TIDMFOUR
RNS Number : 2168I
4imprint Group PLC
11 August 2021
11 August 2021
4imprint Group plc
Half year results for the 26 weeks ended 3 July 2021
(unaudited)
4imprint Group plc (the "Group"), a direct marketer of
promotional products, today announces its half year results for the
26 weeks ended 3 July 2021.
Half year Half year
2021 2020
Financial Overview $m $m
----------
Revenue 326.81 265.81
Underlying* profit before tax 3.55 0.25
Profit before tax 3.37 0.03
Cash 52.80 37.49
-------------------------------------- ---------- ----------
Underlying* basic EPS (cents) 9.65 0.73
Basic EPS (cents) 9.12 0.07
Interim dividend per share (cents) 15.00 nil
Interim dividend per share (pence) 10.83 nil
-------------------------------------- ---------- ----------
* Underlying is before defined benefit pension charges (see note
9 for reconciliation to equivalent IFRS measure).
The results for the half year and prior half year are
unaudited.
Operational Overview
* Robust recovery in demand:
* 616,000 total orders processed in H1 2021 (H1 2020:
470,000; H1 2019: 778,000)
* 113,000 new customers acquired in H1 2021 (H1 2020:
81,000; H1 2019: 147,000)
* July 2021 order counts running above pre-pandemic
(2019) levels
* Marketing portfolio successfully re-shaped during the
pandemic; well positioned in recovering markets
* Attractive market share opportunity in H2; will
require careful management in conjunction with
pandemic-related supply chain challenges and cost
increases
* Re-introduction of biannual dividend payments;
interim dividend of 15.00c per share declared
* Strong financial position: cash balance of $52.80m
(27 June 2020: $37.49m); no debt
Paul Moody, Chairman said:
"The Board is confident that the Group's markets remain highly
attractive and addressable, and that the core strength of its
flexible business model and competitive positioning will allow it
to return to its pre-COVID-19 organic growth profile. "
For further information, please contact:
4imprint Group plc MHP Communications
Tel. + 44 (0) 20 3709 9680 Tel. + 44 (0) 20 3128 8794
hq@4imprint.co.uk 4imprint@mhpc.com
Kevin Lyons-Tarr - CEO Katie Hunt
David Seekings - CFO Rachel Mann
Chairman's Statement
Backdrop
A year ago, our attention was fully focused on navigating the
extraordinary societal and commercial disruption caused by the
early phases of the COVID-19 pandemic. Although the true extent and
impact of the pandemic is yet to be fully realised, we are
confident that the decisions we made at a time of severe stress
have been successful in protecting the long-term prospects of the
business and the interests of all our stakeholders.
In particular, the following themes have been central to our
approach in leading the business through the severe downturn,
whilst positioning it to take full advantage of the opportunities
presented by a recovery: (i) We have taken a people-led approach at
all times. We are in no doubt that our team members are at the
heart of our culture and are therefore fundamental to our recovery
from the pandemic and to our future success; (ii) We rapidly
adapted to a 'work from home' solution for many of our office-based
team members. Initially borne out of necessity, our evolving
'hybrid' flexible working model promises to enhance our culture and
service capabilities as we move forward; (iii) We have maintained
strong and ethical relationships with our supplier partners
throughout the crisis. These close partnerships will be key in
developing innovative solutions to help us work through the
evolving supply chain challenges set in motion by the pandemic; and
(iv) We have taken advantage of an unprecedented and extremely
difficult situation to make bold, but well considered, moves in
re-shaping our marketing portfolio, leaving 4imprint well
positioned to take further market share.
The benefit of these decisions and actions has been evident in
the improving performance of the Group in the first half of 2021
and they remain fundamental to the delivery of our strategy.
Performance
Given the dramatic disruption to trading patterns during 2020, a
comparison of current order intake against the same period in 2019
(the most recent 'normal' year) gives the best indicator to gauge
the extent of the recovery. In our AGM trading statement on 18 May
2021 we mentioned that total Group order counts had recovered to
85% of 2019 levels over the preceding three weeks. Since that time,
total order counts have continued to improve, rising to over 96% of
the 2019 comparative in the month of June 2021 (79% year to date).
This much improved performance comes despite the Canadian and UK
markets being in some form of lockdown throughout the first half of
2021. Since the end of June our primary US market has continued to
gain significant momentum, with total order intake in the month of
July up an average of 12% over 2019 levels. Importantly, new
customer orders in that same period were up 18% over 2019,
representing a very encouraging recovery of demand in the
business.
Group revenue in the first half of 2021 was $326.81m, an
increase of $61.00m, or 23% over H1 2020. Profit before tax for the
period was $3.37m (H1 2020: $0.03m), resulting in basic earnings
per share of 9.12c, (H1 2020: 0.07c).
The continuing cash-generative characteristics of the business
model produced a strong cash performance for the half year.
Consequently, the Group remains very well financed, with a cash
balance of $52.80m at the 2021 half year (27 June 2020:
$37.49m).
Product supply and margins
The Group's revenue outlook is fast improving. At the same time,
challenges in the second half of the year from global logistical
issues are expected to cause sporadic disruption in the
availability of some of the products that we sell, as well as
increasing transportation costs. This will combine with wage
inflation at our tier 1 domestic suppliers to increase our overall
cost of goods. The labour element of this increase will likely be
permanent, whereas we expect that the transportation disruption
element will be mainly transient. Market-driven internal wage
inflation will also impact margins. In the aggregate we expect
these cost pressures to temper net margins in the second half. We
will address these challenges proactively without compromising our
market share opportunity.
Dividend
As a measure of our increasing confidence in the recovery of the
business, we are pleased to re-introduce our biannual dividend
payment programme, which had been suspended to conserve cash during
the pandemic. The Board has declared an interim dividend of 15.00c
per share (H1 2020: nil). The well-established Group balance sheet
funding and capital allocation guidelines will continue to shape
future dividend payments to Shareholders.
Board
John Gibney was appointed as a Director on 8 March 2021, duly
succeeding John Warren as Chair of the Audit Committee after John's
retirement at the AGM in May 2021.
Further, we announced with our 2020 final results on 16 March
2021 that we had commissioned a search for additional non-executive
talent with a view to strengthening the depth and diversity of our
Board. We are pleased to welcome two additional Non-Executive
Directors.
Lindsay Beardsell is currently Executive Vice President and
General Counsel at Tate & Lyle plc, and she has held similar
positions in other public companies including Ladbrokes Coral Group
plc and SuperGroup plc. We look forward to benefitting from the
breadth of legal, governance and commercial experience that Lindsay
will bring to our Board.
Jaz Rabadia MBE is currently Director of Energy, Sustainability
and Social Impact at WeWork, the commercial real estate company.
Prior to this, she held senior positions at Starbucks Coffee
Company and Sainsbury's Supermarkets Ltd with responsibility mostly
in the areas of energy management and sustainability. Jaz's
contribution is eagerly anticipated as we further develop our
sustainability agenda in the years ahead.
Both Lindsay and Jaz will be appointed formally as Non-Executive
Directors of 4imprint Group plc on 1 September 2021.
Outlook
The Group has remained in a strong financial position throughout
the COVID-19 pandemic. This has permitted management to make a
series of sound business decisions, always in alignment with the
Group's culture and purpose and with a view towards the
long-term.
The benefit of these decisions is reflected in recent demand
activity; total orders are now running at or higher than
pre-pandemic levels as the recovery takes shape in the markets we
serve.
We are cognisant of the challenges that the pandemic still
presents. In particular, the potential risks posed by virus
variants, product availability issues and pressure on operating
margins in the second half of the year mean that a range of
outcomes is possible. Equally, we are confident in our ability,
over time, to turn these challenges into opportunities.
The Board is confident that the Group's markets remain highly
attractive and addressable, and that the core strength of its
flexible business model and competitive positioning will allow it
to return to its pre-COVID-19 organic growth profile.
Paul Moody
Chairman
11 August 2021
Operating and Financial Review
Operating Review
Half year Half year
2021 2020
Revenue $m $m
------------------------------ ---------- ----------
North America 321.70 260.54
UK and Ireland 5.11 5.27
------------------------------ ---------- ----------
Total 326.81 265.81
------------------------------ ---------- ----------
Half year Half year
2021 2020
Underlying* operating profit $m $m
------------------------------ ---------- ----------
Direct Marketing operations 5.69 1.92
Head Office (1.92) (1.79)
------------------------------ ---------- ----------
Total 3.77 0.13
------------------------------ ---------- ----------
Operating profit/(loss) 3.60 (0.03)
------------------------------ ---------- ----------
Underlying profit is included because the Directors consider
this gives a measure of the underlying performance of the
business.
* Underlying is before defined benefit pension charges (see note
6 for reconciliation to equivalent IFRS measure).
The results for the half year and prior half year are
unaudited.
Performance overview
The first half of 2021 saw a continuing steady recovery in the
business after the severe downturn in demand for our products
caused by the COVID-19 pandemic in early 2020. Our team has been
tireless in working through the many challenges presented by the
crisis culminating in a return, in recent weeks, to pre-pandemic
activity levels.
In our 2020 final results announcement released on 16 March
2021, we noted that total order counts in January and February 2021
were at an average of 65% of 2019 levels (the most recent 'normal'
year and thus the best comparative). Since then, vaccine rollouts
and the easing of restrictions in our main US market have resulted
in substantial recovery in business volumes. At our AGM in May 2021
we mentioned that total order counts were at 85% of the same period
in 2019; this had risen to over 96% of 2019 levels in the month of
June 2021 and in the month of July we have seen total orders
exceeding pre-pandemic volumes at 112% compared to July 2019.
In total 616,000 orders were processed in the first half of
2021, an increase of 31% compared to 470,000 orders in H1 2020. It
is encouraging that we have continued to attract new customers at a
relatively steady rate throughout the pandemic. In the first half
of 2021 we acquired 113,000 new customers, an increase of 39% over
the 81,000 acquired over the same period in 2020. This momentum has
accelerated in the month of July, resulting in new customer order
counts up an average of 18% over the same weeks in 2019.
This gradually improving trading environment resulted in a
better year-on-year financial performance. Group revenue for the
2021 half year of $326.81m was 23% improved over $265.81m in the
prior year. Underlying operating profit for the period was $3.77m,
compared to $0.13m in H1 2020, however it should be noted that the
comparative was boosted by a non-recurring credit of $3.64m in
respect of employee retention credits under the US CARES Act and UK
Government Job Retention Scheme.
The 4imprint direct marketing business model remains very cash
generative, with a cash balance at the 2021 half year of $52.80m
(27 June 2020: $37.49m) underpinning the financial strength of the
Group.
Operational highlights
We are confident that the important decisions we have made and
the actions we have taken throughout the pandemic were
directionally appropriate, consistent with 4imprint's culture and
values, and supportive of the Group's long-term future. Some of the
more important themes are set out below.
-- People. A business is only as strong as its people.
Consistent with our principles and our culture we have taken a
people-led approach from the onset of the pandemic. Health and
safety protocols have been and remain a top priority in the
business. We resolved to protect and retain all of our team members
through the depths of the crisis, secure in the knowledge that our
people represent the foundation on which our success is built and
are the key to making the most of the opportunities presented in
recovering markets. This approach has delivered tangible benefit in
recent months as we retained the necessary resource to capture the
rapidly increasing demand, providing excellent service to our
customers at a time when labour constraints in our primary US
market have tightened considerably and some other businesses have
struggled to rebuild their workforce.
-- Flexible working. The experience gained from the actions
taken to enable the majority of our office-based team members to
work from home has allowed us to test new working practices, in
particular the development of a permanent 'hybrid' working
environment that will further enhance our culture and as such, our
competitive position. We have begun to roll out the new computer
hardware and software to support this new way of working and to
provide the team with the necessary tools to do their work
effectively and efficiently.
-- Supply. We have collaborated closely with our valued supplier
partners throughout the pandemic, dealing with challenging
disruptions in the supply chain. Early problems included managing
production difficulties caused by lockdowns and a rapidly changing
product mix. The current phase of the pandemic has brought
challenges around global logistics, inventory availability and the
difficulty and increased cost of finding production labour to keep
up with recovering demand. As with the previous phases of the
pandemic, these challenges will present a period of acute pressure
as we assess the situation and identify effective solutions in
support of our strategic objectives.
-- Marketing. Prior to the pandemic, we were already well
underway with our strategic initiative to significantly evolve our
marketing portfolio through building a brand awareness pillar. From
the start we believed this represented an opportunity to strengthen
the business for the long-term and also to provide more flexibility
than our previous mix. In many ways, the pandemic provided the
ultimate 'stress test' to this approach as we have been able to be
aggressive in the way that we have re-calibrated the marketing
portfolio through the crisis. The flexibility of the new portfolio
allowed us to dramatically reduce costs as order volumes plummeted
at the start of the pandemic by substantially reducing our print
(direct mail) element, whilst simultaneously taking full advantage
of the reduced cost of brand marketing to ensure we maintained our
place in the minds of current and potential customers. We think
that our increasing investment in brand awareness prior to, and
during the pandemic will also help us to take full advantage of the
recovery. In effect, we took the opportunity to accelerate
strategic changes in the marketing mix (primarily increasing the
brand and decreasing the print components) that typically would
have occurred over a longer timeframe. The results we have seen
during the pandemic and into the recovery phase give us confidence
that these changes leave our marketing engine in good shape to
continue to power the business in the years ahead.
ESG
We are excited to have made good progress in our ESG initiatives
in the first half of the year, particularly in respect of
environmental matters. Our Environmental Committee has convened
monthly to manage and prioritise our various initiatives,
including:
-- Working to understand further and audit the scope 1 and scope
2 carbon footprint of our operations, as well as selected scope 3
elements material to our business, most notably transportation.
-- Progressing existing carbon reduction projects, for example
LED lighting in our main offices.
-- Refining the constituent elements of our plan towards meeting
the 'CarbonNeutral (R) ' certification of our external consultant
Natural Capital Partners, with a view to becoming a carbon neutral
business no later than December 2022.
-- A broad review of our product range and how it is presented
on our website with the aim of providing our customers with easy
access to as much information and product variety as possible to
enable them to consider choices based on verified sustainability
criteria.
Competitive position
We believe that the experience of dealing with the many
challenges presented by the COVID-19 pandemic will leave 4imprint
stronger and more focused than ever. The impact of the pandemic
will continue to be felt in various ways for some time to come, but
the significant rebound in demand seen in recent months gives
confirmation that our strategy remains fully relevant, and that our
markets are attractive and ready to be addressed via our agile and
resilient low fixed cost business model.
Financial Review
Half year Half year Half year Half year
2021 2020 2021 2020
Underlying* Underlying* Total Total
$m $m $m $m
------------------------------ ------------- ------------- ---------- ----------
Underlying* operating profit 3.77 0.13 3.77 0.13
Defined benefit pension plan
administration costs (0.17) (0.16)
Net finance (cost)/income (0.21) 0.12 (0.23) 0.06
Profit before tax 3.56 0.25 3.37 0.03
------------------------------ ------------- ------------- ---------- ----------
* Underlying is before defined benefit pension charges (see
notes 6 and 9 for reconciliations to equivalent IFRS measures).
The results for the half year and prior half year are
unaudited.
The Group's underlying operating result in the period,
summarising expense by function, was as follows:
Half year Half year
2021 2020
$m $m
------------------------------ ---------- ----------
Revenue 326.81 265.81
------------------------------ ---------- ----------
Gross profit 95.61 77.28
Marketing costs (59.89) (47.16)
Selling costs (15.43) (15.21)
Admin & central costs (16.19) (14.36)
Share option related charges (0.33) (0.42)
------------------------------ ---------- ----------
Underlying* operating profit 3.77 0.13
------------------------------ ---------- ----------
* Underlying is before defined benefit pension charges (see note
6 for reconciliation to equivalent IFRS measure).
The first six months of 2021 have shown very encouraging
progress in the recovery of the business from the effects of the
COVID-19 pandemic. Demand levels have built steadily throughout the
period consistent with vaccination rollouts and the gradual easing
of restrictions in our primary markets. This has resulted in Group
revenue for the period of $326.81m (H1 2020: $265.81m), an increase
of 22.9%.
The gross profit percentage in the first half has improved
slightly to 29.3% (H1 2020: 29.1%), although this is below
pre-pandemic levels by a couple of percentage points. The primary
influences impacting the margin include a change in the order mix
(strong apparel performance at typically lower product margin
percentages), continuing strength in average order values, and
increases in other directly variable costs such as
transportation.
Marketing costs were 18.3% of revenue in the period, compared to
17.7% of revenue in H1 2020. Our financial strength has permitted
continued investment in marketing activity throughout the COVID-19
pandemic, facilitating a significant re-shaping of the marketing
portfolio ready to take advantage of the market share opportunity
presented by the recovery in demand.
Shown within the H1 2020 admin costs is $3.64m of employee
retention credits received under the US CARES Act and UK Government
Job Retention Scheme; no similar credits have been received in
2021. Head Office costs of $1.92m (H1 2020: $1.79m) were stable, in
underlying currency, year-over-year.
As a result of the above factors, underlying operating profit
increased from $0.13m in H1 2020 to $3.77m in 2021.
Foreign exchange
The primary US dollar exchange rates relevant to the Group's
results were as follows:
Half year 2021 Half year 2020 Full year 2020
Period Average Period Average Period end Average
end end
---------- ------- -------- ------- -------- ----------- --------
Sterling 1.38 1.39 1.23 1.26 1.36 1.28
Canadian
dollars 0.81 0.80 0.73 0.73 0.79 0.75
---------- ------- -------- ------- -------- ----------- --------
The Group reports in US dollars, its primary trading currency.
It also transacts business in Canadian dollars, Sterling and Euros.
Sterling/US dollar is the exchange rate most likely to impact the
Group's financial performance.
The primary foreign exchange considerations relevant to the
Group's operations are as follows:
-- Translational risk in the income statement remains low with
most of the Group's revenue arising in US dollars, the Group's
reporting currency. The net impact on the 2021 half year income
statement from trading currency movements was not material to the
Group's results.
-- Most of the constituent elements of the Group balance sheet
are US dollar-based. The main exception is the Sterling-based
defined benefit pension liability. Currency movements produced an
exchange loss on the pension liability of $0.04m for the first half
of 2021.
-- The Group generates cash mostly in US dollars, but its
primary applications of post-tax cash are Shareholder dividends,
pension contributions and some Head Office costs, all of which are
paid in Sterling. As such, the Group's cash position is sensitive
to Sterling/US dollar exchange movements. To the extent that
Sterling weakens against the US dollar, more funds are available in
payment currency to fund these cash outflows.
Share option charges
A total of $0.33m (H1 2020: $0.42m) was charged in the period in
respect of IFRS 2 'Share-based Payments'. This was made up of two
elements: (i) senior management awards under the 2015 Incentive
Plan; and (ii) charges in respect of the 2019 UK SAYE Scheme and
the 2021 US Employee Stock Purchase Plan.
Current options and awards outstanding are 116,191 share options
under the UK SAYE and US Employee Stock Purchase Plan schemes; and
51,925 share awards under the 2015 Incentive Plan.
Net finance cost
Net finance cost in the period was $0.23m (H1 2020: net finance
income $0.06m). This comprises fees on borrowing facilities and
lease interest charges under IFRS 16, partially offset by external
interest received on deposits. The year-over-year reduction in net
external interest is due to lower yields on deposits and higher
lease interest charges following the signing of an extension to the
Oshkosh office lease commencing 1 October 2020.
Taxation
The tax charge for the half year was $0.81m (H1 2020: $0.01m),
giving an effective tax rate of 24% (H1 2020: 21%). This takes into
account the impact on the deferred tax balances of the increase in
the main corporation tax rate in the UK from 19% in tax year 2022,
to 25% for the tax year 2023, that was substantively enacted in May
2021. The tax charge relates principally to taxation payable on
profits earned in North America.
Earnings per share
Underlying basic earnings per share was 9.65c (H1 2020: 0.73c).
This reflects the continued recovery in demand and earnings from
the COVID-19 pandemic that heavily impacted the 2020 half year
period, and a weighted average number of shares in issue similar to
prior year.
Basic earnings per share was 9.12c (H1 2020: 0.07c).
Dividends
Dividends are determined in US dollars and paid in Sterling,
converted at the exchange rate on the date that the dividend is
declared.
Due to significant uncertainty as to how quickly markets might
recover from the COVID-19 pandemic, and in the interests of
financial prudence, the Board cancelled the payment of the 2019
final dividend and did not propose 2020 interim or 2020 final
dividends.
Underpinned by net cash at the half year end of $52.80m (27 June
2020: $37.49m) and an improving commercial outlook for the Group,
the Board has decided to declare an interim dividend for 2021 of
15.00c per share (H1 2020: nil). In Sterling, the interim dividend
per share will be 10.83p (H1 2020: nil). The dividend will be paid
on 21 September 2021 to Shareholders on the register at the close
of business on 27 August 2021.
Defined benefit pension plan
The Group sponsors a legacy UK defined benefit pension plan (the
"Plan") which has been closed to new members and future accruals
for several years. The Plan has 110 pensioners and 235 deferred
members.
At 3 July 2021, the deficit of the Plan on an IAS 19 basis was
$2.24m, compared to $3.31m at 2 January 2021. Gross Plan
liabilities under IAS 19 were $39.53m, and assets were $37.29m.
The change in deficit is analysed as follows:
$m
--------------------------------------------------- -------
IAS 19 deficit at 3 January 2021 3.31
Company contributions to the Plan (2.07)
Pension administration costs 0.17
Pension finance charge 0.01
Re-measurement gain due to changes in assumptions (2.66)
Return on Plan assets (excluding interest income) 3.44
Exchange loss 0.04
---------------------------------------------------- -------
IAS 19 deficit at 3 July 2021 2.24
---------------------------------------------------- -------
The net liability reduced by $1.07m in the period, driven
primarily by employer's contributions of $2.07m and a
re-measurement gain of $2.66m, partially offset by a negative
return on assets of $3.44m. In Sterling, the net deficit decreased
by GBP0.80m in the period to GBP1.63m.
A triennial actuarial valuation of the Plan was completed in
September 2019 and this forms the basis of the IAS 19 valuation for
the 2021 half year set out above.
The contributions to the Plan are part of a recovery plan agreed
by the Company and the Trustee that aims towards funding on a
buy-out basis by mid-2024.
Cash flow
Net cash was $52.80m at 3 July 2021 (27 June 2020: $37.49m; 2
January 2021: $39.77m).
Cash flow in the period is summarised as follows:
Half year Half year
2021 2020
$m $m
----------------------------------------- ---------- ----------
Underlying* operating profit 3.77 0.13
Share option related charges 0.32 0.42
Depreciation and amortisation 1.76 1.65
Lease depreciation 0.67 0.82
Change in working capital 11.32 9.18
Capital expenditure (0.96) (3.33)
----------------------------------------- ---------- ----------
Underlying operating cash flow 16.88 8.87
Tax and interest (1.04) (0.02)
Defined benefit pension contributions (2.07) (10.91)
Own share transactions (0.30) (0.22)
Capital element of lease payments (0.55) (0.81)
Exchange movement and other 0.12 (0.56)
----------------------------------------- ---------- ----------
Free cash flow^ 13.04 (3.65)
Dividends to Shareholders - -
----------------------------------------- ---------- ----------
Net cash inflow/(outflow) in the period 13.04 (3.65)
----------------------------------------- ---------- ----------
* Underlying is before defined benefit pension charges (see note
6 for reconciliation to equivalent IFRS measure).
^ Free cash flow comprises the net movement in cash and exchange
movements thereon and is before dividend payments.
The Group free cash inflow for the period was $13.04m (H1 2020:
outflow of $3.65m), further emphasising the efficient and cash
generative qualities of the Group's business model, even in the
challenging circumstances resulting from the COVID-19 pandemic. The
half year 2020 Group free cash outflow of $3.65m is after a special
pension contribution of $9.14m; adjusting for the impact of this,
the Group generated a free cash inflow in the comparative period of
$5.49m.
Working capital inflow of $11.31m (H1 2020: $9.18m) reflects the
favourable cash characteristics of the direct marketing business
model, particularly in the North American business where a
significant proportion of customers pay by credit card.
Capital expenditure was $0.96m in the period (H1 2020: $3.33m).
In the interests of cash conservation, capital expenditure projects
have been rephased until later in the year or into 2022.
The share requirements for the satisfaction of senior management
awards made under the Group's 2015 Incentive Plan continue to be
met through the staggered purchase of 4imprint Group plc shares via
the employee benefit trust. Net purchases of own shares during the
period were $0.30m (H1 2020: $0.22m).
Balance sheet and Shareholders' equity
Net assets at 3 July 2021 were $67.46m, compared to $65.37m at 2
January 2021. The balance sheet is summarised as follows:
3 July 2 January
2021 2021
$m $m
-------------------- -------- ----------
Non-current assets 41.39 43.27
Working capital (12.81) (1.50)
Cash 52.80 39.77
Lease liabilities (12.65) (13.21)
Pension deficit (2.24) (3.31)
Other assets - net 0.97 0.35
Net assets 67.46 65.37
-------------------- -------- ----------
Shareholders' equity increased by $2.09m since the 2020
year-end. Constituent elements of the movement were net profit in
the period of $2.56m, exchange gains of $0.14m and $0.32m of share
option related movements, net of own shares purchased of $(0.30)m
and the after tax impact of losses on pension plan assets and
re-measurement gains on pension plan obligations of $(0.63)m.
The Group had a net negative working capital balance of $12.81m
at 3 July 2021, (2 January 2021: $1.50m). This is a typical working
capital profile reflecting the low capital requirements of the
Group and its cash generative business model.
Financing and liquidity
Full details of the Board's balance sheet funding guidelines and
capital allocation priorities are set out on page 23 of the 2020
Annual Report. The Board retains the same guidelines in both
areas.
The primary aim of the Group's conservative balance sheet
funding approach is to facilitate continued investment in
marketing, people and technology through different economic cycles,
recognising that an economic downturn typically represents a market
share opportunity for the business. As a result of this approach,
the Group has been able to make decisions to benefit the
longer-term position of the business throughout the COVID-19
pandemic, whilst also managing to increase its cash position.
The Group has a $20.0m working capital facility with its
principal US bank, JPMorgan Chase, N.A. The facility has a minimum
EBITDA test and standard debt service coverage ratio and debt to
EBITDA covenants. The interest rate is US$ LIBOR plus 2.0%, and the
facility expires on 31 May 2023. In addition, an overdraft facility
of GBP1.0m, with an interest rate of bank base rate plus 2.00% or
2.00% if higher, is available from the Group's principal UK bank,
Lloyds Bank plc.
The Group had cash balances of $52.80m at the period end and has
no current requirement or plans to raise additional equity or core
debt funding.
Critical accounting policies
Critical accounting policies are those that require significant
judgments or estimates and potentially result in materially
different results under different assumptions or conditions. It is
considered that the Group's only critical accounting policies are
in respect of revenue and leases.
Key sources of estimation uncertainty
Determining the carrying amount of some assets and liabilities
requires estimation of the effects of uncertain future events. The
key sources of estimation uncertainty are considered to be in
relation to the valuation of the defined benefit plan liabilities
and assets.
Principal risks and uncertainties
The Group may be affected by a number of risks and
uncertainties. The principal risks comprise: macroeconomic
conditions; markets & competition; currency exchange; climate
change & environmental; business facility disruption;
disruption to the product supply chain or delivery service;
disturbance in established marketing techniques; reliance on key
personnel; failure or interruption of information technology
systems and infrastructure; failure to adapt to new technological
innovations; and cyber threats.
At the 2021 half year these risks, uncertainties and associated
mitigating activities remained largely consistent with the detailed
review set out on pages 26 to 31 of the Group's Annual Report 2020,
a copy of which is available on the Group's website:
https://investors.4imprint.com . However, the lingering effects of
the COVID-19 pandemic have caused some stress in the first half of
2021 in certain risk areas. The Group continues to address these
evolving risks in a proactive and effective manner, and we
anticipate that the same factors will continue to shape the risk
agenda for the remaining months of the 2021 financial year. The
heightened risk areas identified, with associated commentary,
are:
Macroeconomic The COVID-19 crisis initially resulted in severe
conditions: economic disruption and a significant reduction
in overall demand in the promotional products
industry. Demand activity for 4imprint has gradually
recovered to pre-pandemic levels, however much
uncertainty remains over the future prevalence
and effects of the virus and associated variants.
The aftermath of COVID-19 has also increased
economic uncertainty in the form of inflation.
The promotional products industry will face cost
increases and therefore margin pressure over
the remaining six months of the year on cost
of product, transportation and payroll. Mitigation
strategies will include supplier negotiations
and price adjustments where appropriate.
Business facility The 4imprint business model relies on centralised
disruption: facilities. During 2020 various 'lockdown' restrictions
meant that our office and distribution facilities
were either closed or severely limited for periods
in the year. Should a resurgence of COVID-19
and/or variants result in future facility restrictions,
we remain particularly exposed in respect of
embroidery production capacity at our Oshkosh
distribution centre. We are, however, in much
better shape in respect of our office facilities
as a result of a robust 'work from home' capability
now in place for essential customer service functions
as well as the vast majority of support functions.
---------------------------------------------------------
Disruption The Group's supply chain suffered disruption
to the product in the first half of 2021, and this is likely
supply chain to intensify in the second half. Early pandemic-related
or delivery problems around the management of production
service: difficulties caused by lockdowns and a rapidly
evolving product mix have now been largely superseded
by challenges anticipated in the second half
of the year around global logistics, (inventory
availability and cost of transportation) and
the difficulty and increased cost of our suppliers
being able to find enough production labour to
keep up with recovered demand. In mitigation,
we will look for innovative solutions by staying
very close to our valued supplier partners, as
we have throughout the pandemic.
---------------------------------------------------------
Cyber threats: Even though the basic nature of cyber risks remains
constant, recent well-publicised instances of
the deployment of 'ransomware' show that the
likelihood and/or potential severity of attacks
has increased and cannot be under-estimated.
We have deployed and continue to invest in significant
resource in order to mitigate this risk.
---------------------------------------------------------
The Board has ultimate responsibility for risk management. In
practice this takes the form of a pragmatic overall approach that
is tailored specifically towards the nature of the Group's business
model and operations, and the way that it is structured and
controlled. Business operations are conducted from centralised
facilities, with short reporting lines. The Executive Directors are
close to day-to-day business operations, facilitating early
identification of and proactive response to ongoing and emerging
risks. In addition, in the first half of 2021 a revised risk
management and internal control framework was approved and a new
Business Risk Management Committee became operational.
Going concern statement
In making their assessment of the Group's ability to continue as
a going concern, the Directors have carefully considered:
-- The Group's strategy, market position and business model, as
set out in the Strategic Report section on pages 9 to 19 of the
2020 Annual Report.
-- The principal risks and uncertainties facing the Group, as
outlined in the Principal risks and uncertainties section of this
Financial Review.
-- Information contained in this Financial Review concerning the
Group's financial position, cash flows and liquidity position.
-- Regular management reporting and updates from the Executive Directors.
-- Recent detailed financial forecasts and analysis for the period to 31 December 2022.
The strength of the Group's business model, market position, and
successful adaptation of business operations and management of
costs throughout the COVID-19 pandemic has enabled the Group to
maintain a strong financial position. The successful roll-out of
vaccines and easing of restrictions in our primary markets over the
six months ended 3 July 2021 has supported the recovery of order
volumes and revenues as we build back to pre-pandemic 2019
levels.
Given the continued uncertainty of COVID-19, we however remain
cautious about the economic backdrop.
Financial position
The Group had net cash of $52.80m at 3 July 2021 (2 January
2021: $39.77m). The Group maintains a $20.0m working capital
facility with its principal US bank, JPMorgan Chase, N.A., and an
overdraft facility of GBP1.0m is available from the Group's
principal UK bank, Lloyds Bank plc. Based on our forecast, we have
no requirement to draw on either of these facilities.
Financial modelling
Towards the end of 2020 we modelled a range of potential
scenarios for different severities of the COVID-19 pandemic for a
three-year period to 30 December 2023. This included 'base case'
and 'distressed' scenarios, as set out in the Viability statement
on pages 24 and 25 of the 2020 Annual Report.
Under both of these scenarios, the Group preserved a strong
liquidity position in the form of cash balances, did not require
the use of its bank facilities, and maintained options to undertake
further mitigating actions, including additional cuts to marketing
costs and headcount reductions, that were not reflected in either
the 'base case' or the 'distressed' forecasts.
Whilst some uncertainty remains over the recovery from COVID-19,
the modelling of different scenarios, including a 'distressed'
case, has demonstrated that the Group has significant flexibility
in its variable costs, a very low fixed cost base, and is able to
respond quickly to changes in trading conditions. Combined with a
strong net cash position maintained throughout the pandemic, this
has demonstrated the Group's ability to remain cash positive, even
under severe economic stress.
Demand in the six months ended 3 July 2021 has seen a faster
recovery in orders, revenue, and cash generation than forecast in
the 'base case' scenario. The resulting improved financial position
and the recent forecast, compared to the 'base case' scenario
modelled towards the end of 2020, give the Board additional
confidence that despite residual uncertainty as to future market
conditions, the Group will be in a good position both to withstand
further economic stress and to take market share opportunities in a
recovering market.
Going concern
Based on the assessment outlined above, the Directors have a
reasonable expectation that the Group will continue to operate and
to meet its liabilities as they fall due over the period to 31
December 2022. On this basis, the Directors continue to adopt the
going concern basis in preparing these condensed consolidated
financial statements.
Kevin Lyons-Tarr David Seekings
Chief Executive Officer Chief Financial Officer
11 August 2021
Condensed Consolidated Income Statement (unaudited)
For the 26 weeks ended 3 July 2021
Half Half Full
year year year
2021 2020 2020
Note $'000 $'000 $'000
--------------------------- ------ ---------- ---------- ----------
Revenue 6 326,808 265,808 560,040
Operating expenses 7 (323,213) (265,841) (556,068)
--------------------------- ------ ---------- ---------- ----------
Operating profit/(loss) 6 3,595 (33) 3,972
Finance income 15 154 168
Finance costs (228) (33) (193)
Pension finance charge (15) (62) (104)
--------------------------- ------ ---------- ---------- ----------
Net finance (cost)/income (228) 59 (129)
Profit before tax 3,367 26 3,843
Taxation 8 (808) (5) (753)
--------------------------- ------ ---------- ---------- ----------
Profit for the period 2,559 21 3,090
--------------------------- ------ ---------- ---------- ----------
Cents Cents Cents
--------------------------- ------ ---------- ---------- ----------
Earnings per share
Basic 9 9.12 0.07 11.03
Diluted 9 9.09 0.07 11.00
Underlying* basic 9 9.65 0.73 12.55
--------------------------- ------ ---------- ---------- ----------
* Underlying is before defined benefit pension charges.
Condensed Consolidated Statement of Comprehensive Income
(unaudited)
For the 26 weeks ended 3 July 2021
Half Half Full
year year year
2021 2020 2020
$'000 $'000 $'000
--------------------------------------------------- -------- -------- --------
Profit for the period 2,559 21 3,090
---------------------------------------------------- -------- -------- --------
Other comprehensive income
Items that may be reclassified subsequently
to the income statement:
Currency translation differences 137 (16) 863
Items that will not be reclassified subsequently
to the income statement:
Return on pension plan assets (excluding
interest income) (3,440) 1,194 1,261
Re-measurement gains/(losses) on post-employment
obligations 2,664 (3,931) (5,550)
Tax relating to components of other comprehensive
expense 147 520 1,000
Effect of change in UK tax rate - 238 241
---------------------------------------------------- -------- -------- --------
Other comprehensive expense (492) (1,995) (2,185)
---------------------------------------------------- -------- -------- --------
Total comprehensive income/(expense) for
the period 2,067 (1,974) 905
---------------------------------------------------- -------- -------- --------
Condensed Consolidated Balance Sheet (unaudited)
At 3 July 2021
At At At
3 July 27 June 2 Jan
2021 2020 2021
Note $'000 $'000 $'000
-------------------------------- ----- --------- --------- ---------
Non-current assets
Property, plant and equipment 24,063 26,002 24,832
Intangible assets 1,078 1,140 1,100
Right-of-use assets 12,395 1,164 13,065
Deferred tax assets 3,857 3,553 4,272
-------------------------------- ----- --------- ---------
41,393 31,859 43,269
-------------------------------- ----- --------- --------- ---------
Current assets
Inventories 12,646 8,625 11,271
Trade and other receivables 48,652 31,400 36,799
Current tax debtor 2,449 1,233 1,976
Cash and cash equivalents 52,802 37,494 39,766
-------------------------------- ----- --------- --------- ---------
116,549 78,752 89,812
-------------------------------- ----- --------- --------- ---------
Current liabilities
Lease liabilities 12 (1,133) (1,234) (1,117)
Trade and other payables (74,110) (44,067) (49,569)
Current tax creditor - - (432)
---------
(75,243) (45,301) (51,118)
-------------------------------- ----- --------- ---------
Net current assets 41,306 33,451 38,694
-------------------------------- ----- --------- --------- ---------
Non-current liabilities
Lease liabilities 12 (11,519) - (12,089)
Retirement benefit obligations 11 (2,244) (3,509) (3,310)
Deferred tax liabilities (1,478) (624) (1,193)
(15,241) (4,133) (16,592)
-------------------------------- ----- --------- --------- ---------
Net assets 67,458 61,177 65,371
-------------------------------- ----- --------- --------- ---------
Shareholders' equity
Share capital 18,842 18,842 18,842
Share premium reserve 68,451 68,451 68,451
Other reserves 6,254 5,238 6,117
Retained earnings (26,089) (31,354) (28,039)
-------------------------------- ----- --------- --------- ---------
Total Shareholders' equity 67,458 61,177 65,371
-------------------------------- ----- --------- --------- ---------
Condensed Consolidated Statement of Changes in Shareholders'
Equity (unaudited)
For the 26 weeks ended 3 July 2021
Retained earnings
--------------------
Share
Share premium Other Own Profit Total
capital reserve reserves shares and loss equity
$'000 $'000 $'000 $'000 $'000 $'000
--------------------------------- --------- --------- ---------- -------- ---------- --------
Balance at 29 December 2019 18,842 68,451 5,254 (3,029) (26,570) 62,948
---------------------------------
Profit for the period 21 21
Other comprehensive expense (16) (1,979) (1,995)
--------------------------------- --------- --------- ---------- -------- ---------- --------
Total comprehensive expense (16) (1,958) (1,974)
--------------------------------- --------- --------- ---------- -------- ---------- --------
Share-based payment charge 415 415
Proceeds from options exercised 17 17
Own shares purchased (229) (229)
Own shares utilised 491 (491) -
At 27 June 2020 18,842 68,451 5,238 (2,767) (28,587) 61,177
--------------------------------- --------- --------- ---------- -------- ---------- --------
Profit for the period 3,069 3,069
Other comprehensive expense 879 (1,069) (190)
Total comprehensive income 879 2,000 2,879
--------------------------------- --------- --------- ---------- -------- ---------- --------
Share-based payment charge 210 210
Proceeds from options exercised 2,153 2,153
Own shares purchased (1,000) (1,000)
Own shares utilised 3,186 (3,186) -
Deferred tax relating to
share options (83) (83)
Deferred tax relating to
losses re share options 35 35
At 2 January 2021 18,842 68,451 6,117 (581) (27,458) 65,371
--------- --------- ---------- -------- ---------- --------
Profit for the period 2,559 2,559
Other comprehensive expense 137 (629) (492)
--------------------------------- --------- --------- ---------- -------- ---------- --------
Total comprehensive income 137 1,930 2,067
--------------------------------- --------- --------- ---------- -------- ---------- --------
Share-based payment charge 321 321
Own shares purchased (301) (301)
Own shares utilised 572 (572) -
Balance at 3 July 2021 18,842 68,451 6,254 (310) (25,779) 67,458
--------------------------------- --------- --------- ---------- -------- ---------- --------
Condensed Consolidated Cash Flow Statement (unaudited)
For the 26 weeks ended 3 July 2021
Half Half Full
year year year
2021 2020 2020
Note $'000 $'000 $'000
---------------------------------------------- ----- ------- -------- --------
Cash flows from operating activities
Cash generated from operations 13 15,770 1,206 3,184
Tax paid (820) (141) (507)
Finance income received 15 154 168
Finance costs paid (42) (7) (49)
Lease interest (193) (26) (132)
---------------------------------------------- ----- ------- -------- --------
Net cash generated from operating activities 14,730 1,186 2,664
---------------------------------------------- ----- ------- -------- --------
Cash flows from investing activities
Purchases of property, plant and equipment (769) (3,109) (3,427)
Purchases of intangible assets (194) (218) (390)
Proceeds from sale of property, plant
and equipment - 82 93
Net cash used in investing activities (963) (3,245) (3,724)
---------------------------------------------- ----- ------- -------- --------
Cash flows from financing activities
Capital element of lease payments (554) (811) (1,418)
Proceeds from share options exercised - 17 2,170
Purchases of own shares (301) (229) (1,229)
Dividends paid to Shareholders 10 - - -
---------------------------------------------- ----- ------- -------- --------
Net cash used in financing activities (855) (1,023) (477)
---------------------------------------------- ----- ------- -------- --------
Net movement in cash and cash equivalents 12,912 (3,082) (1,537)
Cash and cash equivalents at beginning
of the period 39,766 41,136 41,136
Exchange gains/(losses) on cash and
cash equivalents 124 (560) 167
---------------------------------------------- ----- ------- -------- --------
Cash and cash equivalents at end of
the period 52,802 37,494 39,766
---------------------------------------------- ----- ------- -------- --------
Analysis of cash and cash equivalents
Cash at bank and in hand 45,878 37,494 39,766
Short-term deposits 6,924 - -
---------------------------------------------- ----- ------- -------- --------
52,802 37,494 39,766
---------------------------------------------- ----- ------- -------- --------
Notes to the Interim Financial Statements
1 General information
4imprint Group plc is a public limited company incorporated in
England and Wales, domiciled in the UK and listed on the London
Stock Exchange. Its registered office is 25 Southampton Buildings,
London, WC2A 1AL.
These condensed consolidated interim financial statements, which
were authorised for issue in accordance with a resolution of the
Directors on 11 August 2021, do not comprise statutory accounts
within the meaning of Section 434 of the Companies Act 2006.
Statutory accounts for the period ended 2 January 2021 were
approved by the Board of Directors on 16 March 2021 and delivered
to the Registrar of Companies. The report of the auditors on those
accounts was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under Section 498 of
the Companies Act 2006.
The financial information contained in this report has neither
been audited nor reviewed by the auditors, pursuant to Auditing
Practices Board guidance on Review of Interim Financial
Information.
2 Basis of preparation
These condensed consolidated interim financial statements for
the 26 weeks ended 3 July 2021 have been prepared, in US dollars,
in accordance with the Disclosure and Transparency Rules of the
Financial Conduct Authority and IAS 34 'Interim Financial
Reporting', as adopted by the United Kingdom, and should be read in
conjunction with the Group's financial statements for the period
ended 2 January 2021, which were prepared in accordance with
International Financial Reporting Standards as adopted by the
European Union.
As outlined in the Going concern section of the Financial
Review, the Directors consider it appropriate to continue to adopt
the going concern basis in preparing these condensed consolidated
financial statements.
The tax charge for the interim period is accrued based on the
best estimate of the tax charge for the full financial year.
3 Accounting policies
The accounting policies applied in these condensed consolidated
financial statements are consistent with those of the annual
financial statements for the period ended 2 January 2021, as
described in those annual financial statements. New accounting
standards applicable for the first time in this reporting period
have no impact on the Group's results.
4 Use of assumptions and estimates
The preparation of the interim financial statements requires
management to make judgments, estimates and assumptions that affect
the application of policies and reported amounts of assets and
liabilities, income and expenses. The estimates and associated
assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstances,
the results of which form the basis of making estimates about
carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these
estimates.
There have been no changes in the critical accounting judgments
and key sources of estimation uncertainty since the 2020 year-end,
other than the assumptions and sensitivities on the recalculation
of the defined benefit pension obligations as shown in note 11.
5 Financial risk management
The Group's activities expose it to a variety of financial
risks: currency risk; credit risk; liquidity risk; and capital
risk. These condensed consolidated financial statements do not
include all financial risk management information and disclosures
required in the annual financial statements; they should be read in
conjunction with the Group's annual financial statements for the
period ended 2 January 2021. There have been no changes in any
financial risk management policies since that date.
6 Segmental analysis
The chief operating decision maker has been identified as the
Board of Directors and the segmental analysis is presented based on
the Group's internal reporting to the Board.
At 3 July 2021, the Group has two operating segments, North
America and UK and Ireland. The costs of the Head Office are
reported separately to the Board, but this is not an operating
segment.
Half year Half Full
year year
2020 2020
2021 $'000 $'000
Revenue $'000
North America 321,698 260,537 549,873
UK and Ireland 5,110 5,271 10,167
--------------------- ---------- -------- --------
Total Group revenue 326,808 265,808 560,040
--------------------- ---------- -------- --------
Half year Half Full
2021 year year
2020 2020
Profit $'000 $'000 $000
North America 6,654 2,830 9,170
UK and Ireland (968) (909) (1,605)
--------------------------------------------- ---------- -------- --------
Underlying* operating profit from 4imprint
Direct Marketing 5,686 1,921 7,565
Head Office costs (1,919) (1,789) (3,173)
--------------------------------------------- ---------- -------- --------
Underlying* operating profit 3,767 132 4,392
Defined benefit pension plan administration
and past service costs (172) (165) (420)
--------------------------------------------- ---------- --------
Operating profit/(loss) 3,595 (33) 3,972
Net finance (cost)/income (213) 121 (25)
Pension finance charge (15) (62) (104)
--------------------------------------------- ---------- -------- --------
Profit before tax 3,367 26 3,843
Taxation (808) (5) (753)
--------------------------------------------- ---------- -------- --------
Profit after tax 2,559 21 3,090
--------------------------------------------- ---------- -------- --------
* Underlying is before defined benefit pension charges.
Other segmental information
Assets Liabilities
---------------------------- -------------------------------
3 July 27 June 2 Jan 3 July 27 June 2 Jan
2021 2020 2020
$'000 $'000 2021 2021 $'000 2021
$'000 $'000 $'000
---------------- -------- -------- -------- --------- --------- ---------
North America 98,152 64,548 86,755 (84,645) (44,213) (62,216)
UK and Ireland 2,752 2,753 2,055 (3,156) (1,195) (1,673)
Head Office 57,038 43,310 44,271 (2,683) (4,026) (3,821)
---------------- -------- -------- -------- --------- --------- ---------
157,942 110,611 133,081 (90,484) (49,434) (67,710)
---------------- -------- -------- -------- --------- --------- ---------
Head Office assets include cash and cash equivalents and
deferred tax assets, Head Office liabilities include retirement
benefit obligations.
7 Operating expenses
Operating expenses are shown net of US Government Employee
Retention Credits and UK Government Job Retention Scheme claims
totalling $nil (H1 2020: $3.64m; FY 2020: $4.14m).
8 Taxation
The taxation rate was 24%, based on the estimated rate for the
full year (H1 2020: 21%; FY 2020: 20%). Tax paid in the period was
$0.82m (H1 2020: $0.14m; FY 2020: $0.51m).
The deferred tax assets/liabilities at 3 July 2021 have been
calculated at a tax rate of 19% for items reversing pre-April 2023
and 25% for all other items (H1 2020: 19%; FY 2020: 19%) in respect
of UK deferred tax items and 25% (H1 2020: 25%; FY 2020: 25%) in
respect of US deferred tax items.
9 Earnings per share
Basic, diluted and underlying
The basic, diluted and underlying earnings per share are
calculated based on the following data:
Half Half Full
year year year
2021 2020 2020
$'000 $'000 $'000
------------------ ------ ------ ------
Profit after tax 2,559 21 3,090
------------------ ------ ------ ------
Half Half Full
year year year
2021 2020 2020
$'000 $'000 $'000
--------------------------------------------- ------ ------ ------
Profit before tax 3,367 26 3,843
Adjustments:
Defined benefit pension plan administration
and past service costs 172 165 420
Pension finance charge 15 62 104
--------------------------------------------- ------ ------ ------
Underlying profit before tax 3,554 253 4,367
Taxation (808) (5) (753)
Tax relating to above adjustments (36) (43) (100)
--------------------------------------------- ------ ------ ------
Underlying profit after tax 2,710 205 3,514
--------------------------------------------- ------ ------ ------
Half Half Full
year year year
2021 2020 2020
Number Number Number
000's 000's 000's
--------------------------------------------- ------- ------- -------
Basic weighted average number of shares 28,072 28,001 28,003
Adjustment for employee share options 65 97 95
--------------------------------------------- ------- ------- -------
Diluted weighted average number of shares 28,137 28,098 28,098
--------------------------------------------- ------- ------- -------
Cents Cents Cents
--------------------------------------------- ------- ------- -------
Basic earnings per share 9.12 0.07 11.03
--------------------------------------------- ------- ------- -------
Diluted earnings per share 9.09 0.07 11.00
--------------------------------------------- ------- ------- -------
Underlying basic earnings per share 9.65 0.73 12.55
--------------------------------------------- ------- ------- -------
Underlying diluted basic earnings per share 9.63 0.73 12.51
--------------------------------------------- ------- ------- -------
The basic weighted average number of shares excludes shares held
in the employee share trust. The effect of this is to reduce the
average by 13,340 (H1 2020: 84,682; FY 2020: 82,090).
The underlying basic earnings per share is calculated before the
after-tax effect of defined benefit pension charges and is included
because the Directors consider this gives a measure of the
underlying performance of the ongoing business.
10 Dividends Half Half Full
year year year
2021 2020 2020
$'000 $'000 $'000
-------------------------------- ------ ------ ------
Dividends paid in the period - - -
-------------------------------- ------ ------ ------
Cents Cents Cents
-------------------------------- ------ ------ ------
Dividends per share
declared - Interim 15.00 - -
- Final - - -
-------------------- ---------- ------ ------ ------
The interim dividend for 2021 of 15.00c per ordinary share
(interim 2020: nil; final 2020: nil) will be paid on 21 September
2021 to Shareholders on the register at the close of business on 27
August 2021.
11 Employee pension plans
The Group operates defined contribution pension plans for the
majority of its UK and US employees. The regular contributions are
charged to the income statement as they are incurred.
The Group also sponsors a legacy UK defined benefit pension plan
which is closed to new members and future accruals. The funds of
the Plan are held in trust, administered by a corporate trustee,
and are independent of the Group's finances.
The last full actuarial valuation was carried out by a qualified
independent actuary as at 30 September 2019 and this has been
updated on an approximate basis to 3 July 2021 in accordance with
IAS 19. There have been no changes in the valuation methodology
adopted for this period's disclosures compared to previous periods'
disclosures.
The principal assumptions applied by the actuaries at 3 July
2021 were:
Half Half Full
year year year
2021 2020 2020
--------------------------------------------- ------ ------ ------
Rate of increase in pensions in payment 3.10% 2.75% 2.85%
Rate of increase in deferred pensions - CPI
or 5.0% p.a. if less 2.60% 2.00% 2.30%
Discount rate 1.80% 1.40% 1.25%
Inflation assumption - RPI 3.20% 2.80% 2.90%
Inflation assumption - CPI 2.60% 2.00% 2.30%
--------------------------------------------- ------ ------ ------
The mortality assumptions adopted at 3 July 2021 imply the
following life expectancies at age 65:
Half Half Full
year year year
2021 2020 2020
Years Years Years
Male currently aged 45 22.4 22.4 22.3
Female currently aged 45 24.2 24.2 24.2
Male currently aged 65 21.3 21.3 21.3
Female currently aged 65 23.1 23.0 23.0
-------------------------- ------- ------- -------
The movement on the net pension obligation is shown in the
Financial Review.
The sensitivities on key actuarial assumptions at the period end
were:
Change in defined benefit
Change in assumption obligation
------------------- ----------------------------- --------------------------
Discount rate Decrease of 0.25% +4.2%
Rate of inflation Increase of 0.25% +2.3%
Increase in life expectancy
Rate of mortality of one year +4.3%
------------------- ----------------------------- --------------------------
12 Leases
The Group leases office space in office facilities in Oshkosh.
The movement in lease liabilities in the period is shown below:
3 July 27 June 2 Jan
2021 2020 2021
$'000 $'000 $'000
----------------------------------------------- ------- -------- --------
At start of period 13,206 2,045 2,045
Additions - - 12,579
Interest charge 193 26 132
Lease interest payments - operating cash flow (193) (26) (132)
Lease capital payments - financing cash flow (554) (811) (1,418)
At end of period 12,652 1,234 13,206
----------------------------------------------- ------- -------- --------
13 Cash generated from operations
Half year Half year Full year
2021 2020 2020
$'000 $'000 $'000
--------------------------------------------------- --------- --------- ---------
Profit before tax 3,367 26 3,843
Adjustments for:
Depreciation charge 1,547 1,423 2,992
Amortisation of intangibles 216 223 443
Depreciation of right-of-use assets 672 819 1,498
Gain on disposal of property, plant and equipment - (82) (80)
Share option non-cash charges 321 415 625
Net finance cost/(income) 228 (59) 129
Defined benefit pension plan administration
and past service costs - non-cash 172 165 420
Contributions to defined benefit pension plan* (2,069) (10,909) (13,278)
Changes in working capital:
(Increase)/decrease in inventories (1,375) 2,829 186
(Increase)/decrease in trade and other receivables (11,778) 21,340 16,119
Increase/(decrease) in trade and other payables 24,469 (14,984) (9,713)
Cash generated from operations 15,770 1,206 3,184
--------------------------------------------------- --------- --------- ---------
* Full year 2020 and Half year 2020 include a special pension
contribution of $9.14m.
14 Capital commitments
The Group had capital commitments contracted but not provided
for in these financial statements of $1.49m
(27 June 2020: $0.30m; 2 January 2021: $0.30m).
15 Related party transactions
The Group did not participate in any related party transactions
that require disclosure.
16 Alternative performance measures
An Alternative Performance Measure ("APM") is a financial
measure of historical or future financial performance, financial
position, or cash flows, other than a financial measure defined or
specified within IFRS.
The Group uses APMs to supplement standard IFRS measures to
provide users with information on underlying trends and additional
financial measures, which the Group considers will aid the users'
understanding of the business.
The Group's APMs have not changed in the current period and
definitions can be found on page 124 of the 2020 Annual Report.
Statement of Directors' Responsibilities
The Directors confirm that, to the best of their knowledge,
these condensed consolidated interim financial statements have been
prepared in accordance with IAS 34 as adopted by the United Kingdom
and that the interim management report includes a fair review of
the information required by DTR 4.2.7 and 4.2.8, namely:
-- An indication of the important events that have occurred
during the first half year and their impact on the condensed
consolidated interim financial statements, and a description of the
principal risks and uncertainties for the remaining six months of
the financial year; and
-- Material related party transactions in the first half year
and any material changes in the related party transactions
described in the last annual report.
The Directors of 4imprint Group plc are as listed in the Group's
Annual Report and Accounts 2020, except that Mr. John Warren
stepped down as a Non-Executive Director at the AGM held on 18 May
2021. A list of current Directors of 4imprint Group plc is
maintained on the Group website:
https://investors.4imprint.com.
By order of the Board
Kevin Lyons-Tarr David Seekings
Chief Executive Chief Financial
Officer Officer
11 August 2021
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