RNS Number:2931W
Litho Supplies PLC
09 March 2004
LITHO SUPPLIES Plc
Preliminary results for the year ended 31 December 2003
Litho Supplies Plc, the leading independent distributor of analogue and digital
consumables, equipment and related services to the printing, graphic arts and
corporate markets in the UK, announces its results for the year ended 31
December 2003.
Overview:
* Pre-tax profit of #1.66m (2002: #1.80m) before #2.46m (2002: #1.40m) of
exceptional charges incurred in the reorganisation of the business, on a
turnover of #46.79m (2002: #53.79m).
* Strong balance sheet.
* Another year of very good cashflow generating a cash balance of #2.55m
at 31 December 2003 (2002: #0.20m).
* Recommending a final dividend of 1.75p per share (2002: 1.50p per share)
making a dividend for the year of 3.50p per share (2002: 3.00p per share)
- a 16.67% increase.
* The printing market continues to be extremely competitive but there are new
opportunities for sales growth within certain divisions of our business.
The sales team is now well supported by a fast developing telesales
operation.
* Appointed as distributors for Fujifilm products and now offers consumable
products from the three major world manufacturers - Agfa, KPG and Fujifilm.
* Appointed as the exclusive UK distributor for the Toray environmentally
friendly range of waterless printing plates.
Litho Supplies Chief Executive Mike Hammond said:
"Our balance sheet at 31 December 2003 remains strong and we generated another
year of very strong cashflow resulting in a cash balance of #2.55m at the end of
2003 compared to #0.20m in 2002.
Whilst the market conditions in the printing sector remain extremely
challenging, we are working hard on a number of sales opportunities within the
business and are well placed to take advantage of any recovery in the printing
and advertising sectors."
CHAIRMAN'S STATEMENT
Results for the year ended 31 December 2003
The audited results for the year ended 31 December 2003 show a pretax profit of
#1.66m (#1.80m) before #2.46m (#1.40m) of exceptional charges incurred in the
reorganisation of the business during the year. As reported in my Interim
Statement #2.09m of the exceptional charges relate to the provision of the
shortfall on the company's pension scheme, which did not have an impact on the
group's cashflows during the year. The loss before tax after exceptional items
was #(0.80)m (profit of #0.40m). Sales for the year were #46.79m (#53.79m).
The reduction was partly due to the closure of our subsidiary in Belgium in
April 2002 and the disposal of our flexography chemical manufacturing business
as well as further price deflation in the printing market.
The change from analogue to digital products continued to have an impact on
trading conditions within the printing industry but our margins were maintained
by consistent, strict, cost control.
Basic earnings per share before exceptional items were 5.54p (6.24p) and after
exceptional items were -3.25p (0.03p).
Our working capital levels were lower due to further improvements from the
reduction of our stock holdings and tighter control of our debtor balances.
This combined with the cost controls referred to above have resulted in another
very strong year of positive cashflow with a cash balance of #2.55m at 31
December 2003 compared with #0.20m at 31 December 2002.
In the light of the improved cash position and the strength of our balance
sheet, the Board is recommending a final dividend of 1.75p (1.5p) per share,
which will be paid on 28 May 2004 to shareholders on the register as at 30 April
2004. The ex dividend date is 28 April 2004. The total dividend for the year
is 3.5p per share compared with 3.0p per share for the previous year, a 16.67%
increase.
Consumables
UK consumable sales were #37.39m (#41.67m).
The core of our consumables business continued to be printing plates and films
and we have again increased the number of computer to plate (CTP) installations
in our customer base. This reflects the change in the product mix our
customers are purchasing. Film sales have slowed down and are being replaced by
continued rapid growth in the CTP plate products. Towards the end of 2003, we
announced our appointment as distributors for Fujifilm consumable products. The
introduction of Fujifilm products into our range means we can now offer
consumable products from all the three major world manufacturers, Fuji, Agfa and
Kodak.
Within our consumables business we have seen further growth in our pressroom
division, which supplies inks, blankets chemicals and equipment to our customers
using printing presses. We intend to further improve our market share in this
area by increasing the amount of resources we devote to these products.
Our wide format inkjet equipment and consumables sales have shown strong growth
in 2003 and we expect this trend to continue. Customers are using these
products both for digitally proofing jobs, before printing, as well as the
production of banners and large format point of sale material.
We have introduced new equipment and have broadened the range of consumables
output to include plastic and canvas materials.
Sales within our packaging division remain flat but continue to generate healthy
margins. We have sold the first Creo Thermoflex CTP unit to one of our
packaging customers, for the production of digital flexo plates, and we expect
to sell more of these units in the future.
I was very encouraged by the reduction of our bad debts charge for the year
which was considerably lower than the figure for the previous year and our
credit management team is to be congratulated in keeping our exposure under
control.
Electronic Equipment
Sales of electronic products for the year were #9.09m (#9.12m) which, with the
first half being boosted by sales from Northprint in May 2003, was a
satisfactory performance for the year. Our sales of CTP platesetters from Agfa,
Screen and Highwater made a major contribution to our results. We have also
added black and white digital printing engines from Xerox to our range of
products and this contributed to a very satisfactory performance in the digital
printing market. We have recognised the growth potential for digital printing
for sometime and have further increased the size of the sales team involved with
these products, as well as enlarging our showroom in Scotland in a project
supported by Xerox. Sales from our electronics catalogue continued to grow and
we see this as an ideal way to supply our customers with a range of low cost
albeit low margin peripheral equipment and software. I am also pleased to note
the continual improvement in margins brought about by the added value services
such as maintenance and technical support.
Pension Commitments
As previously reported in my Interim Statement, in conjunction with changes to
the company's pension arrangements and the introduction of a new alternative
defined contribution group personal pension plan, the Board has made an
exceptional provision of #2.09m (based upon the value of the fund at 1 January
2003) for the shortfall on the defined benefit Litho Supplies (UK) Limited
Pension Scheme. The provision has been charged to the Profit and Loss Account
as an exceptional item and provided in accordance with Statement of Standard
Accounting Practice SSAP24. The provision assumptions used were consistent with
the SSAP24 disclosure note. In accordance with actuarial calculations, the
company is making additional monthly contributions of #25,000 to fund the
shortfall. Total additional contributions in the year were #300,000 and these
have been offset against the provision.
Efficiencies
To survive, let alone prosper, in such a rapidly changing industry, management
must always be looking for every opportunity to reduce costs and reorganise the
business to sharpen our focus with the ultimate objective of increasing sales
and improving gross margins.
During the year we continued to make progress with improvements to our computer
andcommunication systems in order to increase business efficiencies. We also
continued to see an increase in the number of hits to our website and the number
of customers placing orders through our online internet ordering system.
Current Trading
I have already mentioned the appointment of Fuji as a new major supplier to the
group which further enhances our position as a leading supplier to the printing
industry.
In addition, we have recently been appointed as the exclusive UK distributor for
the Toray range of waterless printing plates which will add both turnover and
contribution to the business. Toray have developed an exclusive technology,
which removes water from the current lithographic printing process. European
directivesregarding industrial processes which cause environmental damage are
being tightened and our agreement with Toray puts us in a strong position to
take advantage of the resultant pressure on our customers to reduce their
industrial waste by-products.
We have other areas of the business which are also showing encouraging signs of
growth and our sales team is now well supported by a fast developing telesales
operation.
Our core business continues to be profitable, as does Murodigital, our business
solutions division selling digital colour copiers, multifunction printers and
digital duplicators to the corporate and education markets. With new
opportunities for sales growth, we will continue to ensure that this
profitability is maintained.
We have worked hard at reducing the level of working capital and again have
generated excellent cashflow during the year. Our balance sheet remains strong
with a healthy cash position. This in turn must provide our customers with
confidence that we will be able to continue to provide an excellent standard of
service and level of support.
There are some positive indications that the UK economy and particularly the
advertising market seem at last to be picking up and that should be a key factor
in creating more opportunities for the printing industry which we serve. The
market, however, is still extremely competitive and the demise of several of our
competitors last year was a further sign that there is still overcapacity in the
sector. Nevertheless, I am pleased that we are able to increase the dividend
to shareholders who I hope are equally pleased to see the recovery in the share
price over the last year.
Finally, I wish to thank all of our customers and suppliers for their ongoing
support and particularly our employees for their hard work and loyalty
throughout the year.
B C Clark
Chairman
9 March 2004
GROUP PROFIT AND LOSS ACCOUNT
for the year ended 31 December 2003
2003 2002
Before Exceptional Total #'000
Exceptional Costs #'000
Costs #'000
#'000
TURNOVER
Continuing operations 46,786 - 46,786 51,476
Discontinued operations - - - 2,317
TOTAL TURNOVER 46,786 - 46,786 53,793
Cost of sales
Continuing operations 38,591 1 38,592 42,612
Discontinued operations - 12 12 1,882
38,591 13 38,604 44,494
GROSS PROFIT 8,195 (13) 8,182 9,299
Distribution costs
Continuing operations 2,297 - 2,297 2,595
Discontinued operations - 93 93 95
2,297 93 2,390 2,690
Administrative expenses
Continuing operations 4,255 2,317 6,572 4,573
Discontinued operations - 38 38 275
4,255 2,355 6,610 4,848
OPERATING PROFIT/(LOSS)
Continuing operations 1,643 (2,318) (675) 1,696
Discontinued operations - (143) (143) 65
TOTAL OPERATING PROFIT/(LOSS) 1,643 (2,461) (818) 1,761
Sale of fixed assets - - - 251
Sale of business - - - (711)
Closure of business - - - (702)
PROFIT/(LOSS) BEFORE INTEREST & TAX 1,643 (2,461) (818) 599
Interest receivable 22 - 22 3
Interest payable & similar charges (7) - (7) (207)
15 - 15 (204)
PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE 1,658 (2,461) (803) 395
TAXATION
Tax on (loss)/profit on ordinary activities 450 (546) (96) 363
PROFIT/(LOSS) ON ORDINARY ACTIVITIES AFTER 1,208 (1,915) (707) 32
TAXATION
Equityminority interests - - - (25)
PROFIT ATTRIBUTABLE TO MEMBERS OF THE PARENT 1,208 (1,915) (707) 7
COMPANY
Dividends on equity shares (762) - (762) (654)
RETAINED (LOSS)/PROFIT FOR THE YEAR 446 (1,915) (1,469) (647)
EARNINGS PER SHARE - basic 5.54p (3.25)p 0.03p
- diluted 5.54p (3.25)p 0.03p
GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 31 December 2003
2003 2002
#'000 #'000
Profit/(Loss) attributable to members of the parent company (707) 7
Exchange difference on retranslation of net assets of subsidiary undertakings - (1)
TOTAL RECOGNISED GAINS AND LOSSES RELATING TO THE YEAR (707) 6
RECONCILIATION OF SHAREHOLDERS' FUNDS
for the year ended 31 December 2003
2003 2002
#'000 #'000
Total recognised gains and losses (707) 6
Dividends (762) (654)
Goodwill reinstated on sale of subsidiary - 762
Total movement during the year (1,469) 114
Shareholders' funds at 1 January 12,758 12,644
Shareholders' funds at 31 December 11,289 12,758
GROUP BALANCE SHEET
at 31 December 2003
2003 2002
#'000 #'000
FIXED ASSETS
Intangible assets 555 600
Tangible assets 516 603
1,071 1,203
CURRENT ASSETS
Stocks 6,658 7,788
Debtors 13,310 14,617
Cash at bank and in hand 2,551 204
22,519 22,609
CREDITORS: amounts falling due within one year 10,375 11,054
NET CURRENT ASSETS 12,144 11,555
TOTAL ASSETS LESS CURRENT LIABILITIES 13,215 12,758
PROVISIONS FOR LIABILITIES AND CHARGES 1,926 -
NET ASSETS 11,289 12,758
CAPITAL AND RESERVES
Called up share capital 2,179 2,179
Share premium account 13,420 13,420
Capital redemption reserve 461 461
Profit and loss account (4,771) (3,302)
EQUITY SHAREHOLDERS' FUNDS 11,289 12,758
GROUP STATEMENT OF CASH FLOWS
for the year ended 31 December 2003
2003 2002
#'000 #'000
NET CASH INFLOW FROM OPERATING ACTIVITIES 3,484 5,728
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 19 3
Interest paid (17) (218)
NET CASH INFLOW/(OUTFLOW) FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE 2 (215)
TAXATION
Corporation tax paid (410) (604)
CAPITAL EXPENDITURE
Payments to acquire tangible fixed assets (106) (92)
Receipts from the sale of tangible fixed assets 18 602
NET CASH INFLOW/(OUTFLOW) FROM CAPITAL EXPENDITURE (88) 510
ACQUISITIONS AND DISPOSALS 67 1,017
EQUITY DIVIDENDS PAID (708) (654)
INCREASE IN CASH IN THE YEAR 2,347 5,782
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
2003 2002
#'000 #'000
Net funds/(debt) at 1 January 204 (5,578)
Increase in cash 2,347 5,782
Net funds at 31 December 2,551 204
Net funds at 31 December is made up as follows:
Cash at bank and in hand 2,551 204
RECONCILIATION OF OPERATING PROFIT/(LOSS) TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
2003 2002
#'000 #'000
Reconciliation of operating profit/(loss) to net cash inflow from operating activities:
Operating profit/(loss) (818) 1,761
Amortisation of goodwill 45 71
Depreciation 184 297
Profit on sale of fixed assets (9) -
Decrease in debtors 1,770 2,728
Decrease in stocks 1,130 1,194
Decrease in creditors (744) (230)
Increase in pension provision 1,926 -
Exceptional non-operating costs - (93)
Net cash inflow from operating activities 3,484 5,728
NOTES TO THE ACCOUNTS
1. The figures for the year ended 31 December 2003 do not constitute full
accounts within the meaning of S.240 of the Companies Act 1985. The figures
for the year ended 31 December 2003 have been extracted from the full
accounts for that year which have yet to be delivered to the Registrar of
Companies and on which the auditors have issued an unqualified audit report.
The figures for the year ended 31 December 2002 have been extracted from the
full accounts for that year which have been delivered to the Registrar of
Companies and on which the auditors have issued an unqualified audit report.
2. EXCEPTIONAL COSTS
2003 2002
#'000 #'000
Exceptional reorganisation costs - UK 92 949
- Belgian subsidiary 143 702
235 1,651
Provision for Pension Scheme deficit 2,090 -
Notional interest on pension provision 136 -
2,226 -
Profit on sale of land - (251)
2,461 1,400
The UK exceptional reorganisation costs comprise expenditure incurred in
reorganising the business.
Changes have been made to the company's pension arrangements during the year
ended 31 December 2003. As a result, a provision of #2.09m has been established
on the company's balance sheet at 1 January 2003. This reflects the deficiency
on the defined benefit Litho Supplies (UK) Limited Pension Scheme disclosed by
the actuarial valuation as at 31 March 2002 (measured on the assumptions
outlined in the accounts for the year to 31 December 2002), which has been
updated to 31 December 2002 with interest and to allow for the company's special
contributions of #25,000 a month.
3. DIVIDENDS
2003 2002
#'000 #'000
Ordinary interim dividend paid 1.75p (2002: 1.50p) per share 381 327
Ordinary final dividend proposed 1.75p (2002: 1.50p) per share 381 327
762 654
4. EARNINGS PER SHARE
The earnings per share have been calculated as follows:
2003 2002
Profit/(loss) available for equity shareholders #(707,000) #7,000
Basic and diluted basis:
Weighted average number of Ordinary shares of 10p each in issue 21,786,148 21,786,148
Earnings per share (3.25)p 0.03p
The number of dilutive potential shares as at 31 December 2003 and 2002 is nil.
5. SHARE OPTIONS
The following options issued under the Litho Supplies PLC 1993 Executive Share
Option Scheme were surrendered for nil consideration by the Executive Directors:
Executive Director: Date of Surrender: Number: Class of Share:
M J Hammond 28 January 2004 24,000 Ordinary shares of 10p each
T F C Cooper 28 January 2004 24,000 Ordinary shares of 10p each
J G Mitchell 28 January 2004 24,000 Ordinary shares of 10p each
G O Mulvaney 8 March 2004 24,000 Ordinary shares of 10p each
This information is provided by RNS
The company news service from the London Stock Exchange
END
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