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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| 4imprint Group PLC | AQSE:FOUR.GB | Aquis Stock Exchange | Ordinary Share | GB0006640972 | Ordinary Shares 38 6/13p |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -115.00 | -1.82% | 6,210.00 | 5,900.00 | 6,520.00 | 6,210.00 | 6,200.00 | 6,200.00 | 0.00 | 07:01:06 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMFOUR
RNS Number : 9048F
4imprint Group PLC
02 August 2016
2 August 2016
4imprint Group plc
Half year results for the period ended 2 July 2016
4imprint Group plc (the 'Group' or the 'Company'), the leading direct marketer of promotional products, announces its half year results for the period ended 2 July 2016.
Highlights
Hot Features
Premium
Financial Half year Half year
2016 2015
$m $m Change
-------------------------------------- ---------- ---------- ---------------
Revenue 270.22 231.03 +17%
Underlying* profit before tax 14.33 12.19 +18%
Profit before tax 11.14 11.41 -2%
-------------------------------------- ---------- ---------- ---------------
Underlying* basic EPS (cents) 37.28 31.25 19%
Basic EPS (cents) 28.22 29.01 -3%
Interim dividend per share (cents) 16.32 12.09 +35%
Interim dividend per share (pence) 12.30 7.75 +59%
-------------------------------------- ---------- ---------- ---------------
* Underlying is before share option related charges, defined benefit pension charges and exceptional items.
Operational
----------------------------------------------------------
* Organic revenue growth continued in both North
America and the UK
* Like-for-like trading activity 15% ahead of 2015
* 529,000 total orders received
* Consistent re-order rates from existing customers
* Robust operating cash generation in the period,
leading to $20m net cash at period end
* Pension de-risking project substantially completed
* GBP10m ($14.5m) one-off contribution
* $2.5m exceptional charge
* Interim dividend increased by 35% over 2015
----------------------------------------------------------
Adjusting for the impact of phasing of weeks caused by the 53 week accounting period in 2015
For further information, please contact:
4imprint Group plc MHP Communications Tel. + 44 (0) 20 7299 7201 Tel. + 44 (0) 20 3128 8100 Kevin Lyons-Tarr - CEO Reg Hoare David Seekings - CFO Katie Hunt
About 4imprint Group
We are the leading direct marketer of promotional products in the USA, Canada, the UK and Ireland.
Operations are focused around a highly developed direct marketing business model which provides millions of potential customers with access to tens of thousands of customised products.
Organic growth is delivered by using a wide range of data-driven, offline and online direct marketing techniques to capture market share in the large and fragmented promotional product markets that we serve.
Our locations
North America
Most of our revenue is generated in North America, serviced from the principal office in Oshkosh, Wisconsin.
-- 2015 revenue: $479.2m (96% of Group revenue) -- 811 employees (June 2016)
UK and Ireland
Customers in the UK and Irish markets are served out of an office in Manchester, UK.
-- 2015 revenue: $18.0m (4% of Group revenue) -- 40 employees (June 2016)
Our objectives
Market leadership
We aim to develop our position as the leading direct marketer of promotional products in the markets in which we operate.
Organic revenue growth
Our primary financial objective is to maximise organic revenue growth whilst maintaining a broadly stable operating margin percentage.
Competitive advantage
We aspire to achieve competitive advantage through sustained investment in three key areas:
-- Marketing -- People -- Systems technology and data analytics
http://investors.4imprint.com
Chairman's statement
Trading in the first half of 2016 has been encouraging. Reported revenue was up 17% over prior year and operating profit before exceptional items increased by 18%. These headline numbers reflect a beneficial timing effect resulting from the 53 week fiscal year in 2015; adjusting for this timing effect, like-for-like revenue growth over 2015 was 15%.
The strategic objective of the business remains unchanged: to deliver attractive organic growth through continued investment in marketing, people and technology. This resulted in total orders received up 16% over the first six months of 2015 (14% on a like-for-like basis). Operating margin percentage remained stable, underpinned by reliable gross margins and well managed marketing expenditure. The low capital requirements of the direct marketing business model contributed to robust operating cash generation in the period.
Significant progress has been made in the ongoing de-risking of the Group's legacy defined benefit pension scheme. The 'buy-in' to 'buy-out' project in respect of pensions in payment was substantially completed, and a one-off contribution of GBP10m ($14.5m) was paid, leaving a much smaller scheme with lower volatility and a reduced level of regular contributions.
The reduced future contributions to the pension scheme, along with the ongoing cash generative nature of the Group's trading operations, leave the Group in a strong financial position. In this context, the Board has decided to enhance the Group's dividend payments and has declared an interim dividend per share of 16.32c, an increase of 35% over 2015. It is anticipated that a similar rate of increase will apply to the 2016 final dividend, setting a higher base for the Group's progressive dividend policy. Dividend cover remains healthy.
Outlook
Indications are for the underlying trading patterns experienced in the first six months of the year to continue into the second half.
John Poulter Chairman
2 August 2016
Operating and financial review
Operating review
Half year Half year
2016 2015
Revenue $m $m Change
---------------- ---------- ---------- -------
North America 261.29 222.71 +17%
UK and Ireland 8.93 8.32 +7%
---------------- ---------- ---------- -------
Total 270.22 231.03 +17%
---------------- ---------- ---------- -------
Half year Half year
2016 2015
Underlying* operating profit $m $m Change
------------------------------ ---------- ---------- -------
Direct Marketing operations 16.18 14.06 +15%
Head office (1.85) (1.89) -2%
------------------------------ ---------- ---------- -------
Total 14.33 12.17 +18%
------------------------------ ---------- ---------- -------
* Underlying is before share option related charges, defined benefit pension charges and exceptional items.
The results for the first half of 2016 show further progress resulting from the pursuit of the Group's financial strategy of prioritising organic revenue growth whilst maintaining a broadly stable operating margin percentage.
Group revenue of $270.22m was 17% ahead of the same period in 2015. This growth measure includes a beneficial timing effect from the 53 week accounting period in 2015 which resulted in a quiet trading week at the start of January being replaced by a busy week at mid-year. When the comparatives are adjusted to a like-for-like basis, revenue growth for the period was 15%.
In the first half of 2016, 97% of Group revenue originated from the North American business, headquartered in Oshkosh, Wisconsin. North American revenue improved by 17% over 2015 to $261.29m, an increase in the period of more than $38m. This compares to estimates of percentage growth in the low single digits in the industry as a whole, meaning that we continue to take market share. The smaller UK operation, based in Manchester, showed lower sales growth of 7% in reporting currency, but in Sterling the growth rate was 14%.
Underlying operating profit in Direct Marketing operations (excluding Head Office costs), increased by 15%. Gross margins have remained resilient, and there is a natural, modest element of operational gearing effect from selling and administration costs. On the other hand, marketing costs were 20% higher than the prior year. This was expected, being driven by the same timing factors outlined above which allocated an extra week of busy marketing activity and cost into the first half of the year.
Head Office costs were flat year-on-year, allowing the overall Group operating margin percentage to remain stable against prior year at 5.3% of revenue.
More than 120,000 new customers were acquired during the period, and new customer orders were 11% up over 2015. Orders from existing customers increased by 19% over the prior year. In aggregate, 529,000 individually customised orders were processed in the first half of 2016, 16% higher than 2015 (14% on a like-for-like basis). Management remains focused on developing new ways of reaching customers and refining existing marketing techniques to maintain the growth of the customer file.
The cash generative nature of our direct marketing business model was demonstrated in the first half of 2016, producing $27.43m of pre-tax operating cash flow. This reflects a negative working capital balance at the half year and includes, as anticipated, the reversal of some timing effects which caused working capital to be a little higher than usual at the 2015 year end.
Financial review
Half year Half year
2016 2015 Half year Half year
underlying* underlying* 2016 2015
$m $m $m $m
-------------------------------- ------------- ------------- ---------- ----------
Underlying* operating profit 14.33 12.17 14.33 12.17
Defined benefit pension scheme
administration costs (0.15) (0.23)
Share option charges (0.21) (0.14)
Net finance income - 0.02 - 0.02
Pension finance charge (0.37) (0.41)
Exceptional items (2.46) -
-------------------------------- ------------- ------------- ---------- ----------
Profit before tax 14.33 12.19 11.14 11.41
-------------------------------- ------------- ------------- ---------- ----------
* Underlying is before share option related charges, defined benefit pension charges and exceptional items.
Operating result
Group revenue in the first half of the year was $270.22m (2015: $231.03m), an increase of 17% over the prior period. Underlying profit before tax in the period was $14.33m (2015: $12.19m), an increase of 18%.
The 53 week accounting period in 2015 has had a knock-on effect on the weekly phasing in the first half of 2016. This has resulted in a favourable timing effect on revenue of around $4.5m, or roughly two percentage points of the reported 17% revenue growth.
The net negative effect on reported full year revenue growth will be around $4.0m, representing a 52 week accounting period compared to 53 weeks in the comparative. The impact on operating profit for the full year is expected to be broadly neutral with one week less of operating costs offsetting the revenue effect.
Foreign exchange
The average Sterling/US dollar rate for the first half of 2016 was $1.43 (H1 2015: $1.52; FY 2015: $1.53). The closing Sterling/US dollar rate as at 2 July 2016 was $1.33 (27 June 2015: $1.57; 2 January 2016: $1.48).
The 23 June 2016 EU referendum vote and subsequent reduction in the value of Sterling relative to the US dollar impacts the Group as follows:
-- Translational risk in the income statement is low, given that over 96% of the Group's trading activities originate in the reporting currency, US dollars.
-- The balance sheet remains stable, with most components being primarily US dollar-based. An exception to this is the net pension liability, which is Sterling-based and accordingly experienced an exchange gain in reporting currency.
-- The Group is highly cash-generative, mostly in US dollars. Those US dollars are now worth significantly more than previously when converted to Sterling, producing an advantage for the Group since its primary applications of cash, Shareholder dividends and pension contributions, are paid in Sterling.
Share option charges
A total of $0.21m (2015: $0.14m), was charged in the period in respect of IFRS2, "Share-based payments". This charge was made up of various different elements: 2013 Performance Share Plan awards up to date of exercise in April 2016; awards under the 2015 Incentive Plan; and charges in respect of the 2016 UK Sharesave and 2016 US Employee Stock Purchase Plan.
Current options outstanding are: 152,648 share options under the Sharesave and Stock Purchase Plan; and 26,128 share options, awarded in respect of the 2015 financial period, under the 2015 Incentive Plan.
Exceptional items
Exceptional items charged in the first half of 2016 amounted to $2.46m (2015: $nil). All of the charge related to the pension risk reduction project, and included $1.53m of past service charge resulting from the GMP equalisation process for pensioners required as part of the move from 'buy-in' to 'buy-out' status.
Net finance income
Net finance income in the period was $nil (2015: $0.02m). Modest external interest income on cash balances was offset by non-utilisation fees on the US line of credit.
Taxation
The tax charge for the half year was $3.23m (2015: $3.31m). The composite tax rate of 29% (2015: 29%), reflects the expected tax rate for the Group for the full year in 2016. The charge relates principally to taxation payable on profits earned in the USA, net of the expected tax implications of pension scheme activity.
Earnings per share
Underlying basic earnings per share was 37.28c (2015: 31.25c), an increase of 19%. This is composed of an increase of 20% in underlying profit after tax, reduced by a slightly increased undiluted weighted average number of shares in issue.
Basic earnings per share was 28.22c (2015: 29.01c), a decrease of 3%. The principal influence causing basic earnings per share to be lower in 2016 than the comparative period in 2015 is the exceptional costs charge of $2.46m ($nil in 2015).
Dividends
Dividends are determined in US dollars and paid in Sterling at the exchange rate on the date that the dividend is determined.
The Board has declared an interim dividend per share of 16.32c (2015: 12.09c), an increase of 35%. In Sterling, the interim dividend per share will be 12.30p (2015: 7.75p), an increase of 59% over prior period. The dividend will be paid on 15 September 2016.
Defined benefit pension scheme
The Group sponsors a legacy UK defined benefit scheme which has been closed to new members and future accruals for several years. The scheme has 1,087 pensioners, of whom 906 have insured benefits, and 483 deferred members.
At 2 July 2016, the deficit of the Scheme on an IAS 19 basis was $16.38m, compared to $23.11m at 2 January 2016.
The change in deficit is analysed as follows:
$m
------------------------------------------------------------------------- --------
IAS 19 deficit at 2 January 2016 23.11
Pension administration costs paid by the Scheme 0.15
Exceptional item - past service charge and buy-out costs paid by Scheme 2.32
Pension finance charge 0.37
Contributions by employer (15.43)
Re-measurement losses due to changes in assumptions 7.78
Exchange gain (1.92)
-------------------------------------------------------------------------- --------
IAS 19 deficit at 2 July 2016 16.38
-------------------------------------------------------------------------- --------
Gross scheme liabilities under IAS19 were $143.42m and assets were $127.04m. Pensioner liabilities of $109.58m have been insured through previous 'buy-in' exercises, resulting in uninsured liabilities of $33.84m and uninsured scheme assets of $17.46m. Over 76% of total scheme liabilities are insured.
Significant progress has been made in the Group's ongoing pension risk reduction exercise. As anticipated, the 'buy-in' to 'buy-out' project in respect of pensions in payment was substantially completed during the first half of 2016, and arrangements have been agreed with the Trustee to transfer the remaining population of primarily deferred members to a new plan. This will allow the existing scheme to be wound up subsequent to the issue by the insurers of individual annuities to the insured pensioners, prompting the removal from the Group balance sheet of the gross liabilities and assets relating to these pensioners. As previously agreed with the Trustee, a one-off deficit adjustment contribution of GBP10m ($14.5m) was paid into the scheme to enable the Trustee to finalise these initiatives and to provide an adequate initial level of funding for the new, much smaller plan. A new schedule of regular contributions will be agreed with the Trustee going forward.
The net deficit at 2 July 2016 was higher than anticipated, driven principally by adverse movements in key actuarial assumptions, particularly the discount rate. Longer term bond yields were negatively impacted by the result of the EU referendum. Conversely, the US dollar/Sterling exchange rate movement produced an exchange gain to offset part of the negative actuarial movement. Whilst unwelcome, this volatility is much less material than it would have been without the pension de-risking actions taken over the last several years.
Cash flow
Net cash was $20.00m at 2 July 2016 (27 June 2015: $28.13m; 2 January 2016: $18.38m).
Cash flow in the period is summarised as follows:
Half year Half year
2016 2015
$m $m
--------------------------------------- ---- ---------- ----------
Underlying operating profit 14.33 12.17
Depreciation and amortisation 1.17 0.89
Change in working capital 13.33 7.41
Capital expenditure (1.40) (3.22)
--------------------------------------------- ---------- ----------
Operating cash flow 27.43 17.25
Tax and interest (2.00) (1.20)
Defined benefit pension contributions (15.43) -
Other (0.80) 0.05
--------------------------------------------- ---------- ----------
Free cash flow 9.20 16.10
Dividends to Shareholders (7.58) (6.27) --------------------------------------------- ---------- ---------- Net cash inflow in the period 1.62 9.83 --------------------------------------------- ---------- ----------
The first half of 2016 again demonstrated the cash generative nature of the Direct Marketing business model, with $9.2m of free cash flow in the period, after the one off pension contribution of $14.5m. Timing differences caused by the 53 week year resulted in a higher than usual net working capital balance at the 2015 year end. As expected, this reversed in the first half of 2016, contributing to the very strong operating cash generation in the period.
Balance sheet and Shareholders' funds
Net assets at 2 July 2016 were $21.19m, compared to $28.45m at 2 January 2016. The balance sheet is summarised as follows:
2 July 2 January
2016 2016
$m $m
-------------------- -------- ----------
Non current assets 22.59 23.75
Working capital (3.53) 9.71
Net cash 20.00 18.38
Pension deficit (16.38) (23.11)
Other liabilities (1.49) (0.28)
Net assets 21.19 28.45
-------------------- -------- ----------
Shareholders' funds decreased by $7.26m, with net profit in the period of $7.91m, $0.35m of share option related movements and $0.72m exchange, reduced by $8.66m of net pension re-measurement losses and dividends paid of $7.58m.
The Group had a net negative working capital balance of $3.53m at 2 July 2016, reflecting the timing of supplier payments around the half year.
Treasury Policy
The financial requirements of the Group are managed through a centralised treasury policy. The Group operates cash pooling arrangements for its North American operations. Forward contracts are taken out to buy or sell currency relating to specific receivables and payables as well as remittances from overseas subsidiaries. The Group holds the majority of its cash on deposit with its principal UK banker and working capital requirements of the North American business are funded by a facility with its principal US banker.
The Group has $20.50m of working capital facilities with its principal US bank, JPMorgan Chase. The interest rate is US$ LIBOR plus 1.5%, and the facilities expire on 31 May, 2018. There was no drawdown on the facility at the period end.
Critical accounting policies
Critical accounting policies are those that require significant judgements or estimates and potentially result in materially different results under different assumptions or conditions. It is considered that the Group's only critical accounting policy is in respect of pensions.
Risks
The Group may be affected by a number of risks. These risks have been reviewed at the half year and have not changed since the year end. The risks are detailed on pages 17 to 19 of the Group's Annual Report 2015, a copy of which is available on the Group's website: http://investors.4imprint.com. The risks include economic and market risks, technological risks and operational risks.
During the interim review of the Group's risk matrix particular attention was paid to the potential implications of the EU referendum. On the evidence available to date, it is not considered that Brexit causes any material change to the risks, uncertainties, assumptions and scenarios underlying the review of risk analysis and viability statement as set out in the 2015 Annual Report.
Kevin Lyons-Tarr David Seekings Chief Executive Officer Chief Financial Officer
2 August 2016
Condensed consolidated income statement (unaudited)
Half Half Full
year year year
2016 2015 2015
Note $'000 $'000 $'000
------------------------------------- ------ ---------- ---------- ----------
Revenue 6 270,222 231,028 497,219
Operating expenses (258,713) (219,231) (465,256)
------------------------------------- ------ ---------- ---------- ----------
Operating profit before exceptional
items 13,970 11,797 32,821
Exceptional items 7 (2,461) - (858)
------------------------------------- ------ ---------- ---------- ----------
Operating profit 6 11,509 11,797 31,963
------------------------------------- ------ ---------- ---------- ----------
Finance income 21 23 37
Finance costs (20) (5) (7)
Pension finance charge 11 (372) (407) (836)
------------------------------------- ------ ---------- ---------- ----------
Net finance cost (371) (389) (806)
Profit before tax 11,138 11,408 31,157
Taxation 8 (3,230) (3,309) (8,462)
------------------------------------- ------ ---------- ---------- ----------
Profit for the period 7,908 8,099 22,695
------------------------------------- ------ ---------- ---------- ----------
Cents Cents Cents
------------------------------------- ------ ---------- ---------- ----------
Earnings per share
Basic 9 28.22 29.01 81.26
Diluted 9 28.13 28.81 80.76
Underlying 9 37.28 31.25 88.04
------------------------------------- ------ ---------- ---------- ----------
Condensed consolidated statement of comprehensive income (unaudited)
Half Half Full
year year year
2016 2015 2015
Note $'000 $'000 $'000
--------------------------------------------- ----- --------- -------- --------
Profit for the period 7,908 8,099 22,695
--------------------------------------------- ----- --------- -------- --------
Other comprehensive (expense)/income
Items that may be reclassified subsequently
to the income statement:
Currency translation differences 722 46 417
Items that will not be reclassified
subsequently to the income statement:
Re-measurement (losses)/gains on post
employment obligations 11 (20,124) 2,711 5,597
Return on pension scheme assets (excluding
interest income) 11 12,348 (2,025) (4,832)
Tax relating to components of other
comprehensive (expense)/income (835) (139) (156)
Effect of change in UK tax rate (47) - (235)
--------------------------------------------- ----- --------- -------- --------
Total other comprehensive (expense)/income
net of tax (7,936) 593 791
--------------------------------------------- ----- --------- -------- --------
Total comprehensive (expense)/income
for the period (28) 8,692 23,486
--------------------------------------------- ----- --------- -------- --------
Condensed consolidated balance sheet (unaudited)
At At At
2 July 27 June 2 Jan
2016 2015 2016
Note $'000 $'000 $'000
-------------------------------------- ----- --------- --------- ---------
Non current assets
Property, plant and equipment 18,318 11,580 18,154
Intangible assets 1,154 1,247 1,211
Deferred tax assets 3,118 4,837 4,388
-------------------------------------- ----- --------- --------- ---------
22,590 17,664 23,753
-------------------------------------- ----- --------- --------- ---------
Current assets
Inventories 3,646 4,127 4,460
Trade and other receivables 41,429 39,629 42,506
Current tax - - 688
Cash and cash equivalents 12 20,001 28,125 18,381
-------------------------------------- ----- --------- --------- ---------
65,076 71,881 66,035
-------------------------------------- ----- --------- --------- ---------
Current liabilities
Trade and other payables (48,601) (45,122) (37,254)
Current tax (196) (2,237) -
Provisions for other liabilities and
charges - (127) -
(48,797) (47,486) (37,254)
-------------------------------------- ----- --------- --------- ---------
Net current assets 16,279 24,395 28,781
-------------------------------------- ----- --------- --------- ---------
Non current liabilities
Retirement benefit obligations 11 (16,376) (24,232) (23,114)
Deferred tax liability (1,160) (301) (808)
Provisions for other liabilities and
charges (143) - (160)
-------------------------------------- ----- --------- --------- ---------
(17,679) (24,533) (24,082)
-------------------------------------- ----- --------- --------- ---------
Net assets 21,190 17,526 28,452
-------------------------------------- ----- --------- --------- ---------
Shareholders' equity
Share capital 14 18,842 18,777 18,777
Share premium reserve 68,451 68,451 68,451
Other reserves 6,150 5,057 5,428
Retained earnings (72,253) (74,759) (64,204)
-------------------------------------- ----- --------- --------- ---------
Total Shareholders' equity 21,190 17,526 28,452
-------------------------------------- ----- --------- --------- ---------
Condensed consolidated statement of changes in Shareholders' equity (unaudited)
Retained earnings
Share
Share premium Other Own Profit Total
capital reserve reserves shares and loss equity
$'000 $'000 $'000 $'000 $'000 $'000
-------------------------------------- --------- --------- ---------- -------- ---------- --------
At 27 December 2014 18,777 68,451 5,011 (1,392) (76,777) 14,070
Profit for the period 8,099 8,099
Other comprehensive expense 46 547 593
-------------------------------------- --------- --------- ---------- -------- ---------- --------
Total comprehensive income
for the period 46 8,646 8,692
-------------------------------------- --------- --------- ---------- -------- ---------- --------
Share-based payment charge 140 140
Proceeds from share options
exercised 892 892
Own shares utilised 1,367 (1,367) -
Dividends (6,268) (6,268)
-------------------------------------- --------- --------- ---------- -------- ---------- --------
At 27 June 2015 18,777 68,451 5,057 (25) (74,734) 17,526
Profit for the period 14,596 14,596
Other comprehensive income/(expense) 371 (173) 198
-------------------------------------- --------- --------- ---------- -------- ---------- --------
Total comprehensive income/(expense)
for the period 371 14,423 14,794
-------------------------------------- --------- --------- ---------- -------- ---------- --------
Share-based payment charge 82 82
Tax relating to share
options 128 128
Proceeds from share options
exercised 8 8
Own shares purchased (750) (750)
Own shares utilised 63 (63) -
Dividends (3,336) (3,336)
-------------------------------------- --------- --------- ---------- -------- ---------- --------
At 2 January 2016 18,777 68,451 5,428 (712) (63,492) 28,452
Profit for the period 7,908 7,908
Other comprehensive (expense)/income 722 (8,658) (7,936)
-------------------------------------- --------- --------- ---------- -------- ---------- --------
Total comprehensive (expense)/income
for the period 722 (750) (28)
-------------------------------------- --------- --------- ---------- -------- ---------- --------
Share-based payment charge 208 208
Proceeds from share options
exercised 142 142
Shares issued 65 65
Own shares purchased (65) (65)
Own shares utilised 724 (724) -
Dividends (7,584) (7,584)
-------------------------------------- --------- --------- ---------- -------- ---------- --------
At 2 July 2016 18,842 68,451 6,150 (53) (72,200) 21,190
-------------------------------------- --------- --------- ---------- -------- ---------- --------
Condensed consolidated cash flow statement (unaudited)
Half Half Full
year year year
2016 2015 2015
Note $'000 $'000 $'000
---------------------------------------------- ----- -------- -------- ---------
Cash flows from operating activities
Cash generated from operations 13 13,249 20,294 29,797
Net tax paid (1,998) (1,213) (8,730)
Finance income 22 23 37
Finance costs (20) (5) (7)
---------------------------------------------- ----- -------- -------- ---------
Net cash generated from operating activities 11,253 19,099 21,097
---------------------------------------------- ----- -------- -------- ---------
Cash flows from investing activities
Purchases of property, plant and equipment (1,203) (3,119) (10,585)
Purchases of intangible assets (201) (215) (438)
Net proceeds from sale of property,
plant and equipment - 111 111
Net cash utilised in investing activities (1,404) (3,223) (10,912)
---------------------------------------------- ----- -------- -------- ---------
Cash flows from financing activities
Proceeds from issue of ordinary shares 14 65 - -
Dividends paid to Shareholders 10 (7,584) (6,268) (9,604)
---------------------------------------------- ----- -------- -------- ---------
Net cash used in financing activities (7,519) (6,268) (9,604)
---------------------------------------------- ----- -------- -------- ---------
Net movement in cash and cash equivalents 2,330 9,608 581
Cash and cash equivalents at beginning
of the period 18,381 18,301 18,301
Exchange (losses)/gains on cash and
cash equivalents (710) 216 (501)
---------------------------------------------- ----- -------- -------- ---------
Cash and cash equivalents at end of
the period 20,001 28,125 18,381
---------------------------------------------- ----- -------- -------- ---------
Analysis of cash and cash equivalents
Cash at bank and in hand 12 20,001 22,604 5,463
Short term deposits 12 - 5,521 12,918
---------------------------------------------- ----- -------- -------- ---------
20,001 28,125 18,381
---------------------------------------------- ----- -------- -------- ---------
Notes to the interim financial statements
1 General information
4imprint Group plc is a public limited company incorporated and domiciled in the UK and listed on the London Stock Exchange. Its registered office is 7/8 Market Place, London, W1W 8AG.
The condensed consolidated interim financial statements were authorised for issue in accordance with a resolution of the Directors on 2 August 2016.
These condensed consolidated interim financial statements do not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the period ended 2 January 2016 were approved by the Board of Directors on 9 March 2016 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, pursuant to Auditing Practices Board guidance on Review of Interim Financial Information, by the auditors.
2 Basis of preparation
These condensed consolidated interim financial statements for the half year ended 2 July 2016 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 European Union, and should be read in conjunction with the Group's financial statements for the period ended 2 January 2016, which were prepared in accordance with International Financial Reporting Standards as adopted by the European Union.
After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue to operate for a period of at least twelve months from the date these interim financial statements were approved. Accordingly, they continue to adopt the going concern basis in preparing the Interim Report and financial statements.
3 Accounting policies
The accounting policies applied in these condensed consolidated interim financial statements are consistent with those of the annual financial statements for the period ended 2 January 2016, 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.
The tax charge for the interim period is accrued based on the best estimate of the tax charge for the full financial year.
4 Estimates
The preparation of the interim financial statements requires management to make judgements, 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 experiences and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements 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 key areas involving management judgements since the year end.
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.
The condensed consolidated interim 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 as at 2 January 2016. There have been no changes in any risk management policies since this date.
6 Segmental analysis
The chief operating decision maker has been identified as the Board.
The operations of the Group are reported in one primary operating segment.
Revenue
----------------------------------------- -------- -------- --------
Half Half Full
year year year
2016 2015 2015
4imprint Direct Marketing $'000 $'000 $'000
North America 261,286 222,711 479,235
UK and Ireland 8,936 8,317 17,984
----------------------------------------- -------- -------- --------
Total revenue from promotional products 270,222 231,028 497,219
----------------------------------------- -------- -------- --------
Profit Underlying Total
Half Half Full Half Half Full
year year year year year year
2016 2015 2015 2016 2015 2015
$'000 $'000 $'000 $'000 $'000 $000
4imprint Direct Marketing 16,182 14,061 37,044 16,182 14,061 37,044
Head Office (1,851) (1,888) (3,525) (1,851) (1,888) (3,525)
------------------------------ -------- -------- -------- -------- -------- --------
Underlying operating profit 14,331 12,173 33,519 14,331 12,173 33,519
Exceptional items (note
7) (2,461) - (858)
Share option related charges (211) (140) (304)
Defined benefit pension
scheme administration
costs (150) (236) (394)
------------------------------ -------- -------- -------- -------- -------- --------
Operating profit 14,331 12,173 33,519 11,509 11,797 31,963
Net finance income 1 18 30 1 18 30
Pension finance charge (372) (407) (836)
------------------------------ -------- -------- -------- -------- -------- --------
Profit before tax 14,332 12,191 33,549 11,138 11,408 31,157
Taxation (3,886) (3,466) (8,962) (3,230) (3,309) (8,462)
------------------------------ -------- -------- -------- -------- -------- --------
Profit after tax 10,446 8,725 24,587 7,908 8,099 22,695
------------------------------ -------- -------- -------- -------- -------- --------
7 Exceptional items
Half Half Full
year year year
2016 2015 2015
$'000 $'000 $'000
---------------------------------- ------ ------ ------
Pension risk reduction exercises 2,461 - 858
---------------------------------- ------ ------ ------
The pension costs related to the costs of the defined benefit scheme buy-out exercise and include: a past service charge in respect of GMP equalisation for the pensioners of $1,535k (2015: $nil); costs incurred by the Scheme of $786k (2015 HY: $nil, 2015 FY: $514k); and costs incurred by the Company of $140k (2015 HY: $nil, 2015 FY: $68k). 2015 also includes costs in respect of the flexible retirement option implementation of $276k.
8 Taxation
The taxation charge for the period to 2 July 2016 was 29%, the estimated rate for the full year (H1 2015: 29%; FY 2015: 27%). Tax paid in the period was $2.00m (H1 2015: $1.21m; FY 2015: $8.73m).
9 Earnings per share
Basic, underlying and diluted
The basic, underlying and diluted earnings per share are calculated based on the following data:
Half Half Full
year year year
2016 2015 2015
$'000 $'000 $'000
------------------ ------ ------ -------
Profit after tax 7,908 8,099 22,695
------------------ ------ ------ -------
Half Half Full
year year year
2016 2015 2015
Number Number Number
000's 000's 000's
------------------------------------------- ------- ------- -------
Basic weighted average number of shares 28,018 27,917 27,928
Adjustment for employee share options 96 193 173
------------------------------------------- ------- ------- -------
Diluted weighted average number of shares 28,114 28,110 28,101
------------------------------------------- ------- ------- -------
Basic earnings per share 28.22c 29.01c 81.26c
Diluted earnings per share 28.13c 28.81c 80.76c
------------------------------------------- ------- ------- -------
Half Half Full
year year year
2016 2015 2015
$'000 $'000 $'000
----------------------------------------------- -------- -------- --------
Profit before tax 11,138 11,408 31,157
Add back:
Defined benefit pension scheme administration
costs 150 236 394
Share option charges 208 140 222
Social security charges on share options 3 - 82
Pension finance charge 372 407 836
Exceptional items 2,461 - 858
----------------------------------------------- -------- -------- --------
Underlying profit before tax 14,332 12,191 33,549
Taxation (3,230) (3,309) (8,462)
Tax relating to above adjustments (656) (157) (500) ----------------------------------------------- -------- -------- -------- Underlying profit after tax 10,446 8,725 24,587 ----------------------------------------------- -------- -------- -------- Underlying basic earnings per share 37.28c 31.25c 88.04c ------------------------------------- ------- ------- -------
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 5,429 (H1 2015: 48,389; FY 2015: 37,998).
10 Dividends Half Half Full
year year year
2016 2015 2015
$'000 $'000 $'000
---------------------------------- ------ ------ ------
Dividends paid in the period 7,584 6,268 9,604
---------------------------------- ------ ------ ------
Cents Cents Cents
---------------------------------- ------ ------ ------
Dividends per share
declared - Interim 16.32 12.09 12.09
- Final 26.80
--------------------------------- ------ ------ ------
The interim dividend for 2016 of 16.32c per ordinary share (interim 2015: 12.09c; final 2015: 26.80c) will be paid on 15 September 2016 to Shareholders on the register at the close of business on 19 August 2016.
11 Employee pension schemes
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 scheme which is closed to new members and future accruals. The funds of the Scheme are administered by a trustee company and are independent of the Group's finances.
The last full actuarial valuation was carried out by a qualified independent actuary as at 5 April 2013 and this has been updated on an approximate basis to 2 July 2016 on an IAS 19 basis. There have been no changes in the valuation methodology adopted for this period's disclosures compared to previous periods' disclosure.
The amounts recognised in the income statement in respect of the defined benefit pension scheme are:
Half Half Full
year year year
2016 2015 2015
$'000 $'000 $'000
-------------------------------------------------- ------ ------ ------
Defined benefit pension administration costs 150 236 394
Pension finance charge 372 407 836
Exceptional - Past service cost re pensioner
items GMP equalisation 1,535 - -
- Pension risk reduction exercise
costs paid by the Scheme 786 - 610
------------------------------------------------- ------ ------ ------
Total recognised in the income statement 2,843 643 1,840
-------------------------------------------------- ------ ------ ------
The principal assumptions applied by the actuaries at 2 July 2016 were:
Half Half Full
year year year
2016 2015 2015
--------------------------------------------------------- ------ ------ ------
Rate of increase in pensions
in payment - Pensioners 2.42% 2.86% 2.66%
- Deferred pensioners 2.82% 2.86% 2.66%
Rate of increase in deferred pensions 1.72% 1.86% 1.56%
Discount rate - Pensioners 2.28% 3.67% 3.52%
- Deferred members 2.97% 3.67% 3.52%
Inflation
assumption - RPI pensioners 2.52% 2.96% 2.76%
- RPI deferred members 2.92% 2.96% 2.76%
- CPI deferred members 1.82% 1.96% 1.66%
------------------------- ------------------------------ ------ ------ ------
The buy-out of the insured pensioners has been approved by the Trustee of the Scheme in the period. In order to align the accounting disclosures with this process, the directors have taken the decision to use separate inflation and discount rates for pensioners and deferred members, based on the weighted average duration of the two sections of the Scheme of 11 years and 17 years respectively.
The mortality assumptions adopted at 2 July 2016 imply the following life expectancies at age 65:
Half Half Full
year year year
2016 2015 2015
Male currently aged 40 24.4 24.8 24.4
yrs yrs yrs
Female currently aged 40 26.5 27.3 26.5
yrs yrs yrs
Male currently aged 65 22.2 22.5 22.2
yrs yrs yrs
Female currently aged 65 24.2 24.9 24.2
yrs yrs yrs
------------------------- ------ ------ ------
Analysis of the movement in the balance sheet liability:
Half Half Full
year year year
2016 2015 2015
$'000 $'000 $'000
----------------------------------------------------- --------- -------- --------
At start of period 23,114 24,015 24,015
Administration costs paid by the Scheme 150 236 394
Pension finance charge 372 407 836
Exceptional item - Flexible retirement and buy-out
costs paid by Scheme 786 - 610
Exceptional item - Past service cost re GMP
equalisation of pensioners 1,535 - -
Contributions by employer (15,429) - (825)
Re-measurement losses/(gains) on post employment
obligations 20,124 (2,711) (5,597)
Return on pension scheme assets (excluding interest
income) (12,348) 2,025 4,832
Exchange (gain)/loss (1,928) 260 (1,151)
----------------------------------------------------- --------- -------- --------
At end of period 16,376 24,232 23,114
----------------------------------------------------- --------- -------- --------
12 Analysis of net cash
Half Half Full
year year year
2016 2015 2015
$'000 $'000 $'000
--------------------------- ------- ------- -------
Cash at bank and in hand 20,001 22,604 5,463
Short term deposits - 5,521 12,918
--------------------------- ------- ------- -------
Cash and cash equivalents 20,001 28,125 18,381
--------------------------- ------- ------- -------
13 Cash generated from operations
Half year Half year Full year
2016 2015 2015
$'000 $'000 $'000
--------------------------------------------------- --------- --------- ---------
Operating profit 11,509 11,797 31,963
Adjustments for:
Depreciation charge 922 638 1,449
Amortisation of intangibles 250 256 510
Profit on sale of property, plant and equipment (15) (81) (81)
Exceptional non cash items 2,321 - 610
Decrease in exceptional accrual/provisions - (99) (63)
Share option non cash charges 208 140 222
Defined benefit scheme administration costs -
non cash charge 150 236 394
Contributions to defined benefit pension scheme (15,429) - (825)
Changes in working capital:
Decrease/(increase) in inventories 812 226 (107)
Decrease/(increase) in trade and other receivables 720 389 (5,676)
Increase in trade and other payables 11,801 6,792 1,401
Cash generated from operations 13,249 20,294 29,797
--------------------------------------------------- --------- --------- ---------
14 Share capital
In April 2016 the Company issued 120,000 shares, with a nominal value of $65,000, to the 4imprint Employee Benefit Trust for a consideration of $65,000 to satisfy exercises of share options under the Performance Share Plan. No shares were issued in 2015.
15 Capital commitments
The Group had capital commitments contracted but not provided for in these financial statements of $0.5m
(27 June 2015: $6.6m; 2 January 2016: $nil).
16 Related party transactions
The Group did not participate in any related party transactions that require disclosure.
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 European Union 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 for 2 January 2016. A list of current Directors of 4imprint Group plc is maintained on the Group website: http://investors.4imprint.com.
By order of the Board
John Poulter David Seekings
Chairman Chief Financial
Officer
2 August 2016
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFSRTRILIIR
(END) Dow Jones Newswires
August 02, 2016 02:00 ET (06:00 GMT)
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