RNS Number:7988J
St. Ives PLC
9 April 2003
9 April 2003
St Ives plc
Interim Results Announcement
Maintained Profit and Strong Balance Sheet
St Ives, the leading UK-based printing group, today announces Interim Results for the 26 weeks ended 31 January 2003.
26 weeks to 26 weeks to
31 Jan 2003 1 Feb 2002
* Turnover #223m #241m
* Profit before tax, exceptional items & goodwill amortisation #16.7m #16.6m
* Earnings per share before exceptional items & goodwill amortisation 10.77p 10.93p
* Interim dividend per share 5.0p 5.0p
Commenting on the interim results, Miles Emley, Chairman, St Ives plc said:
"These results have been achieved in exceptionally challenging market conditions. While demand for monochrome,
consumer books in the UK remains resilient, there is no sign of an upturn in demand in any of our other markets.
Volatility has increased as a result of the current global uncertainties and our markets continue to experience the
effects of over-capacity. Maintained profitability reflects improved work mix as well as the actions taken over the
past 18 months to reduce our cost base.
"In the short term, economic conditions remain uncertain and it will be a challenge to deliver significant progress.
In the longer term, however, we are well positioned to take advantage of an improvement in market conditions as it
occurs".
For further information, please contact:
St Ives plc 020 7928 8844
Miles Emley, Chairman
Brian Edwards, Managing Director
Citigate Dewe Rogerson 020 7638 9571
Martin Jackson/Fiona Bradshaw
Results
The results for the 26 weeks ended 31 January 2003 show turnover of #222.9 million (2002 - #241.1 million) and profit
before taxation and amortisation of goodwill of #16.2 million (2002 - #7.2 million). Profit before taxation, goodwill
amortisation and exceptional items was #16.7 million (2002 - #16.6 million). Profit before taxation was #15.1 million
(2002 - #6.1 million). Earnings per share before goodwill amortisation and exceptional items were 10.77p (2002 -
10.93p).
Dividend
An interim dividend of 5.00p per share (2002 - 5.00p) has been declared, which will be paid on 21 May 2003 to
shareholders on the register on 22 April 2003.
Trading Conditions
The market for books in the UK remained steady. Our other markets, both in the UK and overseas, continued to suffer
from weak or volatile demand and over-capacity, especially in web offset, leading to further pressure on margins.
Despite these challenging conditions, sales were only some 5 per cent lower than in the first half of the previous
year (after taking into account the effect of currency movements on the conversion of the results of overseas
businesses). We were able broadly to maintain trading profitability and increase margin overall, as a result of the
cost reduction exercises undertaken over the last 18 months and through improved control of waste, better
utilisation, greater labour flexibility and further refinement of our mix of work.
Books
Sales of both cased and paperback books grew during the period. We supply almost all the leading publishing houses in
the UK and, in most cases, produce a majority of their monochrome, trade and general work, particularly where short
lead times and quick reprints are required. Our sales benefited from the flexibility afforded by our investment in
additional equipment as well as from the closure of two of our competitors in the early part of 2002.
Direct Response and Commercial
UK
Following the closure of web offset operations at our Leeds factory in January 2002, we reduced sales of longer-run,
less time-sensitive products to commercial markets in the UK. Better utilisation of our remaining capacity and
increased focus on those parts of the market with a requirement for shorter-run work and higher service levels led to
some improvement in returns.
Germany
Falling demand and continued pressure on prices led to a further deterioration in the financial performance of our
business serving these markets in Germany, despite the reduction in capacity undertaken at the beginning of 2002.
USA
In the USA, reduced volumes and continuing pricing pressure contributed to lower sales and returns. Short-term
fluctuations in demand made for less than optimal utilisation.
Financial
The uncertainties facing global capital markets resulted in a continuing absence of activity in corporate financial
markets in the UK, Europe and the USA. As a result our sales were below those achieved in the first half of the
previous year. We have been successful in winning a good share of the few transactions that have been launched,
especially in London and Paris. However, despite further cost reduction measures, levels of activity have not been
sufficient to enable us to make a profit serving these markets. Sales to the funds, annual reports and fine art
markets, which mainly occur in the second half of our financial year, were modestly higher overall.
Magazines
UK
We were successful in winning a number of new contracts, but not so as to offset fully the effects of reduced
paginations and title closures. We lost some work because it was only available at prices which did not provide an
acceptable economic return. The level of new launch activity remains subdued. The transfer of work from our factory
in Gillingham following its closure at the end of the previous financial year helped to mitigate the effects of lower
activity levels in our remaining plants.
USA
Sales to the magazine market in the USA remained steady and profitability was maintained. The effects of pricing
pressure were offset by the benefits of last year's cost reductions and improved utilisation resulting from the
reorganisation of our south Florida sites.
Multimedia
In a difficult market, sales of music and multimedia products increased from all three of our sites serving these
markets. Two of our competitors closed facilities in the UK during the first half of 2002, and we gained additional
work for production at our factory in Holland as a result of a customer's closure of one of its own facilities in the
UK. We made some improvement in the utilisation of both people and machinery.
Balance Sheet and Investment
The Group's financial position remains strong, with net cash resources and shareholders' funds of #12.7 million and
#239 million respectively at the end of the half-year. Capital expenditure, mainly on replacement equipment, amounted
to #11 million during the period.
Outlook
Demand for monochrome, consumer books in the UK remains resilient. There is no sign of an upturn in demand in any of
our other markets and volatility has increased as a result of the current global uncertainties. Our markets continue
to experience the effects of over-capacity. Insurance and employment benefit costs are rising and changes in UK tax,
employment and environmental legislation have put upward pressure on costs. While we continue to work at improving
productivity and utilisation, increasing flexibility and reducing waste, economic conditions remain uncertain and it
will be a challenge to deliver significant progress. In the longer term, however, our strong balance sheet, skilled
work force and well invested asset base, together with the systems which support them, make us well placed to take
advantage of any improvement in market conditions when it occurs.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
26 weeks to 26 weeks to 52 weeks to
31 January 1 February 2 August
2003 2002 2002
#'000 #'000 #'000
Turnover (note 2) 222,916 241,124 466,806
Cost of sales (169,352) (187,475) (356,986)
Gross profit 53,564 53,649 109,820
Sales and distribution costs (14,708) (16,871) (31,699)
Administrative expenses
Goodwill amortisation (1,077) (1,096) (2,250)
Other administrative expenses (23,153) (28,861) (51,875)
(24,230) (29,957) (54,125)
Other operating income/(costs) 343 (483) 567
Operating profit (note 2) 14,969 6,338 24,563
Interest receivable 530 402 787
Interest payable (348) (649) (1,074)
Profit before taxation 15,151 6,091 24,276
Taxation (note 3) (5,303) (2,120) (8,449)
Profit after taxation 9,848 3,971 15,827
Dividends (note 4) (5,162) (5,137) (17,688)
Retained profit/(loss) 4,686 (1,166) (1,861)
Basic earnings per share (note 5) 9.54p 3.87p 15.40p
Diluted earnings per share (note 5) 9.54p 3.86p 15.36p
Earnings per share before
exceptional items and goodwill
amortisation (note 5) 10.77p 10.93p 24.33p
Dividend per ordinary share 5.00p 5.00p 17.15p
All transactions are derived from continuing activities.
Exceptional items included above are detailed in note 6.
CONSOLIDATED BALANCE SHEET
31 January 1 February 2 August
2003 2002 2002
#'000 #'000 #'000
Fixed assets
Intangible assets 39,762 43,228 40,839
Tangible assets 193,695 205,640 201,558
233,457 248,868 242,397
Current assets
Stocks 15,900 17,343 15,444
Debtors 69,478 82,321 69,391
Cash at bank and in hand 37,452 26,826 39,768
122,830 126,490 124,603
Creditors - due within one year (102,112) (114,889) (113,525)
Net current assets 20,718 11,601 11,078
Total assets less current liabilities 254,175 260,469 253,475
Creditors - due after more than one year (838) (3,295) (1,189)
Provisions and deferred taxation (13,332) (18,303) (15,946)
Deferred income (1,318) (1,728) (1,523)
238,687 237,143 234,817
Capital and reserves
Called up share capital 10,319 10,271 10,317
Share premium account 45,518 44,070 45,455
Capital redemption reserve 1,238 1,238 1,238
Profit and loss account 181,612 181,564 177,807
Equity shareholders' funds 238,687 237,143 234,817
This interim statement was approved by the board of directors on 9 April 2003.
SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
26 weeks to 26 weeks to 52 weeks to
31 January 1 February 2 August
2003 2002 2002
#'000 #'000 #'000
Net cash inflow from operating activities 25,090 32,262 73,196
Returns on investments and servicing of finance (11) (305)
(150)
Tax paid (2,180) (8,614) (14,731)
Capital expenditure (11,698) (16,670) (32,621)
Acquisitions - - 332
Equity dividends paid (12,537) (12,467) (17,619)
Net cash (outflow)/inflow before financing (1,336) (5,794) 8,407
Financing
Issue of shares 65 517 1,948
Decrease in debt (656) (784) (2,286)
(Decrease)/increase in cash (1,927) (6,061) 8,069
NOTES TO THE SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
26 weeks to 26 weeks to 52 weeks to
31 January 1 February 2 August
2003 2002 2002
#'000 #'000 #'000
Net cash inflow from operating activities
Operating profit 14,969 6,338 24,563
Depreciation 17,187 16,734 33,847
Goodwill amortisation 1,077 1,096 2,250
Other non cash movements (593) 6,670 1,963
Changes in working capital (7,029) 1,283 10,432
Other items (521) 141 141
25,090 32,262 73,196
NOTES TO THE SUMMARISED CONSOLIDATED CASH FLOW STATEMENT continued
26 weeks to 26 weeks to 52 weeks to
31 January 1 February 2 August
2003 2002 2002
#'000 #'000 #'000
Reconciliation of net cash flow to movement in net
funds/(debt)
(Decrease)/increase in cash in the period (1,927) (6,061) 8,069
Cash outflow from decrease in debt and lease financing 656 784 2,286
Change in net funds resulting from cash flows (1,271) (5,277) 10,355
Exchange adjustments 589 (199) 1,255
Movement in net funds in the period (682) (5,476) 11,610
Opening net funds 13,350 1,740 1,740
Closing net funds/(debt) 12,668 (3,736) 13,350
Other
2 August non cash Exchange 31 January
2002 Cashflow changes movements 2003
#'000 #'000 #'000 #'000 #'000
Analysis of net funds
Cash at bank and in 39,768 (1,927) - (389) 37,452
hand
Bank loans -
due within one year (25,006) 168 (102) 980 (23,960)
due after one year (100) - 102 (2) -
Finance leases (1,312) 488 - - (824)
13,350 (1,271) - 589 12,668
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
26 weeks to 26 weeks to 52 weeks to
31 January 1 February 2 August
2003 2002 2002
#'000 #'000 #'000
Profit after taxation 9,848 3,971 15,827
Exchange differences (881) 585 (2,477)
Total recognised gains and losses 8,967 4,556 13,350
MOVEMENTS IN CONSOLIDATED SHAREHOLDERS' FUNDS
26 weeks to 26 weeks to 52 weeks to
31 January 1 February 2 August
2003 2002 2002
#'000 #'000 #'000
Opening shareholders' funds 234,817 237,207 237,207
Total recognised gains and losses 8,967 4,556 13,350
Dividends (5,162) (5,137) (17,688)
Issue of ordinary shares 65 517 1,948
Closing shareholders' funds 238,687 237,143 234,817
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
The interim statements have been prepared in accordance with the accounting policies set out in the Group's Annual
Report for 2002 except that the taxation charge for the period is based on the estimated charge for the 52 weeks to 1
August 2003.
The interim statements are neither audited nor reviewed. The financial information set out in these statements does
not comprise statutory accounts for the purposes of Section 240 of the Companies Act 1985. The abridged information
for the 52 weeks to 2 August 2002 has been prepared from the Group's statutory accounts for that period, which have
been filed with the Registrar of Companies. The auditors' report on the accounts of the Group for that period was
unqualified and did not contain a statement under either Section 237(2) or Section 237(3) of the Companies Act 1985.
NOTES TO THE FINANCIAL STATEMENTS continued
2. Geographical analysis
The geographical analysis of turnover and operating profit by origin is stated below:
26 weeks to 26 weeks to 52 weeks to
31 January 1 February 2 August
2003 2002 2002
#'000 #'000 #'000
Turnover
United Kingdom 144,952 152,465 303,362
United States of America 65,170 76,523 141,504
Rest of the World 12,794 12,136 21,940
222,916 241,124 466,806
Operating profit/(loss) before exceptional items and goodwill
amortisation
United Kingdom 17,302 16,054 34,970
United States of America 65 1,815 3,613
Rest of the World (890) (1,006) (2,221)
16,477 16,863 36,362
Exceptional items
United Kingdom (440) (8,606) (8,660)
United States of America (206) (55) (103)
Rest of the World 215 (768) (786)
(431) (9,429) (9,549)
Operating profit/(loss)
United Kingdom 16,862 7,448 26,310
United States of America (141) 1,760 3,510
Rest of the World (675) (1,774) (3,007)
16,046 7,434 26,813
Goodwill amortisation - USA (1,077) (1,096) (2,250)
14,969 6,338 24,563
The directors consider that the Group has only one class of business and consequently no further analysis of turnover
of profit is given.
NOTES TO THE FINANCIAL STATEMENTS continued
3. Taxation
The tax charge is analysed below:
26 weeks to 26 weeks to 52 weeks to
31 January 1 February 2 August
2003 2002 2002
#'000 #'000 #'000
United Kingdom taxation 5,728 2,901 8,621
Overseas taxation (425) (781) (172)
5,303 2,120 8,449
The taxation charge for the period ended 31 January 2003 is based on the estimated charge for the fifty two weeks to
1 August 2003.
4. Dividends
The directors have declared an interim dividend of 5.00p (2002 - 5.00p) net per share. The payment date will be 21
May 2003 and the record date will be 22 April 2003.
5. Earnings per share
The calculation of the basic earnings per share is based on profit after taxation as disclosed in the profit and loss
account of #9,848,000 (2002: January - #3,971,000; July - #15,827,000). Earnings per share before exceptional items
and goodwill amortisation is calculated by adding back exceptional items and goodwill amortisation, as adjusted for
taxation, to the profit after taxation. Basic earnings per share and earnings per share before exceptional items and
goodwill amortisation are calculated on a weighted average of 103.2 million (2002: January - 102.6 million; July -
102.8 million) shares in issue during the period.
The calculation of the diluted earnings per share is based on profit after taxation as disclosed in the profit and
loss account and on a diluted weighted average of 103.2 million (2002: January - 103.0 million; July - 103.0 million)
shares during the period.
6. Exceptional items and goodwill amortisation
Goodwill amortisation of #1,077,000 was charged in the twenty six weeks ended
31 January 2003. The exceptional items of #431,000, before taxation, relate to rationalisation measures completed or
announced throughout the Group. They include redundancy costs and realised gains on asset disposals.
The exceptional items that are included within the profit and loss account are as follows:-
26 weeks to 26 weeks to 52 weeks to
31 January 1 February 2 August
2003 2002 2002
#'000 #'000 #'000
Costs/(income)
Cost of sales 394 4,007 4,316
Sales and distribution costs 197 503 537
Administrative expenses 55 4,074 4,013
Other operating (income)/costs (215) 845 683
431 9,429 9,549
7. A copy of the interim statement will be sent to all shareholders.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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