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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Litho Supplies | LSE:LTS | London | Ordinary Share | GB0005196257 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 5.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number:7807P
Litho Supplies PLC
11 March 2008
LITHO SUPPLIES Plc
Results for the year ended 31 December 2007
HIGHLIGHTS
Litho Supplies Plc, the leading supplier of analogue and digital consumable
products, equipment and related services to the printing, graphic arts and
corporate markets in the UK, announces its results for the year ended 31
December 2007 as reported under International Financial Reporting Standards.
Overview:
* Sales of £43.25m (2006: £42.88m) generating earnings per share before
reorganisation costs of 3.31p per share (2006: 4.22p).
* Strong balance sheet with a total equity balance of £9.51m at 31 December
2007 (2006: £8.36m), therefore increasing the net asset value per share.
* A net cash balance of £3.54m as at 31 December 2007 (2006: £5.05m) reflecting
the acquisition payments during the year, together with working capital cash
flows utilised in the second half to develop the business.
* Acquisition of Graphica Plus Limited (trading as Andersons) prior to the
year end and Graphic Arts Equipment Limited post year end provide good
opportunities for the Group in 2008.
Litho Supplies Chief Executive Michael Hammond said:
"Market conditions have remained extremely competitive throughout the year and
were compounded in the second half by the uncertainties in the credit and
financial markets.
However, we have been addressing the cost base of the business and our
acquisitions, both pre and post year end, present good opportunities for the
Group in 2008."
Contacts:
Michael Hammond, Chief Executive Tel: 01332 873921
Eddie Williams, Sales Director Tel: 01332 873921
Gerry Mitchell, Financial Director Tel: 0117 9724455
John Wakefield, Blue Oar Securities Plc Tel: 0117 9330020
CHAIRMAN'S STATEMENT
Results for the year ended 31 December 2007
The audited results for the year ended 31 December 2007 show a pretax profit
before reorganisation costs of £0.73m (2006: £1.14m) on sales for the year of
£43.25m (2006: £42.88m). Reorganisation charges were £0.21m (2006: £0.13m) and
the pretax profit for the year after these charges was £0.52m (2006: £1.01m).
Basic earnings per share (EPS) before and after reorganisation charges were
3.31p (2006: 4.22p) and 2.33p (2006: 3.62p) respectively.
As we have previously announced, the uncertainties in the credit and financial
markets in the second half of 2007 have had an impact on our customers'
confidence, both in relation to the purchase of consumable products and capital
equipment purchases, with some customers deferring capital expenditure decisions
to gauge how the economy and credit markets stabilise in 2008.
These conditions, combined with over-capacity in the printing sector and weak
demand from advertisers for printed media, have resulted in continued pressure
during 2007 on the Group's selling prices and gross margins.
The board, however, has been undertaking a number of positive initiatives, which
I will explain in greater depth later in my report, in order to address these
changing market dynamics.
The board also continues to focus attention on maintaining a strong balance
sheet, seeing this as essential to the future strength of the company. Tight
controls have been maintained over the Group's stock levels and this, together
with our constant close attention to credit control and cash collection, has
resulted in a net cash balance at 31 December 2007 of £3.54m compared with
£5.05m at 31 December 2006. The lower net cash balance compared to the previous
year mainly reflects the acquisition payments during the year, together with
working capital cash flows.
Taking all of the above points into consideration, the board is recommending a
final dividend of 1.25p (2006: 2.00p) per share. The dividend will be paid on
30 May 2008 to shareholders on the register on 2 May 2008. The ex-dividend date
is 30 April 2008. The total dividend for the year is 3.25p per share compared
with 3.95p per share for the previous year. The board is aware that the final
dividend is a reduction compared with that paid last year. However, given the
fall in earnings per share and the demands for cash to grow the business, it was
considered that the dividend paid should at least be covered by earnings per
share.
Trading performance
UK analogue and digital consumable product sales which, with electronic
equipment sales, remain the core activities of the business, were £32.42m (2006:
£32.96m).
We have continued with our policy of consolidating analogue product lines as
these products continue to decline. This has helped to maintain gross margins
with the supply of our own private label range and reduced stockholdings.
We have seen some growth in the sales of digital and pressroom consumable
products during 2007 although there has been considerable pressure on selling
prices. There was also a useful contribution from sales of flexographic
consumable products and equipment.
Our existing portfolio of wide format consumable products and equipment has been
boosted by the acquisition of Graphica Plus Limited (trading as Andersons) on 23
October 2007. Andersons is a well-respected supplier to the proofing, point of
sale, signage and exhibition markets.
Sales of electronic equipment in the year were £9.45m (2006: £9.47m) with strong
sales of Computer to Plate (CtP) devices. Although the overall sales
performance of digital printing equipment was satisfactory, the uncertainties in
the financial markets did have an impact on the sales in the second half of 2007
with considerable pressure on gross margins.
Electronic equipment service and other added value services provided a good
contribution in 2007 with opportunities for new maintenance contracts from our
growing database of CtP installations.
We have more than doubled the number of online orders that we received from our
customers in 2007 compared to the previous year. There was also excellent
growth in the sales generated from telesales. Both of the above sales and
processing techniques are strategically important for the Group as we reorganise
and address the cost base of the business for the changing market dynamics. In
this connection I report that we have closed a distribution unit in the
Midlands, consolidating the business with another warehouse within the Group;
regrettably this did involve some redundancies. The benefit of these cost
savings will be effective from the second quarter of this year.
Reorganisation
With the changes in technology and the current market conditions that the
printing sector is experiencing, it is inevitable that our company has had to
undergo a significant reorganisation. We are continuing to make changes with a
major emphasis on new technology and are at an advanced stage of testing and
implementing a new computer system to improve business efficiencies. We
anticipate the benefits of this system to commence towards the end of 2008.
Pensions
There has been a welcome improvement in the Pension Scheme deficit by £2.66m
compared to the previous year mainly arising from the increase in corporate bond
yields (used to discount the liabilities), together with additional
contributions paid into the scheme by the company. The net deficit, after the
deduction of related deferred tax, now stands at £1.77m. As previously stated,
the board will continue to monitor the Pension Scheme position closely. It is
considered that it is in the best interests of both the Pension Fund and the
company that a reasonable balance is achieved in determining future funding, in
a way which also minimises the company's levy to the Pension Protection Fund.
Prospects
2007 has been a challenging year in many respects, with pressure on selling
prices and gross margins, and the board has been active in seeking ways to
reorganise and develop the business.
As stated above, we acquired Graphica Plus Limited (trading as Andersons) on 23
October 2007 which will enable us to grow our sales of consumable media and
equipment to the expanding signage and point of sale printing markets and also
the advertising and proofing markets. A great deal of management time has been
invested in this business since its acquisition and already the warehouse and
distribution operations have been integrated within existing Litho Supplies
distribution units. Due to these integration costs, however, the benefits from
the acquisition are not anticipated to commence until the second quarter of
2008. I would like to acknowledge the excellent support we have had from
Andersons' suppliers, most notably MACtac.
On 24 January 2008 we also acquired the whole of the issued share capital of
Graphic Arts Equipment Limited (GAE) and the remaining 49% of the share capital
of Shinohara (UK) Limited.
Graphic Arts Equipment's principal activity is the sale, installation and
servicing of leading lines of printing and finishing equipment with exclusive
distribution agreements for Horizon and Perfecta in the UK and Ireland.
Shinohara (UK) Limited markets, sells and services the Shinohara Printing Press.
We are pleased that the vendors and directors of both companies being acquired,
Mr A E Hards and Mr B P Godwyn, are to continue with the businesses. There
should be significant cross-selling opportunities and other potential synergies
between Litho Supplies and the companies being acquired. GAE has had a positive
start to 2008 and there are a number of good sales leads for the Shinohara
press.
We have also reached agreement in February 2008 with NCS Supplies Limited (NCS)
to take over the distribution of consumable products in the north of England to
the customers that they previously supplied. In return, a commission will be
paid to NCS in the two years following the transfer based on the gross profit
generated by Litho Supplies. The amount of turnover generated by NCS in 2007
from these consumable products was less than £1 million. Following the
agreement, NCS will no longer supply these consumable products.
We do not anticipate that the underlying market conditions will change in the
early part of 2008 although we continue to seek opportunities to run the
business more efficiently. However, as detailed above, we now have a number of
opportunities to add value to the Group.
We are very appreciative of the ongoing support of our existing and new
suppliers and our customers.
Finally, I would like to thank all our people for their continuing hard work and
loyalty.
B C Clark
Chairman
11 March 2008
Consolidated Income Statement
for the year ended 31 December 2007
2007 2006
£'000 £'000
Continuing operations
Revenue
Sale of goods 43,254 42,877
Cost of sales 36,599 35,607
Gross profit 6,655 7,270
Distribution costs 2,235 2,209
Administrative expenses 3,888 4,090
Reorganisation costs 211 128
Profit from continuing
operations before tax
and net finance income 321 843
Finance costs 1 3
Finance income 198 173
Profit before tax 518 1,013
Income tax expense (6) 237
Profit for the year 524 776
Attributable to:
Equity holders of the Company 501 776
Minority interest 23 -
524 776
Earnings per share from
continuing activities
- basic 2.33p 3.62p
- diluted 2.28p 3.36p
Consolidated Statement of Recognised Income and Expense
for the year ended 31 December 2007
2007 2006
£'000 £'000
Income and expense recognised
directly in equity
Actuarial gains for the year 1,834 992
Deferred tax charge (550) (298)
Net income recognised directly in equity 1,284 694
Profit for the year 524 776
Total recognised income
for the year 1,808 1,470
Attributable to:
Equity holders of the company 1,785 1,470
Minority interest 23 -
1,808 1,470
Consolidated Balance Sheet
at 31 December 2007
2007 2006
£'000 £'000
Assets
Non-current assets
Property, plant and equipment 547 361
Intangible assets 2,393 1,089
Deferred tax asset 979 1,575
3,919 3,025
Current assets
Inventories 4,437 3,612
Trade and other receivables 9,260 11,006
Income tax receivable 208 44
Other current assets 1,284 931
Cash and cash equivalents 3,543 5,048
18,732 20,641
Non-current assets classified as held for sale - 87
18,732 20,728
Total assets 22,651 23,753
Equity
Equity attributable to equity holders
of the parent
Share capital 2,177 2,144
Share premium 13,587 13,420
Other reserves 511 511
Retained earnings (6,791) (7,719)
9,484 8,356
Minority interest in equity 23 -
Total equity 9,507 8,356
Liabilities
Non-current liabilities
Interest bearing loans and borrowings - 2
Retirement benefit obligation 2,531 5,188
2,531 5,190
Current liabilities
Trade and other payables 9,263 8,942
Interest bearing loans and borrowings 2 4
Income tax payable - -
Provisions 1,348 1,261
10,613 10,207
Total liabilities 13,144 15,397
Total equity and liabilities 22,651 23,753
Consolidated Cash Flow
for the year ended 31 December 2007
2007 2006
£'000 £'000
Cash flows from operating activities
Cash flows generated from operations 17 1,586
Income tax paid - (352)
Net cash flows from operating activities 17 1,234
Cash flows from investing activities
Proceeds from sale of property,
plant and equipment 12 360
Proceeds from sale of non-current assets
held for sale 91 -
Interest received 216 157
Interest paid (1) (3)
Purchase of property, plant and equipment (296) (158)
Acquisitions net of cash acquired (683) (10)
Net cash flows from investing activities (661) 346
Cash flows from financing activities
Payment of finance lease liabilities (4) (6)
Dividends paid to equity holders of the
company (857) (825)
Net cash flows from financing activities (861) (831)
Net increase/(decrease) in cash and
cash equivalents (1,505) 749
Net cash and cash equivalents at
1 January 5,048 4,299
Net cash and cash equivalents at
31 December 3,543 5,048
Consolidated Statement of Changes in Equity
for the year ended 31 December 2007
Share Share Retained Other Total
Capital Premium Earnings Reserves Equity
£'000 £'000 £'000 £'000 £'000
At 1 January 2006 2,144 13,420 (8,364) 508 7,708
Actuarial gains - - 992 - 992
Deferred tax charge - - (298) - (298)
Profit for the year - - 776 - 776
Total recognised
income for the year - - 1,470 - 1,470
Share option expense - - - 3 3
Dividends - - (825) - (825)
At 31 December 2006 2,144 13,420 (7,719) 511 8,356
Actuarial gains - - 1,834 - 1,834
Deferred tax charge - - (550) - (550)
Profit for the year - - 524 - 524
Minority interest - - (23) - (23)
Total recognised
income for the year - - 1,785 - 1,785
Issue of shares 33 167 - - 200
Dividends - - (857) - (857)
At 31 December 2007 2,177 13,587 (6,791) 511 9,484
NOTES TO THE PRELIMINARY FINANCIAL INFORMATION
1. The figures for the year ended 31 December 2007 and 2006 do not constitute
statutory accounts within the meaning of S.240 of the Companies Act 1985.
The figures for the year ended 31 December 2007 have been extracted from
the statutory 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 2006 have been
extracted from the statutory accounts for that year which have been d
elivered to the Registrar of Companies and on which the auditors have
issued an unqualified audit report. No statement has been made by the
auditor under Section 237(2) or (3) of the Companies Act 1985 in respect
of either of these sets of accounts. This announcement was approved by the
board of directors on 11 March 2008.
2. EARNINGS PER SHARE
The earnings per share have been calculated as follows:
2007 2006
£'000 £'000
Net profit attributable to equity holders
before reorganisation costs 712 904
Reorganisation costs (211) (128)
Profit attributable to equity holders
after reorganisation costs 501 776
Weighted average number of Ordinary Shares
Basic 21,499,847 21,436,148
Dilutive share options 445,000 1,685,000
Diluted 21,944,847 23,121,148
Basic:
Weighted average number of Ordinary
shares of 10p each in issue 21,499,847 21,436,148
Earnings per share before reorganisation costs 3.31p 4.22p
Earnings per share after reorganisation costs 2.33p 3.62p
Diluted:
Weighted average number of Ordinary
shares of 10p each in issue 21,944,847 23,121,148
Earnings per share before reorganisation costs 3.24p 3.91p
Earnings per share after reorganisation costs 2.28p 3.36p
3. DIVIDENDS PAID AND PROPOSED
Declared and paid during the year:
2007 2006
£'000 £'000
Ordinary final dividend paid
2.00p (2006: 1.90p) per share 429 407
Ordinary interim dividend paid
2.00p (2006: 1.95p) per share 428 418
857 825
Proposed for approval at AGM (not recognised
as a liability as at 31 December)
Ordinary final dividend per share 1.25p 2.00p
4. ACQUISITIONS
On 23 October 2007, Litho Supplies (UK) Limited acquired 100% of the
shareholding of Graphica Plus Limited, a private limited company based in the
UK. The company supplies equipment and media consumable products for the sign
making, point of sale and wide format printing markets. The acquired business
contributed revenues of £390,614 and net profit of £40,246 to the Group for the
period 23 October 2007 to 31 December 2007. If the acquisition had occurred on
1 January 2007, revenue would have been £2,903,000 and profit before tax would
have been £180,000 excluding any reorganisation, integration costs and other
pre-acquisition income statement costs that would not have been incurred if the
acquisition had occurred on 1 January 2007. These amounts have been calculated
using the Group's accounting policies and by adjusting the results of the
subsidiary to reflect the additional depreciation and amortisation that would
have been charged assuming the fair value adjustments to property, plant and
equipment and intangible assets had applied from 1 January 2007, together with
the consequential tax effects.
On 1 August 2007, Litho Supplies (UK) Limited acquired 51% of the shareholding
of Shinohara (UK) Limited, a private limited company based in the UK. The
company markets, sells and services the Shinohara Printing Press. The acquired
business contributed revenues of £258,042 and net profit of £46,692 to the Group
for the period 1 August 2007 to 31 December 2007. The company did not trade
prior to this date and therefore Group revenue and profits would remain the same
had the acquisition taken place on 1 January 2007.
Details of total net assets acquired and goodwill for both acquisitions are as
follows:
£'000
Purchase consideration:
Cash paid 603
Direct costs relating to the acquisition 69
Fair value of shares issued 200
872
Consideration claw-back (180)
Total purchase consideration 692
Fair value of net liabilities acquired 612
Goodwill 1,304
A fair value adjustment has been made to the property, plant and equipment,
inventories and current liabilities acquired. It has not been possible to
accurately allocate a fair value to the experienced management, sales and
technical team acquired and the customer relationships, therefore the excess of
the purchase consideration over the asset and liabilities acquired has been
treated as goodwill.
The fair value of the shares issued was based on the average mid-market price of
the company's shares for the seven business days immediately preceding the
completion date. A total of 332,147 ordinary shares were issued as part of the
consideration for Graphica Plus Limited.
The assets and liabilities as of 23 October 2007 arising from the
acquisition are as follows:
Fair Net Book
Value Value
£'000 £'000
Property, plant and equipment 40 60
Inventories 250 280
Trade and other receivables 265 265
Deferred tax asset 112 98
Trade and other payables (1,279) (1,216)
Net liabilities acquired (612) (513)
Purchase consideration settled in cash 603
Total cash outflow on acquisition 603
The remaining 49% shareholding of Shinohara (UK) Limited was owned by the
directors of Graphic Arts Equipment Limited until 24 January 2008 when Litho
Supplies (UK) Limited acquired 100% of the shareholding of Payrite Services
Limited, its main trading subsidiary Graphic Arts Equipment Limited, and the
remaining 49% of Shinohara (UK) Limited.
5. EVENTS AFTER THE BALANCE SHEET DATE
a) On 24 January 2008 Litho Supplies (UK) Limited acquired 100% of
the share capital of Payrite Services Limited, its main trading subsidiary
Graphic Arts Equipment Limited, and the remaining 49% of the share capital of
Shinohara (UK) Limited. The Group already owned 51% of the share capital of
Shinohara (UK) Limited.
Graphic Arts Equipment's principal activity is the sale, installation and
servicing of leading lines of printing and finishing equipment with exclusive
distribution agreements for Horizon and Perfecta in the UK and Ireland.
Shinohara (UK) Limited markets, sells and services the Shinohara Printing Press.
Details of the aggregate net assets acquired and goodwill for the acquisitions
above are as follows:
£'000
Purchase consideration:
Cash paid 1,400
Fair value of shares issued 200
Deferred performance - related consideration 600
Total consideration 2,200
Fair value of assets acquired (see below) 628
Goodwill 1,572
2,200
It has not been possible to accurately allocate a fair value to the experienced
management, sales and technical team acquired and the customer relationships,
therefore the excess of the purchase consideration over the asset and
liabilities acquired has been treated as goodwill.
The assets and liabilities arising from the acquisition, provisionally
determined, are as follows:
Fair Net Book
Value Value
£'000 £'000
Cash and cash equivalents 236 236
Property, plant and equipment 230 230
Inventories 1,835 1,835
Trade and other receivables 413 413
Trade and other payables (2,034) (2,034)
Borrowings (52) (52)
Net assets acquired 628 628
b) The fair value of the shares issued was based on the average mid-market price
of the company's shares for the seven business days immediately preceding the
completion date. A total of 423,602 ordinary shares were issued as part of the
consideration for Payrite Services Limited and its main trading subsidiary,
Graphic Arts Equipment Limited.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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