data to an = Unchanged
alternative site, to minimise the impact of
information technology interruption.
* Cloud-based hosting for eCommerce and other back end
functionality.
Failure to adapt to new technological innovations
Description of risk
The operating platforms of the business may not be able
to respond and adapt to rapid changes in technology. If
the development of websites and customer-facing applications
for alternative devices and platforms is slow or ineffective
the business could lose competitive edge. In addition,
the development of order processing, supplier-facing and
data analytics technologies could fail to deliver the improvements
in speed, ease and efficiency necessary to attract and
retain a productive customer base.
Potential impact
* If the business fails to identify and adopt new Link to strategy
technologies and therefore falls behind in the * Market leadership
marketplace, it may fail to capture the number of new
customers and retain existing customers at the rate
required to deliver the growth rates called for in * Organic revenue growth
the Group's strategic plan.
* Building a sustainable business
Mitigating activities
* Management has a keen awareness of the need to keep Direction
pace with the rapidly changing and continuously * Innovation remains a priority
evolving technological landscape.
= Unchanged
* An appetite for technological innovation is
encouraged in the business. Sustained investment is
made in the development of both outward-facing and
back office systems.
Cyber threats
Description of risk
Malware, ransomware and other malicious cyber threats can
lead to system failure and/or unauthorised access to and
misappropriation of customer data, potentially leading
to reputational damage and loss of customer confidence.
This is a rapidly changing environment, with new threats
emerging on an almost daily basis.
Potential impact
* Revenue and profitability are directly related to Link to strategy
order flow and would be adversely affected as a * Cash generation and profitability
consequence of system compromise.
* Shareholder value
* A significant security breach could lead to
litigation and losses, with a costly rectification
process. In addition, it might be damaging to the
Group's reputation and brand.
* An event of this nature might result in significant
expense, impacting the Group's ability to meet its
strategic objectives.
Mitigating activities
* The business employs experienced IT staff whose focus Direction
is to identify and mitigate IT security * The general incidence and publicity around
vulnerabilities. Investment in software and other cyber-crime continues to increase
resources in this area continues to be a high
priority.
* Increased incidence of malicious cyber activity
during the current COVID-19 pandemic
* Due to the ever-evolving nature of the threat,
emerging cyber risks are addressed by the IT security
team on a case-by-case basis. Increased
* Technical and physical controls are in place to
mitigate unauthorised access to customer data and
there is an ongoing investment process to maintain
and enhance the integrity and efficiency of the IT
infrastructure and its security.
C. Related party transactions
There are no related party transactions requiring
disclosure.
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