TIDMIGR
RNS Number : 6550X
IG Design Group PLC
28 November 2017
28 November 2017
IG Design Group PLC
(the "Company", the "Group" or "Design Group")
Interim Results
IG Design Group plc, one of the world's leading designers,
innovators and manufacturers of gift packaging, greetings,
stationery, creative play products and giftware, announces its
Interim Results for the six months ended 30 September 2017.
Financial Highlights
-- Sales up 14% to GBP166.5m from GBP145.5m
Ø 10% organic growth at like for like FX rates, with the full
effect of Lang (acquired mid H1 2016) adding a further 2%
-- Gross profit up 15% to GBP35.4m from GBP30.8m
Ø 8% organic growth at like for like FX rates, with the
synergies in Lang adding a further 5%
-- Operating profit* up 20% to GBP11.1m from GBP9.3m
Ø 11% organic growth at like for like FX rates, with Lang adding
8%
-- PBT* up 27% to GBP10.5m from GBP8.2m
Ø 22% organic growth at like for like FX rates, 9% Lang
-- Underlying Earnings Per Share up 14% to 10.9p from 9.6p
Ø 9% organic at like for like FX rates, 7% Lang
-- Net Debt reduced by GBP6.2m to GBP70.2m
-- Interim Dividend declared of 2p
* before exceptional items and LTIP charges
Operational Highlights
Group
-- Continued to drive profitable overall organic growth
-- Identified and delivered further commercial, operational and
purchasing synergies to enhance profitability
UK
-- Sales up 4% at GBP57.5m with profit* stable, following the
integration of our three UK operating businesses
-- State-of-the-art manufacturing equipment producing retailer
branded bags is now fully operational on
time and on budget
Continental Europe
-- Sales in local currency up 19% to EUR23.6m with growth in profit* of 26%
-- Second high speed, highly efficient and environmentally
friendly printing press is on track and on
budget for installation early in 2018
-- Strong order book in place for the balance of the financial year
Australia (JV)
-- Sales in local currency up 13% to A$30.9m with growth in profit* of 17%
-- Growth mainly driven in the robust Independents Channel
-- Completion of the acquisition of Biscay Greetings Pty Limited on track
USA
-- Excellent trading performance with overall sales up 18% to $91.3m and profit* up 45%
-- Organic sales and profits* growth of 13% and 27% respectively
-- Synergies following the integration of Lang Companies
(acquired July 2016) are being achieved as
planned, resulting in H1 sales up 46% to $16.2m and H1 profit* up 124%
-- Planned investment to upgrade our IT systems in the USA is
proceeding on time and on budget and is due
for installation during FY19
* before exceptional items and LTIP charges
Outlook
Whilst cost headwinds are undoubtedly stronger than ever, our
businesses are well positioned to combat these. A full order book
and a strong performance in the first half of the year provides
confidence that the Group is fully on track to meet full year
market expectations for profit and other key underlying
metrics.
Paul Fineman, Chief Executive said:
"We are once again delighted to be reporting a robust
performance during the first half of the year, with all regions
trading profitably and growth being achieved both organically and
through acquisition.
Our business is diversified by product category, regional
activity and by customer channel, all with a common theme of adding
value through potent and commercial design, efficient
manufacturing, sourcing and excellent customer service.
Building on our established track record, we are pleased to be
identifying still further compelling investment opportunities to
continuously improve efficiency and enhance capability across all
territories.
We look forward to providing a further update during January and
remain committed to creating sustainable value for our shareholders
through both organic growth and, when the opportunity arises,
through carefully considered acquisitions."
-S -
This announcement contains inside information.
IG Design Group PLC Tel: 01525 887310
Paul Fineman, Chief Executive
Anthony Lawrinson, Chief Financial Officer
Cenkos Securities Tel: 020 7397 8900
Bobbie Hilliam
Harry Hargreaves
Alma PR Tel: 020 3865 9668
Rebecca Sanders-Hewett
Susie Hudson
Helena Bogle
Executive summary
Overview
The first half of FY18 has seen a very pleasing performance with
growth achieved both organically and through acquisition.
Overall, sales and profit before tax, exceptional items and LTIP
charges are up 14% and 27% respectively. Underlying, fully diluted
earnings per share is up 14% whilst net debt is lower than at the
previous half-year period, despite funding the seasonal working
capital at the recently acquired Lang business.
Performance by region
We are pleased to report that all regions have again traded
profitably during the period.
Americas
-- An excellent trading performance with sales up 18% to $91.3
million and underlying profit(a) up 45% to $7.1 million
-- This includes organic growth of sales up 13% and profits up 27%
-- The integration of The Lang Companies (Lang) acquired in July
2016 has progressed very well resulting in sales in the first half
up 46% to $16.2 million and profit up 124% to $2.1 million
-- The planned investment to upgrade our IT systems in the USA
is proceeding on time and on budget and is due for installation
during FY19
Europe
-- Sales in local currency up 19% to EUR23.6 million with growth
in underlying profit(a) of 26% to EUR2.0 million
-- A second high speed, highly efficient, printing press is on
track for delivery and on budget for installation early in 2018
-- A strong order book is in place for the balance of the financial year
Australia
-- Sales in local currency up 13% to AUD30.9 million with growth
in underlying profit(a) of 17% to AUD2.0 million
-- Growth mainly driven by the robust Independents channel
-- The completion of the acquisition of Biscay Greetings Pty
Limited is on track to take place in January 2018
UK
-- Sales up 4% at GBP57.5 million with underlying profit(a)
remaining stable at GBP4.2 million, reflecting the initial impact
of the integration of our three UK operating businesses
-- Our UK business continues to work hand--in--hand with our
manufacturing facility in China, which continues to efficiently
supply record volumes of gift bags and greetings cards, as well as
high volumes of crackers
-- State--of--the--art manufacturing equipment producing
retailer branded bags to be given to consumers is now fully
operational, having been installed on time and on budget in our
manufacturing facility in Wales
(a) Underlying profit is stated before exceptional items and
LTIP charges.
Central costs
Reflect investment to broaden and strengthen our ability to
support growth both organically and through M&A activity.
Financial review
Reported sales are up 14% to GBP166.5 million on the prior
period (2016 H1: GBP145.5 million) with some favourable timing
differences in the USA assisting. Organic growth (excluding Lang)
represents 10% of this growth with foreign exchange translation
effects accounting for 2% and the acquisition in 2016 of Lang a
further 2%. Lang was only owned for half of the period in H1 last
year. As usual, there are geographical variations but overall
phasing of delivery to customers appears to be slightly ahead of
prior years.
Gross margins increased from GBP30.8 million to GBP35.4 million
which was stable as a percentage of sales at 21.2%.
Overhead costs are higher at GBP25.3 million (2016 H1: GBP22.5
million). This is largely driven by a) the impact of Lang ownership
for the full period (GBP0.8 million); b) the effect of overseas
costs translated at current exchange rates; and c) our recent
investments in people, rebranding and growth opportunities.
The LTIP charge is a largely non-cash accounting charge and we
exclude the effect of this when measuring underlying trends in
profitability. As a percentage of sales, and after removing the
effect of the LTIP charge, overhead costs were flat at 15%.
Operating profit before exceptional costs and LTIP charges again
improved strongly by 20% to GBP11.1 million (2016 H1: GBP9.3
million) while profit before tax, exceptional items and LTIP
charges was up 27% to GBP10.5 million from GBP8.2 million in the
equivalent period last year. This strong trading position at the
end of the first half of the year is firmly underpinning
management's expectations for the full year.
The exceptional cost during the period was GBP0.1 million (2016
H1: GBP0.6 million credit) mainly reflecting costs associated with
the acquisition of Biscay.
After allowing for exceptional items in the period, profit
before tax and after exceptional items and LTIP charges was GBP9.5
million, up 20% on the prior year (2016 H1: GBP7.9 million).
Reconciliation to underlying measures
Unaudited Unaudited Twelve
six months six months months
ended ended ended
30 Sept 30 Sept 31 Mar
2017 2016 2017
GBPm GBPm GBPm
------------------ ---------- ---------- -------
Profit before tax 9.5 7.9 13.0
Exceptional items 0.1 (0.6) 1.1
LTIP charges 0.9 0.9 2.2
------------------ ---------- ---------- -------
Underlying profit 10.5 8.2 16.3
------------------ ---------- ---------- -------
Unaudited Unaudited Twelve
six months six months months
ended ended ended
30 Sept 30 Sept 31 Mar
2017 2016 2017
pence pence pence
------------------------------------ ---------- ---------- -------
Fully diluted EPS 9.9 9.5 15.0
Cost per share on exceptional items 0.0 (1.0) 0.4
Costs per share on LTIP charge 1.0 1.1 2.8
------------------------------------ ---------- ---------- -------
Underlying EPS 10.9 9.6 18.2
------------------------------------ ---------- ---------- -------
Finance expenses in the period were again substantially lower on
the prior year period at GBP0.6 million (2016 H1: GBP1.1 million)
reflecting the continued effect of improved borrowing costs,
efficient use of our lower cost asset-based lending working capital
facilities and lower average indebtedness. We also agreed to extend
the term of our global facilities in May 2017 by a further year to
June 2020. The facility is capable of extension for one further
year on the same terms should the parties agree.
The effective underlying tax rate (before exceptional items and
LTIP charges) was 28% (2016 H1: 24%), slightly below the blended
prevailing rate which based upon the current mix of Group profits
would be 28.5%. We now anticipate by the year end that all US
losses will have been used with only GBP3.4 million of tax losses
unutilised in the UK. If growth is heavily fuelled by our US
business as is our expectation, the blended tax rate could continue
to rise; however, should US tax rates be significantly reduced as
is currently under review, this could provide a material additional
advantage to the Group's earnings after tax. Cash tax is
increasingly becoming payable at the prevailing rate in most of our
geographic regions of operation as historical losses are fully
utilised although this will be not be evident in the US or UK until
2018/19.
Stated before exceptional items and LTIP charges, basic earnings
per share were ahead of expectations and much improved at 11.3p
(2016 H1: 9.8p). The equivalent statutory outcome was 10.2p (2016
H1: 9.7p) after exceptional items and LTIP charges. Our primary
measure of performance is underlying fully diluted earnings per
share (stated before exceptional items and LTIP charges) and this
was up 14% to 10.9p (2016 H1: 9.6p). The half year EPS outcome
benefits slightly from the timing of profitability for reasons
explained above.
Capital expenditure in the six months was GBP3.8 million (2016
H1: GBP3.0 million), somewhat higher than the prior period as we
seek out opportunities to invest in efficiency. Notably we have
taken delivery of new machinery in Wales to manufacture retail
branded bags ("Not--for--sale" consumables) as part of our
diversification into new adjacent product categories. This
equipment was already fully operational at 30 September 2017 with a
strong order book in place. Orders have also been confirmed and
deposits placed for a second high definition, high speed, printing
press in Europe and to implement a new ERP system in our US
business. Both are expected to yield attractive paybacks.
Cash used by operations was GBP64.5 million (2016 H1: GBP54.2
million) reflecting the growing scale of the business and the
seasonal funding of the newly acquired Lang business. The
underlying cash dynamic reflects the usual phasing of production,
geared heavily towards H1. As always this is impacted by the high
variability year to year of the exact timing of customer delivery
requirements.
Cash flows associated with interest, tax and dividends in
aggregate were up from GBP2.9 million in 2016 H1 to GBP4.5 million,
with increases in dividend payments (including a modest amount to
our joint venture partner) and taxation accounting for GBP1 million
each while interest payments continue to decline.
Despite the increasing working capital need, net debt at 30
September 2017 was lower than the prior year at GBP70.2 million
(2016 H1: GBP76.4 million). This results from strong underlying
trading cash flows and tight disciplines around working capital
control.
Recent exchange rate translation effects have depressed
underlying profits by a modest GBP0.1 million compared with the
prior year.
Our focus on reduction of average leverage has not wavered and
having achieved our long term target last year, two years ahead of
schedule, we will now continue to target a level of average debt of
between 1.5 and 2.5 times EBITDA.
Dividend
A final dividend for the year ended 31 March 2017 of 2.75p per
share was paid in September 2017 making the total for the year
4.5p. The Board is pleased to declare an interim dividend of 2p per
share in respect of H1 2017/18 (2017 H1: 1.75p) in line with our
intention to steadily increase total dividends. This will be paid
on 18 January 2018 to shareholders on the register on 8 December
2017.
Directorate changes
As previously announced in July, Anthony Lawrinson indicated his
intention to retire from his role as Chief Financial Officer for
family reasons, after six years with the Group. The Board is
pleased to have announced alongside these financial results that it
intends to appoint Giles Willits as its new Chief Financial Officer
effective from 2nd January 2018. Anthony is continuing in his role
until early January 2018 and he has agreed to provide additional
transitional support in order to ensure an orderly handover.
The Board would like to thank Anthony for the diligence,
commitment and dedication he has shown over the past six years. He
has made a significant contribution to the Group, supporting its
turnaround, global diversification and subsequent stellar growth,
executing its M&A strategy and creating a robust finance
function which will serve the Group well over the coming years. We
wish him well for the future.
Current trading outlook
We are once again delighted to be reporting a robust performance
during the first half of the year, with all regions trading
profitably and growth being achieved both organically and through
the successful integration of Lang which we acquired in July
2016.
Our business is diversified by product category, regional and
seasonal activity as well as by customer channel, all with a common
theme of adding value through creating products with potent and
highly commercial designs, efficient manufacturing and sourcing and
excellent customer service.
Whilst we have delivered fast payback through investment in
capital equipment, we are really pleased to be identifying further
compelling investment opportunities to continuously improve
efficiency and enhance capability across all territories.
We look forward to providing a further update during January
2018 and creating sustainable value for our shareholders through
both organic growth and, when the opportunity arises, through
carefully considered acquisitions.
Paul Fineman
Chief Executive Officer
28 November 2017
Anthony Lawrinson
Chief Financial Officer
28 November 2017
Consolidated income statement
six months ended 30 September 2017
Unaudited six Unaudited six Twelve months
months months
ended 30 Sep ended 30 Sep ended 31 Mar
2017 2016 2017
----------------------------------- ----------------------------------- -----------------------------------
Before Exceptional Before Exceptional Before Exceptional
exceptional items exceptional items exceptional items
items (note Total items (note Total items (note Total
3) 3) 3)
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------- ----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Revenue 166,530 - 166,530 145,525 - 145,525 310,992 - 310,992
Cost of sales (131,168) - (131,168) (114,730) - (114,730) (247,058) (1,532) (248,590)
----------------- ----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Gross profit 35,362 - 35,362 30,795 - 30,795 63,934 (1,532) 62,402
21.2% 21.2% 21.2% 21.2% 20.6% 20.1%
Selling expenses (9,383) - (9,383) (8,317) - (8,317) (19,019) - (19,019)
Administration
expenses (15,910) (88) (15,998) (14,172) 563 (13,609) (29,832) 495 (29,337)
Other operating
income 179 - 179 99 - 99 210 - 210
----------------- ----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Operating
profit/(loss) 10,248 (88) 10,160 8,405 563 8,968 15,293 (1,037) 14,256
Finance expenses (660) - (660) (1,045) - (1,045) (1,229) - (1,229)
----------------- ----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Profit/(loss)
before tax 9,588 (88) 9,500 7,360 563 7,923 14,064 (1,037) 13,027
Income tax
(charge)/credit (2,737) 4 (2,733) (1,792) 26 (1,766) (3,480) 761 (2,719)
----------------- ----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Profit/(loss) for
the period 6,851 (84) 6,767 5,568 589 6,157 10,584 (276) 10,308
----------------- ----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Attributable to:
Owners of the
Parent Company 6,432 5,865 9,650
Non--controlling
interests 335 292 658
----------------- ----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Earnings per ordinary share
Unaudited six months Unaudited six months Twelve months
ended 30 Sep 2017 ended 30 Sep 2016 ended 31 Mar 2017
---------------------- ----------------------- -------------------
Diluted Basic Diluted Basic Diluted Basic
------------------- ------------ -------- ------------- -------- ---------- -------
Earnings per share 9.9p 10.2p 9.5p 9.7p 15.0p 15.7p
------------------- ------------ -------- ------------- -------- ---------- -------
Consolidated statement of comprehensive income
six months ended 30 September 2017
Unaudited Unaudited Twelve
six months six months months
ended ended ended
30 Sep 30 Sep 31 Mar
2017 2016 2017
GBP000 GBP000 GBP000
-------------------------------------------------------------------------------------- ---------- ---------- ------
Profit for the period 6,767 6,157 10,308
Other comprehensive income:
Exchange difference on translation of foreign operations (net of tax) (573) 3,069 3,213
Transfer to profit and loss on maturing cash flow hedges (net of tax) (271) 223 223
Net loss on cash flow hedges (net of tax) (110) (580) 271
Other comprehensive income for period, net of tax, items which may be reclassified to
profit
and loss in subsequent periods (954) 2,712 3,707
Total comprehensive income for the period, net of tax 5,813 8,869 14,015
Attributable to:
Owners of the Parent Company 5,676 8,107 12,795
Non--controlling interests 137 762 1,220
-------------------------------------------------------------------------------------- ---------- ---------- ------
5,813 8,869 14,015
-------------------------------------------------------------------------------------- ---------- ---------- ------
Consolidated statement of changes in equity
six months ended 30 September 2017
Share
premium
and Non--
capital
Share redemption Merger Hedging Translation Retained Shareholder controlling
capital reserve reserves reserves reserve earnings equity interest Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------- ------- ---------- -------- -------- ----------- -------- ----------- ----------- -------
At 31 March 2017 3,132 9,769 17,164 271 2,551 53,330 86,217 3,833 90,050
------------------- ------- ---------- -------- -------- ----------- -------- ----------- ----------- -------
Profit for the
period - - - - - 6,432 6,432 335 6,767
Other comprehensive
income - - - (381) (375) - (756) (198) (954)
------------------- ------- ---------- -------- -------- ----------- -------- ----------- ----------- -------
Total comprehensive
income for the
period - - - (381) (375) 6,432 5,676 137 5,813
Equity--settled
share--based
payment - - - - - 594 594 - 594
Tax on
equity--settled
share--based
payment - - - - - 424 424 - 424
Options exercised 31 - - - - (31) - - -
Equity dividends
paid - - - - - (1,734) (1,734) (575) (2,309)
------------------- ------- ---------- -------- -------- ----------- -------- ----------- ----------- -------
At 30 September
2017 3,163 9,769 17,164 (110) 2,176 59,015 91,177 3,395 94,572
------------------- ------- ---------- -------- -------- ----------- -------- ----------- ----------- -------
six months ended 30 September 2016
Share
premium
and Non--
capital
Share redemption Merger Hedging Translation Retained Shareholder controlling
capital reserve reserves reserves reserve earnings equity interest Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------- ------- ---------- -------- -------- ----------- -------- ----------- ----------- -------
At 31 March 2016 2,963 4,852 17,164 (223) (100) 43,346 68,002 3,370 71,372
------------------- ------- ---------- -------- -------- ----------- -------- ----------- ----------- -------
Profit for the
period - - - - - 5,865 5,865 292 6,157
Other comprehensive
income - - - (357) 2,599 - 2,242 470 2,712
------------------- ------- ---------- -------- -------- ----------- -------- ----------- ----------- -------
Total comprehensive
income for the
period - - - (357) 2,599 5,865 8,107 762 8,869
Equity--settled
share--based
payment - - - - - 514 514 - 514
Tax on
equity--settled
share--based
payment - - - - - 850 850 - 850
Shares issued 150 4,883 - - - - 5,033 - 5,033
Options exercised 19 34 - - - - 53 - 53
Equity dividends
paid - - - - - (1,039) (1,039) (260) (1,299)
------------------- ------- ---------- -------- -------- ----------- -------- ----------- ----------- -------
At 30 September
2016 3,132 9,769 17,164 (580) 2,499 49,536 81,520 3,872 85,392
------------------- ------- ---------- -------- -------- ----------- -------- ----------- ----------- -------
year ended 31 March 2017
Share
premium
and Non--
capital
Share redemption Merger Hedging Translation Retained Shareholder controlling
capital reserve reserves reserves reserve earnings equity interest Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------- ------- ---------- -------- -------- ----------- -------- ----------- ----------- -------
At 1 April 2016 2,963 4,852 17,164 (223) (100) 43,346 68,002 3,370 71,372
------------------- ------- ---------- -------- -------- ----------- -------- ----------- ----------- -------
Profit for the year - - - - - 9,650 9,650 658 10,308
Other comprehensive
income - - - 494 2,651 - 3,145 562 3,707
------------------- ------- ---------- -------- -------- ----------- -------- ----------- ----------- -------
Total comprehensive
income for the
year - - - 494 2,651 9,650 12,795 1,220 14,015
Equity--settled
share--based
payment - - - - - 1,555 1,555 - 1,555
Tax on
equity--settled
share--based
payments - - - - - 913 913 - 913
Shares issued 150 4,883 - - - - 5,033 - 5,033
Options exercised 19 34 - - - - 53 - 53
Capital
contribution from
non--controlling
investor - - - - - - - 110 110
Equity dividends
paid - - - - - (2,134) (2,134) (867) (3,001)
------------------- ------- ---------- -------- -------- ----------- -------- ----------- ----------- -------
At 31 March 2017 3,132 9,769 17,164 271 2,551 53,330 86,217 3,833 90,050
------------------- ------- ---------- -------- -------- ----------- -------- ----------- ----------- -------
Consolidated balance sheet
as at 30 September 2017
Unaudited Unaudited
as at as at As at
30 Sep 30 Sep 31 March
2017 2016 2017
Note GBP000 GBP000 GBP000
---------------------------------------------------- ---- --------- --------- --------
Non--current assets
Property, plant and equipment 33,270 33,450 32,607
Intangible assets 33,879 33,733 33,681
Deferred tax assets 4,640 4,426 5,398
---------------------------------------------------- ---- --------- --------- --------
Total non--current assets 71,789 71,609 71,686
---------------------------------------------------- ---- --------- --------- --------
Current assets
Inventory 70,197 74,355 49,475
Trade and other receivables 120,422 105,810 29,622
Derivative financial assets 188 86 307
Cash and cash equivalents 4 2,282 5,381 3,659
---------------------------------------------------- ---- --------- --------- --------
Total current assets 193,089 185,632 83,063
---------------------------------------------------- ---- --------- --------- --------
Total assets 264,878 257,241 154,749
---------------------------------------------------- ---- --------- --------- --------
Equity
Share capital 3,163 3,132 3,132
Share premium 8,429 8,429 8,429
Reserves 20,570 20,423 21,326
Retained earnings 59,015 49,536 53,330
---------------------------------------------------- ---- --------- --------- --------
Equity attributable to owners of the Parent Company 91,177 81,520 86,217
---------------------------------------------------- ---- --------- --------- --------
Non--controlling interests 3,395 3,872 3,833
---------------------------------------------------- ---- --------- --------- --------
Total equity 94,572 85,392 90,050
---------------------------------------------------- ---- --------- --------- --------
Non--current liabilities
Loans and borrowings 4 (39) (254) (39)
Deferred income 1,048 1,133 1,083
Provisions 883 872 881
Other financial liabilities 1,960 2,242 1,911
Deferred tax liability 584 352 525
---------------------------------------------------- ---- --------- --------- --------
Total non--current liabilities 4,436 4,345 4,361
---------------------------------------------------- ---- --------- --------- --------
Current liabilities
Bank overdraft 4 6,409 4,576 916
Loans and borrowings 4 66,055 75,250 (232)
Deferred income 152 150 111
Provisions 455 220 441
Income tax payable 3,337 2,809 3,153
Trade and other payables 72,763 64,975 37,450
Other financial liabilities 16,699 19,524 18,499
---------------------------------------------------- ---- --------- --------- --------
Total current liabilities 165,870 167,504 60,338
---------------------------------------------------- ---- --------- --------- --------
Total liabilities 170,306 171,849 64,699
---------------------------------------------------- ---- --------- --------- --------
Total equity and liabilities 264,878 257,241 154,749
---------------------------------------------------- ---- --------- --------- --------
Consolidated cash flow statement
six months ended 30 September 2017
Unaudited Unaudited Twelve
six months six months months
ended ended ended
30 Sep 30 Sep 31 Mar
2017 2016 2017
GBP000 GBP000 GBP000
-------------------------------------------------------- ---------- ---------- --------
Cash flows from operating activities
Profit for the year 6,767 6,157 10,308
Adjustments for:
Depreciation 2,198 1,809 4,571
Amortisation of intangible assets 347 328 798
Finance expenses 660 1,045 1,229
Negative goodwill release to income - (1,067) (1,271)
Income tax charge 2,733 1,766 2,719
(Profit)/loss on sales of property, plant and equipment (2) 15 24
Loss on external sale of intangible fixed assets - - 51
Equity--settled share--based payment 874 870 2,216
-------------------------------------------------------- ---------- ---------- --------
Operating profit after adjustments for non--cash items 13,577 10,923 20,645
Change in trade and other receivables (90,306) (78,676) (772)
Change in inventory (21,358) (22,863) 2,670
Change in trade and other payables 33,601 36,436 8,940
Change in provisions and deferred income (45) (58) 44
-------------------------------------------------------- ---------- ---------- --------
(Cash used by)/cash generated from operations (64,531) (54,238) 31,527
Tax paid (1,501) (525) (2,003)
Interest and similar charges paid (734) (1,060) (1,867)
-------------------------------------------------------- ---------- ---------- --------
Net cash (outflow)/inflow from operating activities (66,766) (55,823) 27,657
-------------------------------------------------------- ---------- ---------- --------
Cash flow from investing activities
Proceeds from sale of property, plant and equipment 27 48 58
Acquisition of businesses - (2,669) (2,669)
Capital contribution from non--controlling investor - - 110
Acquisition of intangible assets (462) (77) (534)
Acquisition of property, plant and equipment (3,372) (2,914) (4,633)
Receipt of government grants 15 39 40
-------------------------------------------------------- ---------- ---------- --------
Net cash outflow from investing activities (3,792) (5,573) (7,628)
-------------------------------------------------------- ---------- ---------- --------
Cash flows from financing activities
Net proceeds from issue of share capital - 5,086 5,086
Repayment of secured borrowings - (21,774) (21,774)
Net movement in credit facilities 66,265 68,575 (795)
Payment of finance lease liabilities (17) (229) (2,383)
Loan arrangement fees (67) (287) (319)
Equity dividends paid (1,734) (1,039) (2,134)
Dividends paid to non--controlling interests (575) (260) (867)
-------------------------------------------------------- ---------- ---------- --------
Net cash inflow/(outflow) from financing activities 63,872 50,072 (23,186)
-------------------------------------------------------- ---------- ---------- --------
Net decrease in cash and cash equivalents (6,686) (11,324) (3,157)
Cash and cash equivalents at beginning of period 2,743 6,872 6,872
Effect of exchange rate fluctuations on cash held (184) 5,257 (972)
-------------------------------------------------------- ---------- ---------- --------
Cash and cash equivalents at end of the period (4,127) 805 2,743
-------------------------------------------------------- ---------- ---------- --------
Notes to the interim financial statements
1 Accounting policies
Basis of preparation
The financial information contained in this interim report does
not constitute statutory accounts as defined in Section 434 of the
Companies Act 2006 and is unaudited.
The Group interim report has been prepared and approved by the
Directors in accordance with International Financial Reporting
Standards as adopted by the EU ("Adopted IFRS"). The financial
information for the year ended 31 March 2017 is extracted from the
statutory accounts of the Group for that financial year and does
not constitute statutory accounts as defined in Section 434 of the
Companies Act 2006. The auditor's report was (i) unqualified; (ii)
did not include a reference to any matters to which the auditor
drew attention by way of emphasis without qualifying their report;
and (iii) did not contain a statement under Section 498 (2) of the
Companies Act 2006.
The interim report does not include all the information and
disclosures required in the annual financial statements and should
be read in conjunction with the Group's annual financial statements
for the year ended 31 March 2017.
Going concern basis
The borrowing requirement of the Group increases steadily over
the period from July and peaks in October, due to the seasonality
of the business, as sales of wrap and crackers are mainly for the
Christmas market, before then reducing.
As with any company placing reliance on external entities for
financial support, the Directors acknowledge that there can be no
certainty that this support will continue, although, at the date of
approval of this interim report, they have no reason to believe
that it will not do so.
After making enquiries, the Directors have a reasonable
expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future.
Thus, they continue to adopt the going concern basis of accounting
in preparing the financial statements.
Significant accounting policies
The accounting policies adopted in the preparation of the
interim report are consistent with those followed in the
preparation of the Group's annual financial statements for the year
ended 31 March 2017.
2 Segmental information
The Group has one material business activity being the design,
manufacture and distribution of gift packaging and greetings,
stationery and creative play products, and design--led
giftware.
For management purposes the Group is organised into four
geographic business units.
The results below are allocated based on the region in which the
businesses are located; this reflects the Group's management and
internal reporting structure. The decision was made during 2011 to
focus Asia as a service provider of manufacturing and procurement
operations, whose main customers are our UK businesses.
Both the China factory and the majority of the Hong Kong
procurement operations are now overseen by our UK operational
management team and we therefore continue to include Asia within
the internal reporting of the UK operations, such that UK and Asia
comprise an operating segment.
Intra--segment pricing is determined on an arm's length basis.
Segment results include items directly attributable to a segment as
well as those that can be allocated on a reasonable basis.
Financial performance of each segment is measured on operating
profit. Interest income or expense and tax are managed on a Group
basis and not split between reportable segments.
Segment assets are all non--current and current assets,
excluding deferred tax and income tax, which are shown in the
eliminations column. Where cash shown in one segment, nets under
the Group's banking facilities against overdrafts in other
segments, the elimination is shown in the eliminations column.
Inter--segment receivables and payables are eliminated
similarly.
UK and Asia Europe USA Australia Eliminations Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------------------------- ----------- --------- --------- --------- ------------ ---------
Six months ended 30 September 2017
Revenue
- external 57,516 20,817 69,713 18,484 - 166,530
- inter segment 1,737 786 - - (2,523) -
----------------------------------------------- ----------- --------- --------- --------- ------------ ---------
Total segment revenue 59,253 21,603 69,713 18,484 (2,523) 166,530
----------------------------------------------- ----------- --------- --------- --------- ------------ ---------
Segment result before exceptional items 4,003 1,684 5,132 1,227 - 12,046
Exceptional items - - (12) (76) - (88)
----------------------------------------------- ----------- --------- --------- --------- ------------ ---------
Segment result 4,003 1,684 5,120 1,151 - 11,958
----------------------------------------------- ----------- --------- --------- --------- ------------ ---------
Central administration costs (1,798)
Net finance expenses (660)
Income tax (2,733)
----------------------------------------------- ----------- --------- --------- --------- ------------ ---------
Profit for the six months ended 30 September
2017 6,767
----------------------------------------------- ----------- --------- --------- --------- ------------ ---------
Balances at 30 September 2017
Segment assets 147,275 32,870 63,985 16,108 4,640 264,878
----------------------------------------------- ----------- --------- --------- --------- ------------ ---------
Segment liabilities (62,018) (28,276) (65,247) (10,844) (3,921) (170,306)
----------------------------------------------- ----------- --------- --------- --------- ------------ ---------
Capital expenditure
- property, plant and equipment 2,263 789 124 196 - 3,372
- intangible 32 10 420 - - 462
Depreciation 1,192 341 425 240 - 2,198
Amortisation 92 25 219 11 - 347
----------------------------------------------- ----------- --------- --------- --------- ------------ ---------
UK and Asia Europe USA Australia Eliminations Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------------------------- ----------- --------- --------- --------- ------------ ---------
Six months ended 30 September 2016
Revenue
- external 55,117 16,545 58,560 15,303 - 145,525
- inter segment 1,448 224 - - (1,672) -
----------------------------------------------- ----------- --------- --------- --------- ------------ ---------
Total segment revenue 56,565 16,769 58,560 15,303 (1,672) 145,525
----------------------------------------------- ----------- --------- --------- --------- ------------ ---------
Segment result before exceptional items 4,000 1,258 3,758 1,020 - 10,036
Exceptional items - - 563 - - 563
----------------------------------------------- ----------- --------- --------- --------- ------------ ---------
Segment result 4,000 1,258 4,321 1,020 - 10,599
----------------------------------------------- ----------- --------- --------- --------- ------------ ---------
Central administration costs (1,631)
Net finance expenses (1,045)
Income tax (1,766)
----------------------------------------------- ----------- --------- --------- --------- ------------ ---------
Profit for the six months ended 30 September
2016 6,157
----------------------------------------------- ----------- --------- --------- --------- ------------ ---------
Balances at 30 September 2016
Segment assets 139,043 31,989 66,914 14,869 4,426 257,241
----------------------------------------------- ----------- --------- --------- --------- ------------ ---------
Segment liabilities (78,480) (12,426) (69,222) (8,560) (3,161) (171,849)
----------------------------------------------- ----------- --------- --------- --------- ------------ ---------
Capital expenditure
- property, plant and equipment 1,085 226 554 1,049 - 2,914
- intangible 26 - 49 2 - 77
Depreciation 885 349 424 151 - 1,809
Amortisation 131 21 165 11 - 328
----------------------------------------------- ----------- --------- --------- --------- ------------ ---------
UK and Asia Europe USA Australia Eliminations Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------------------- ----------- --------- --------- --------- ------------ --------
Year ended 31 March 2017
Revenue
- external 114,113 45,497 117,831 33,551 - 310,992
- inter segment 2,904 227 - - (3,131) -
---------------------------------------- ----------- --------- --------- --------- ------------ --------
Total segment revenue 117,017 45,724 117,831 33,551 (3,131) 310,992
---------------------------------------- ----------- --------- --------- --------- ------------ --------
Segment result before exceptional items 5,541 4,490 6,119 1,710 - 17,860
---------------------------------------- ----------- --------- --------- --------- ------------ --------
Exceptional items - - (1,037) - - (1,037)
---------------------------------------- ----------- --------- --------- --------- ------------ --------
Segment result 5,541 4,490 5,082 1,710 - 16,823
---------------------------------------- ----------- --------- --------- --------- ------------ --------
Central administration costs (2,567)
Net finance expenses (1,229)
Income tax (2,719)
---------------------------------------- ----------- --------- --------- --------- ------------ --------
Profit for the year ended 31 March 2017 10,308
---------------------------------------- ----------- --------- --------- --------- ------------ --------
Balances at 31 March 2017
Segment assets 95,760 20,413 21,461 11,717 5,398 154,749
---------------------------------------- ----------- --------- --------- --------- ------------ --------
Segment liabilities (10,934) (16,382) (27,952) (5,753) (3,678) (64,699)
---------------------------------------- ----------- --------- --------- --------- ------------ --------
Capital expenditure
- property, plant and equipment 1,866 687 812 1,268 - 4,633
- intangible 184 36 263 51 - 534
Depreciation 1,813 1,081 1,306 371 - 4,571
Amortisation 194 45 536 23 - 798
---------------------------------------- ----------- --------- --------- --------- ------------ --------
3 Exceptional items
Six months Six months Twelve months
ended ended ended
30 Sep 30 Sep 31 Mar
2017 2016 2017
GBP000 GBP000 GBP000
------------------------------------------- ---------- ---------- -------------
Acquisition of Biscay Greetings Pty Ltd
Transaction costs(a) 76 - -
Acquisition of Lang Companies Inc.
Transaction and restructuring costs(b) - 504 722
Gain on bargain purchase(c) - (1,067) (1,271)
Restructuring of American operations(d) 12 - 1,586
------------------------------------------- ---------- ---------- -------------
Total before tax 88 (563) 1,037
Income tax credit (4) (26) (761)
------------------------------------------- ---------- ---------- -------------
84 (589) 276
------------------------------------------- ---------- ---------- -------------
(a) Transaction costs relating to the acquisition of the Biscay business.
(b) Transaction and restructuring costs relating to the acquisition of the Lang business.
(c) Gain on the bargain purchase on the acquisition of the Lang
business (see note 7 for further details).
(d) Restructuring of American printing platform.
4 Cash, loans and borrowings
Net debt
Six months Six months Twelve months
ended ended ended
30 Sep 30 Sep 31 Mar
2017 2016 2017
GBP000 GBP000 GBP000
-------------------------------------------------- ---------- ---------- -------------
Cash and cash equivalents 2,282 5,381 3,659
Bank overdrafts (6,409) (4,576) (916)
-------------------------------------------------- ---------- ---------- -------------
Cash and cash equivalents per cash flow statement (4,127) 805 2,743
Bank loans and borrowings (66,265) (75,402) -
Loan arrangement fees 249 406 271
Finance leases (30) (2,200) (45)
-------------------------------------------------- ---------- ---------- -------------
Net debt as used in the executive summary (70,173) (76,391) 2,969
-------------------------------------------------- ---------- ---------- -------------
Split between current and non--current
Six months Six months Twelve months
ended ended ended
30 Sep 30 Sep 31 Mar
2017 2016 2017
GBP000 GBP000 GBP000
---------------------------- ---------- ---------- -------------
Non--current liabilities
Loan arrangement fees 39 254 39
---------------------------- ---------- ---------- -------------
39 254 39
---------------------------- ---------- ---------- -------------
Current liabilities
Asset backed loan (36,374) (51,043) -
Revolving credit facilities (29,891) (24,359) -
---------------------------- ---------- ---------- -------------
Bank loans and borrowings (66,265) (75,402) -
Loan arrangement fees 210 152 232
---------------------------- ---------- ---------- -------------
(66,055) (75,250) 232
---------------------------- ---------- ---------- -------------
Finance leases of GBP30,000 (2016: GBP2,200,000) are included
within other financial liabilities and are split GBP1,000 (2016:
GBP1,703,000) non--current and GBP29,000 (2016: GBP497,000)
current.
Loan arrangement fees represent the unamortised costs in
arranging the three--year Group facilities which commenced in June
2016 and the unamortised costs relating to a one--year
extension.
5 Taxation
Six months Six months Twelve months
ended ended ended
30 Sep 30 Sep 31 Mar
2017 2016 2017
GBP000 GBP000 GBP000
----------------------------------------------------------- ---------- ---------- -------------
Current tax expenses
Current income tax charge 2,082 1,376 3,132
Deferred tax expense
Relating to original and reversal of temporary differences 651 390 (413)
----------------------------------------------------------- ---------- ---------- -------------
Total tax in income statement 2,733 1,766 2,719
----------------------------------------------------------- ---------- ---------- -------------
Taxation for the six months to 30 September 2017 is based on the
effective rate of taxation, which is estimated to apply in each
country for the year ended 31 March 2018.
6 Earnings per share
Six months ended Six months ended Twelve months ended
30 Sep 2017 30 Sep 2016 31 Mar 2017
------------------ ------------------ ---------------------
Diluted Basic Diluted Basic Diluted Basic
pence pence pence pence pence pence
------------------------------------------------------- ---------- ------ ---------- ------ ------------ -------
Underlying earnings per share excluding exceptional
items and LTIP charges 10.9 11.3 9.6 9.8 18.2 19.0
Cost per share on LTIP charge (1.0) (1.1) (1.1) (1.1) (2.8) (2.9)
------------------------------------------------------- ---------- ------ ---------- ------ ------------ -------
Underlying earnings per share excluding exceptional
items 9.9 10.2 8.5 8.7 15.4 16.1
Earnings per share on exceptional items - - 1.0 1.0 (0.4) (0.4)
------------------------------------------------------- ---------- ------ ---------- ------ ------------ -------
Earnings per share 9.9 10.2 9.5 9.7 15.0 15.7
------------------------------------------------------- ---------- ------ ---------- ------ ------------ -------
The basic earnings per share is based on the profit attributable
to equity holders of the Parent Company of GBP6,432,000 (2016:
GBP5,865,000) and the weighted average number of ordinary shares in
issue of 62,868,000 (2016: 60,442,000) calculated as follows:
As at As at As at
30 Sep 30 Sep 31 Mar
In thousands of shares 2017 2016 2017
-------------------------------------------------------- ------ ------ ------
Issued ordinary shares at 1 April 62,642 59,257 59,257
Shares issued in respect of exercising of share options 226 136 260
Shares issued in respect of share placing - 1,049 2,022
-------------------------------------------------------- ------ ------ ------
Weighted average number of shares at end of the period 62,868 60,442 61,539
-------------------------------------------------------- ------ ------ ------
Total number of executive share options, over 5p ordinary
shares, in issue at 30 September 2017 was 710,000 (2016:
710,000).
Total number of Long Term Incentive Plan ("LTIP") options, over
5p ordinary shares, in issue at 30 September 2017 was 1,213,013
(2016: 500,000).
Underlying basic earnings per share excludes exceptional items
and LTIP charges of GBP924,000 (2016: GBP307,000) and tax relief
attributable to those items of GBP196,000 (2016: GBP209,000) to
give underlying profits of GBP7,160,000 (2016: 5,963,000).
7 Acquisitions of businesses
Biscay Greetings Pty Limited
On 21 September 2017 IG Design Group plc announced that it had
signed a contract to acquire the trade and certain assets of Biscay
Greetings Pty Limited, a leading greetings card and paper products
business based in Australia. Completion will take place in January
2018.
The acquisition, to be made through Design Group's Australian
joint venture Artwrap, will be satisfied by a cash consideration of
AUD9.0 million (GBP5.5 million) using local debt facilities. Stock
and fixed assets acquired are estimated at a market value of AUD5.0
million (GBP3.1 million) with the balance of the consideration to
be treated as intangible assets and goodwill. The consideration
represents 2.7x EBITDA for the year ended 30 June 2017 although an
injection of working capital of up to AUD3.0 million (GBP1.8
million) will also be required.
Biscay provides greetings cards and related products to an
extensive base of almost 2,000 customers through regional,
wholesale, and independent retail channels across Australia and New
Zealand.
The Lang Companies Inc.
On 11 July 2016, the Group acquired all of the shares capital of
The Lang Companies Inc, ("Lang") for a cash consideration of
GBP2,669,000 ($3,443,000). Acquisition costs of GBP260,000 were
incurred during the period and expensed in the income statement as
an exceptional item. Lang is a design--led supplier of
high--quality branded consumer home décor and lifestyle products,
based in the USA. Lang is a natural fit with the Group, being a
design--led company with complementary products and markets. There
are natural synergy opportunities with the Group in sourcing and
cross selling. In the period from acquisition to 31 March 2017,
Lang contributed net profit of GBP528,000 to the consolidated Group
net profit for the year ended 31 March 2017. If the acquisition had
occurred on 1 April 2016, Group revenue would have been
GBP316,160,000 and net profit would have been GBP9,224,000. In
determining these amounts, management has assumed that the fair
value adjustments that arose on the date of acquisition would have
been the same if the acquisition occurred on 1 April 2016.
Effect of acquisition
The acquisition had the following effect on the Group's assets
and liabilities:
Recognised
fair values
on acquisition
GBP000
---------------------------- --------------
Property, plant and
equipment 292
Intangible assets 1,230
Inventories 2,967
Trade and other receivables 6,005
Trade and other payables (5,742)
Deferred tax liabilities (812)
---------------------------- --------------
Net identifiable assets
and liabilities 3,940
---------------------------- --------------
Total cash consideration
paid 2,669
---------------------------- --------------
Gain on bargain purchase
recognised immediately
in the income statement 1,271
---------------------------- --------------
The gain on bargain purchase arose as a result of the sum of the
net assets acquired being greater than the amount paid. This was
possible due to the low number of potential acquirers for the
business.
Directors and advisers
John Charlton
Non--Executive Chairman
Anders Hedlund
Founder and Non--Executive Deputy Chairman
Paul Fineman
Chief Executive Officer
Anthony Lawrinson
Chief Financial Officer and Company Secretary
Lance Burn
Executive Director
Elaine Bond
Non--Executive Director
Mark Tentori
Non--Executive Director
Financial and nominated adviser and broker
Cenkos Securities Plc
6, 7, 8, Tokenhouse Yard
London EC2R 7AS
Auditor
KPMG LLP
Altius House
One North Fourth Street
Milton Keynes MK9 1NE
Public Relations
Alma PR
Aldwych House
71-91 Aldwych
London WC2B 4HN
Legal Adviser
Bird & Bird LLP
12 New Fetter Lane
London EC4A 1JP
Registered office
No 7, Water End Barns
Water End
Eversholt MK17 9EA
IG Design Group plc is registered in England and Wales, number
1401155
Share registrar
Link Asset Services
The Registry
34 Beckenham Road
Beckenham BR3 4TU
By phone - UK - 0871 664 0300, from overseas call +44 (0) 371
664 0300 calls cost 12p per minute plus your phone company's access
charge. Calls outside the United Kingdom will be charged at the
applicable international rate. We are open between 09:00 - 17:30,
Monday to Friday excluding public holidays in England and
Wales.
By email - enquiries@linkgroup.co.uk
Visit us online at
thedesigngroup.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFIALELDFID
(END) Dow Jones Newswires
November 28, 2017 02:00 ET (07:00 GMT)
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