REG - 4imprint Group PLC - Half Yearly Report <Origin Href="QuoteRef">FOUR.L</Origin> - Part 1
06/09/2014 22:35
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4imprint Group PLC
30 July 2014
30 July 2014
4imprint Group plc
Half year results for the period ended 28 June 2014
4imprint Group plc (the 'Group'), a leading international direct marketer of
promotional products, announces today its half year results for the period
ended 28 June 2014
Financial highlights
Continuing operations H1 2014 H1 2013(restated)† Change Constantcurrency**
Revenue £115.65m £101.34m +14% +23%
Underlying* profit before tax £5.85m £4.28m +37% +49%
Profit before tax £4.37m £3.23m +35% +52%
Underlying* basic EPS 15.99p 12.02p +33% +45%
Basic EPS 11.55p 8.62p +34% +51%
Interim dividend 6.20p 5.60p +11% +11%
* Underlying is before share option related charges, defined benefit pension
charges and exceptional items.
** Based on translation of North American results to Sterling at H1 2013
average US$ rate: 1.54 (H1 2014: 1.67).
† Restated to include delivery receipts and other income in revenue and to
classify SPS as a discontinued operation.
Operational highlights
· Strong organic growth, revenue and profit ahead of expectations
· Continued organic growth in North America - US$ revenue 23% ahead of H1
2013
- More than 360,000 orders received, 21% ahead of H1 2013
- Customer acquisition and re-order rates both strong
· UK Direct Marketing revenue 22% ahead of H1 2013
· Robust financial position, net cash £26.13m, after SPS net disposal
proceeds of £5.93m
· Ongoing pension deficit risk reduction project to insure additional
pension liabilities
John Poulter, Executive Chairman, commenting on the results, said:
"The Group delivered an exceptionally strong first half as a result of
continued market share growth. Indications for the second half year are that
good performance, consistent with our stated strategic growth objectives will
continue."
- Ends -
There will be a presentation to discuss the results at 8 a.m. this morning at
Espirito Santo's offices (10 Paternoster Square, London EC4M 7LS). If you
wish to attend, please contact Ollie Hoare, on 07824 142725.
For further information, please contact:
4imprint Group plcTel. + 44 (0) 20 7299 7201 MHP CommunicationsTel. + 44 (0) 20 3128 8100
John PoulterExecutive Chairman Gillian DaviesGroup Finance Director Reg Hoare Katie Hunt
4imprint Group
4imprint is a leading direct marketer of promotional products in the USA,
Canada, the UK and Ireland. The direct marketing business is headquartered in
Oshkosh, Wisconsin, USA and 96% of its revenue is generated in the USA and
Canada. The business serves UK and Irish customers out of its base in
Manchester, England.
The strategy is to continue to drive organic growth, gaining market share in
the large ($24bn) and highly fragmented US and Canadian markets as well as
continuing to drive growth in its smaller UK based business.
4imprint sells an extensive range of customised products to individuals in
businesses and organisations of all sizes, processing hundreds of thousands of
individually customised orders each year. Organic growth is delivered using a
variety of increasingly sophisticated bespoke online and offline marketing
techniques backed by proprietary technology. 4imprint provides an easy and
convenient order process, allowing customers to purchase in a simple and
secure way online or via telephone, with the assistance of a highly skilled
customer service team and backed by its service level guarantees. Thousands
of products are available to millions of potential customers and items are
imprinted and shipped directly to 4imprint's customers from the suppliers.
4imprint has grown significantly ahead of the market, consistently gaining
market share. Growth has been achieved organically, driven by revenue
investment in marketing, technology and people. Even after this investment the
business generates substantial operating cash inflow, driven by low fixed and
working capital requirements.
Chairman's statement
The Group delivered an exceptionally strong first half as a result of
continued market share growth.
Our well established data and analytics-based marketing processes were
reinforced by the expansion of existing and introduction of new online
marketing techniques. Combined, these generated an encouraging growth in
orders and revenue. Strong profit and cash performance followed.
In the half year, the Group took a further step in its long term strategy to
reduce risk in its legacy pension scheme and concluded a Flexible Early
Retirement Offer to eligible members. In addition the Group has embarked on a
larger project to use its cash resources to procure a buy-out (initially via a
buy-in) of the substantial existing liabilities for pensions in payment. On
conclusion, this would result in a much reduced risk exposure with significant
reduction in both the deficit and routine contributions.
Outlook
Indications for the second half year are that good performance, consistent
with our stated strategic growth objectives will continue.
John Poulter
Executive Chairman
30 July 2014
Operating and financial review
Operating review - continuing operations
Half year2014 Half year2013(restated)†
Revenue £'000 £'000 Change
North America 110,881 97,414 +14%
UK and Ireland 4,771 3,923 +22%
Total 115,652 101,337 +14%
† Restated to include delivery receipts and other income in revenue and to classify SPS as a discontinued operation.
Half year2014 Half year2013(restated)†
Underlying* operating profit £'000 £'000 Change
4imprint Direct Marketing 6,909 5,294 +31%
Head office (1,105) (1,027) +(8)%
Total 5,804 4,267 +36%
* Underlying is before share option related charges, defined benefit pension
charges and exceptional items.
† Restated to classify SPS as a discontinued operation.
The Group produced a strong revenue and underlying operating profit
performance despite an adverse Sterling/US dollar movement in the period.
Continued organic growth delivered Group revenue for the first half of the
year 14% ahead of H1 2013 (23% at constant currency) and Group underlying
operating profit increased by 36% (49% at constant currency).
North America
Revenue in US dollars increased 23% over 2013 to $185.10m, representing
another period of strong organic growth. Industry sources estimate that over
this reporting period the North American promotional products market as a
whole expanded by circa 7%, indicating that most of 4imprint's growth derives
from market share gains in this highly fragmented market.
New customer activity in the first half has been particularly robust. Nearly
87,000 new customers were acquired in the period, resulting in an increase in
new customer orders of 21%. This growth was driven by further expansion of
online marketing initiatives identified in the second half of 2013 and
supported by the implementation of sophisticated bid management software for
pay-per-click advertising. This effort was underpinned by expanded print
catalogue circulation which remains a key part of the prospect marketing mix.
Orders from existing customers increased by 21% year-on-year and represent 65%
of the total orders received. The retention metrics in the business remain
consistent, even as the number of new customers acquired has increased. Deeper
analysis of the customer file and information gathering on customer
preferences has helped with the targeting and effectiveness of the popular
Blue Box sample mailings. In addition, many of the online marketing programmes
the business engages in are also effective tools in retaining existing
customers.
Operating profit in US dollars increased 41% over prior year. Thousands of
products are offered to customers, and with such a wide product base gross
margins have remained stable. Marketing spend increased by 23% to drive
organic revenue growth and other overheads remain well controlled.
The business is highly cash generative and US$20.18m of pre tax operating cash
was generated in the first half of the year.
UK and Ireland
Revenue increased by 22% over the same prior year period as the business
focuses on growing the customer file.
New customer orders in the period increased by 37%, driven by essentially the
same marketing techniques employed in the North American business, as well as
a programme to expand the product range. Retention rates were also
consistent, with existing customer orders increasing by 23% over prior year.
Head office costs
Head office costs comprised Board costs, UK corporate office and other plc
related costs.
Financial review
Half year2014underlying* Half year2013underlying*(restated)† Half year2014 Half year2013(restated)†
Continuing operations £m £m £m £m
Underlying operating profit 5.80 4.26 5.80 4.26
Pension scheme administration charges (0.21) (0.20)
Share option charges (0.31) (0.38)
Net interest receivable 0.05 0.02 0.05 0.02
Net pension finance charge (0.35) (0.47)
Exceptional items (0.61) -
Profit before tax 5.85 4.28 4.37 3.23
* Underlying is before share option related charges, defined benefit pension
charges and exceptional items.
† Restated to classify SPS as a discontinued operation.
Underlying profit before tax from continuing operations was £5.85m (H1 2013:
£4.28m), an increase of 37%. At constant currency the increase would be 49%.
Exchange
The average US dollar rate for the half year was $1.67 (H1 2013: $1.54; FY
2013: $1.56). The closing US dollar rate at 28 June 2014 was $1.70 (29 June
2013: $1.52; FY 2013: $1.65).
The movement in the half year average exchange rate decreased revenue by
£8.94m and operating profit by £0.55m on translation of revenue and profit
into Sterling. The movement in the closing rates reduced US dollar denominated
overseas subsidiary assets by £0.41m.
Share option charges
The Group charged £0.31m (H1 2013: £0.38m) in respect of IFRS 2, 'Share-based
payments'. This related to UK and US SAYE schemes, together with the
Performance Share Plan. The decreased charge was due to the vesting and
exercise of 1.4 million shares in May 2014, under the Performance Share Plan.
Current options outstanding are 140,000 shares under the Performance Share
Plan and 225,000 SAYE awards.
Net finance income
Net finance income in the half year was £0.05m (H1 2013: £0.02m), reflecting
the Group's cash balance invested in short term deposits.
Taxation
The tax charge for continuing operations for the half year was £1.27m at a
rate of 29% (H1 2013: 29%; FY 2013: 27%), which represents the expected tax
rate for the full year 2014. The charge related to taxation payable on profit
earned in USA, together with the unwinding of the UK deferred tax asset,
principally in relation to payments into the UK defined benefit pension
scheme.
The tax charge for underlying profit from continuing operations was 27% (H1
2013: 27%; FY 2013: 25%).
Earnings per share
Underlying basic earnings per share from continuing operations was 15.99p (H1
2013: 12.02p), an increase of 33%. At constant currency, underlying EPS from
continuing operations would have been 1.45p higher.
Basic earnings per share from continuing operations was 11.55p (H1 2013:
8.62p). Including the impact of the discontinued operation basic earnings per
share was 11.70p (H1 2013: 9.81p).
Dividends
The Board has declared an interim dividend of 6.20p (H1 2013: 5.60p), an
increase of 11%. The dividend will be paid on 12 September 2014 at a cash cost
of £1.73m.
Discontinued operation
On 10 February 2014, the Group completed the sale of SPS, its UK based
manufacturing operation, to the SPS senior management, backed by Maven Capital
Partners, a private equity firm. The consideration was £7.25m (increased by
£0.24m relating to the amount of working capital, debt and cash at
completion). Net cash proceeds from disposal were £5.93m after costs,
including a bonus payable to the SPS senior management on completion of the
disposal.
Up to the date of disposal SPS made an operating loss of £0.06m and profit on
disposal of the business was £0.10m (representing release of a provision made
for estimated loss on disposal in 2013).
In accordance with IFRS 5 'Non-current Assets Held for Sale and Discontinued
Operations', SPS has been presented as a discontinued operation in 2014 and
2013.
Cash flow
The Group had net cash of £26.13m at 28 June 2014, an increase of £10.37m from
the prior year end. Net cash at 28 June 2014 was represented by:
28 June2014£m 28 December2013£m
Other financial assets - cash deposits 8.60 4.95
Cash and cash equivalents 17.53 10.81
26.13 15.76
The Group has US$13.0m of working capital facilities with its principal US
bank, JPMorgan Chase. The interest rate is US$ LIBOR plus 1.5%, and the
facilities expire on 31 August 2015.
Cash flow is summarised as follows:
Half year2014£m
Underlying operating profit 5.80
Depreciation and amortisation 0.50
Change in working capital 5.38
Capital expenditure (0.64)
Operating cash flow 11.04
Interest and tax (0.06)
Defined benefit pension contributions (1.96)
NI on share options exercises (0.83)
Other (0.60)
Free cash flow 7.59
Discontinued operations net cash inflow 5.80
Dividends to Shareholders (3.02)
Net cash inflow in the period 10.37
The Group delivered a strong cash flow performance in the first half of 2014,
generating £7.59m of free cash flow. The Direct Marketing business cash
generation profile remained strong and £12.17m of pre tax operating cash flow
was delivered in the first half of 2014, benefiting from a £5.42m working
capital inflow which is due to timing.
Cash inflow in respect of the sale of SPS and trading to the date of disposal
was £5.80m and the 2013 final dividend totalling £3.02m was paid in May 2014.
Defined benefit pension scheme
The Group sponsors a legacy UK defined benefit pension scheme, closed to new
members and future accruals. The Scheme has 1,151 pensioners (of which 411 had
insured benefits) and 535 deferred pensioners.
At 28 June 2014, the deficit of the Scheme on an IAS 19 basis increased to
£18.74m (FY 2013: £16.61m). On an IAS 19 basis liabilities were £77.20m and
assets were £58.46m, a further £18.26m of pensioner liabilities were insured
by a buy-in policy.
The change in deficit is explained as follows: £m
IAS 19 deficit at 28 December 2013 (16.61)
Company contributions 1.96
Administrative expenses (0.21)
Net finance charge (0.35)
Exceptional items related to risk reduction (0.42)
Remeasurement due to changes in assumptions* (3.11)
IAS 19 deficit at 28 June 2014 (18.74)
* Principally due to a decrease in the discount rate from 4.48% to 4.04%.
In line with its strategy of continuing to reduce the risk of the legacy
defined benefit pension scheme to the Group, in H1 2014 the Group completed a
flexible early retirement offer which was made to eligible deferred
pensioners. 41 deferred pensioners accepted the offer and the total liability
transferred was £5.23m, this was a take up rate of 27% by number of people and
45% by value. The total cash cost of the offer to the Company, including fees,
was £0.49m and the settlement charge (non-cash) on transfer was £0.29m.
The Group is pursuing further risk reduction in the pension scheme and has
embarked on a project to procure a buy-out (initially via a buy-in) of the
substantial liabilities for pensions in payment. The cash cost of this
exercise to the Company, based on June 2014 market conditions, would be circa
£22m spread over 2014 and 2015.
If completed, around three quarters of the overall liabilities would be on an
insured basis. Based on June 2014 market conditions, this could be expected to
reduce the deficit by approximately half and to permit a reduction in routine
contributions.
Balance sheet and Shareholders' funds
Net assets at 28 June 2014 were £14.32m, a decrease of £2.46m:
28 June 2014 28 December 2013
£m £m
Non current assets 10.41 9.99
Working capital (2.14) 2.49
Net cash 26.13 15.76
Pension deficit (18.74) (16.61)
Other liabilities (1.34) (0.59)
Net assets held for sale - 5.74
Net assets 14.32 16.78
Shareholders' funds decreased as profit generated in the period of £3.14m was
offset by actuarial losses on the pension scheme net of tax of £(2.47)m,
dividends paid £(3.02)m and other movements £(0.11)m.
Treasury Policy
Treasury policy is to manage centrally the financial requirements of the
Group. The Group operates cash pooling arrangements separately for its North
American operations and its UK operations. The Group enters into forward
contracts to buy or sell currency relating to specific receivables and
payables as well as remittances from its 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.
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
critical accounting policy is in respect of pensions.
Risks
The Group may be affected by a number of risks. These risks have not changed
since the year end and are detailed on pages 11 and 12 of the Group's Annual
Report 2013, 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.
Kevin Lyons-Tarr
Gillian Davies
Executive Director
Group Finance Director
30 July 2014
Condensed consolidated income statement (unaudited)
Half year2014 Half year2013(restated)† Full year2013
Note £'000 £'000 £'000
Continuing operations
Revenue 7 115,652 101,337 212,861
Operating expenses (110,982) (97,657) (202,724)
Operating profit before exceptional items 5,281 3,680 10,391
Exceptional items 8 (611) - (254)
Operating profit 7 4,670 3,680 10,137
Finance income 50 29 56
Finance costs - (12) (17)
Net pension finance charge 12 (354) (471) (924)
Net finance cost (304) (454) (885)
Profit before tax 4,366 3,226 9,252
Taxation 9 (1,266) (945) (2,466)
Profit for the period from continuing operations 3,100 2,281 6,786
Discontinued operation
Profit/(loss) from discontinued operation 15 41 315 (2,886)
Profit for the period 3,141 2,596 3,900
Earnings per share
Basic
From continuing operations 10 11.55p 8.62p 25.64p
From continuing and discontinued operations 10 11.70p 9.81p 14.74p
Diluted
From continuing operations 10 11.02p 8.26p 24.38p
From continuing and discontinued operations 10 11.17p 9.40p 14.01p
Underlying
From continuing operations 10 15.99p 12.02p 35.51p
† See note 6
Condensed consolidated statement of comprehensive income (unaudited)
Half year2014 Half year2013 Full year2013
Note £'000 £'000 £'000
Profit for the period 3,141 2,596 3,900
Other comprehensive income/(expense)
Items that may be reclassified subsequently to profit and loss:
Exchange differences on translation of foreign subsidiaries (411) 586 (423)
Items that will not be reclassified subsequently to profit and loss:
Remeasurement (losses)/gains on post employment obligations 12 (3,101) 4,913 4,586
Tax relating to components of other comprehensive income 667 (1,142) (2,239)
Effect of change in UK tax rate (31) - (483)
Total other comprehensive (expense)/income net of tax (2,876) 4,357 1,441
Total comprehensive income for the period 265 6,953 5,341
Half year2014 Half year2013 Full year2013
£'000 £'000 £'000
Total comprehensive income/(expense) attributable to equity 22441 6,638315 8,227(2,886)
Shareholders arising from- Continuing operations- Discontinued operation
265 6,953 5,341
Condensed consolidated balance sheet (unaudited)
At 28 June2014 At 29 June 2013 At28 Dec2013
Note £'000 £'000 £'000
Non current assets
Property, plant and equipment 5,316 12,361 5,337
Intangible assets 824 943 818
Deferred tax assets 4,265 5,158 3,834
10,405 18,462 9,989
Current assets
Assets held for sale - - 8,381
Inventories 1,982 3,881 2,235
Trade and other receivables 18,606 22,138 18,253
Other financial assets - bank deposits 13 8,600 3,200 4,950
Cash and cash equivalents 13 17,532 11,801 10,807
46,720 41,020 44,626
Current liabilities
Trade and other payables (22,730) (21,949) (17,997)
Current tax (973) (1,004) (150)
Borrowings 13 - (79) -
Liabilities held for sale - - (2,646)
(23,703) (23,032) (20,793)
Net current assets 23,017 17,988 23,833
Non current liabilities
Retirement benefit obligations 12 (18,735) (17,075) (16,611)
Borrowings 13 - (90) -
Deferred tax liability (224) (640) (289)
Provisions for other liabilities and charges (146) (147) (147)
(19,105) (17,952) (17,047)
Net assets 14,317 18,498 16,775
Shareholders' equity
Share capital 16 10,756 10,286 10,286
Share premium reserve 38,575 38,575 38,575
Other reserves (746) 674 (335)
Retained earnings (34,268) (31,037) (31,751)
Total Shareholders' equity 14,317 18,498 16,775
Total Shareholders' equity
14,317
18,498
16,775
Condensed consolidated statement of changes in Shareholders' equity
(unaudited)
Sharecapital Sharepremiumreserve Other reserves Retained earnings
Ownshares Profitand loss Total equity
£'000 £'000 £'000 £'000 £'000 £'000
At 29 December 2012 10,222 38,437 88 (726) (34,231) 13,790
Profit for the period 2,596 2,596
Other comprehensive expense 586 3,771 4,357
Total comprehensive income for the period 586 6,367 6,953
Share-based payment charge 385 385
Shares issued 64 138 202
Own shares purchased (130) (130)
Own shares utilised 5 (5) -
Dividends (2,702) (2,702)
At 29 June 2013 10,286 38,575 674 (851) (30,186) 18,498
Profit for the period 1,304 1,304
Other comprehensive expense (1,009) (1,907) (2,916)
Total comprehensive expense for the period (1,009) (603) (1,612)
Share-based payment charge 410 410
Deferred tax relating to share options 961 961
Dividends (1,482) (1,482)
At 28 December 2013 10,286 38,575 (335) (851) (30,900) 16,775
Profit for the period 3,141 3,141
Other comprehensive expense (411) (2,465) (2,876)
Total comprehensive income for the period (411) 676 265
Share-based payment charge 296 296
Shares issued (note 16) 470 470
Own shares purchased (470) (470)
Own shares utilised 1,201 (1,201) -
Dividends (3,019) (3,019)
At 28 June 2014 10,756 38,575 (746) (120) (34,148) 14,317
Condensed consolidated cash flow statement (unaudited)
Half year2014 Half year2013 Full year2013
Note £'000 £'000 £'000
Cash flows from operating activities
Cash generated from operations 14 8,484 6,082 11,451
Net tax paid (106) - (1,735)
Finance income 43 54 70
Finance costs - (13) (14)
Net cash generated from operating activities 8,421 6,123 9,772
Cash flows from investing activities
Net proceeds from sale of business 15 5,928 1,250 991
Purchases of property, plant and equipment (505) (528) (986)
Purchases of intangible assets (141) (141) (311)
Net cash generated from investing activities 5,282 581 (306)
Cash flows from financing activities
Repayment of borrowings - (6,408) (6,434)
Capital element of finance lease payments - (75) (151)
Amounts placed on deposit (3,650) (200) (1,950)
Proceeds from issue of ordinary shares 470 202 202
Purchase of own shares (470) (130) (130)
Dividends paid to Shareholders (3,019) (2,702) (4,184)
Net cash used in financing activities (6,669) (9,313) (12,647)
Net movement in cash and cash equivalents 7,034 (2,609) (3,181)
Cash and cash equivalents at beginning of the period 10,807 14,101 14,101
Exchange (losses)/gains on cash and cash equivalents (309) 309 (113)
Cash and cash equivalents at end of the period 17,532 11,801 10,807
Analysis of cash and cash equivalents
Cash at bank and in hand 13 14,132 7,601 6,557
Short term deposits 13 3,400 4,200 4,250
17,532 11,801 10,807
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 30 July 2014.
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 28 December 2013 were approved
by the Board of Directors on 5 March 2014 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 28 June 2014 have been prepared 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 28
December 2013, 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 the
foreseeable future. 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 28 December 2013, 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.
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 28 December 2013. There have been no changes
in any risk management policies since this date.
6 Restatement
The 2013 half year income statements and notes have been restated to
reclassify SPS as a discontinued operation. The reclassification has no net
impact on the profit for the period. The amounts reclassified as discontinued
operations are shown by line item in note 15. Additionally revenue has been
restated to include income from delivery receipts and other income which has
been moved from operating expenses, where it was offset against the costs of
these activities.
7 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 - continuing operations
4imprint Direct Marketing Half year 2014 £'000 Half year 2013(restated)£'000 Full year 2013 £'000
Sales of promotional products 107,019 93,515 196,422
Delivery receipts and other income 8,633 7,822 16,439
Total revenue from promotional products 115,652 101,337 212,861
Profit - continuing operations Underlying Total
Half year 2014 £'000 Half year 2013(restated)£'000 Full year 2013 £'000 Half year 2014 £'000 Half year 2013(restated)£'000 Full year 2013 £'000
4imprint Direct Marketing 6,909 5,294 14,602 6,909 5,294 14,602
Head Office (1,105) (1,027) (2,139) (1,105) (1,027) (2,139)
Underlying operating profit 5,804 4,267 12,463 5,804 4,267 12,463
Exceptional items - Head Office (note 8) (611) - (254)
Share option related charges (315) (380) (1,594)
Defined benefit pension scheme administrative expenses (208) (207) (478)
Operating profit 5,804 4,267 12,463 4,670 3,680 10,137
Net finance income 50 17 39 50 17 39
Net pension finance charge (354) (471) (924)
Profit before tax 5,854 4,284 12,502 4,366 3,226 9,252
8 Exceptional items
Half year2014 Half year2013 Full year2013
£'000 £'000 £'000
Pension risk reduction exercises 611 - 254
The pension costs related to a flexible early retirement offer (FERO)
undertaken in the first half of the year and preliminary work into further
risk reduction exercises. The costs include costs paid by the Company of
£188,000 (FY 2013: £178,000), a £286,000 IAS 19 settlement charge in respect
of the FERO and £137,000 (FY 2013: £76,000) incurred and paid by the defined
benefit pension scheme.
9 Taxation
The taxation charge for continuing operations for the period to 28 June 2014
was 29%, the estimated rate for the full year (H1 2013: 29%; FY 2013: 27%).
Tax paid in the period was £106,000 (H1 2013: £nil; FY 2013: £1,735,000).
10 Earnings per share
Basic, underlying and diluted
The basic, underlying and diluted earnings per share are calculated based on
the following data:
Half year2014 Half year2013(restated) Full year2013
£'000 £'000 £'000
Profit after tax - continuing operations 3,100 2,281 6,786
Profit/(loss) after tax - discontinued operation 41 315 (2,886)
Profit after tax 3,141 2,596 3,900
Half year2014 Half year2013(restated) Full year2013
£'000 £'000 £'000
Profit after tax - continuing operations 3,100 2,281 6,786
Add back:
Defined benefit pension administration charges 208 207 478
Share option charges 296 380 784
Social security charges on share options 19 - 810
Net pension finance charge 354 471 924
Exceptional items 611 - 254
Tax relating to above items (296) (158) (638)
Underlying profit after tax - continuing operations 4,292 3,181 9,398
Underlying profit after tax - continuing operations
4,292
3,181
9,398
Half year 2014 Half year 2013(restated) Full year2013
Number 000's Number 000's Number 000's
Basic weighted average number of shares 26,847 26,463 26,463
Dilutive potential ordinary shares - employee share options 1,276 1,146 1,372
Diluted weighted average number of shares 28,123 27,609 27,835
Basic earnings per share from continuing operations 11.55p 8.62p 25.64p
Basic earnings/(loss) per share from discontinued operation 0.15p 1.19p (10.90)p
11.70p 9.81p 14.74p
Diluted earnings per share from continuing operations 11.02p 8.26p 24.38p
Diluted earnings/(loss) per share from discontinued operation 0.15p 1.14p (10.37)p
11.17p 9.40p 14.01p
Underlying basic earnings per share from continuing operations 15.99p 12.02p 35.51p
14.01p
Underlying basic earnings per share from continuing operations
15.99p
12.02p
35.51p
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 247,152
(H1 2013: 265,183; FY 2013: 272,936).
11 Dividends Half year2014 Half year2013 Full year2013
£'000 £'000 £'000
Dividends paid in the period 3,019 2,702 4,184
Dividends per share declared - Interim 6.20p 5.60p 5.60p
- Final - - 11.40p
The interim dividend for 2014 of 6.20p per ordinary share (interim 2013:
5.60p; final 2013: 11.40p) will be paid on 12 September 2014 to ordinary
Shareholders on the register at the close of business on 15 August 2014.
12 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 28 June 2014 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 are:
Half year2014 Half year2013 Full year2013
£'000 £'000 £'000
Defined benefit pension administration charges 208 207 478
Net pension finance charge 354 471 924
Exceptional items - Settlement charge re flexible early retirement offer - Pension risk reduction exercise costs paid by the Scheme 286137 -- -76
Total recognised in the income statement 985 678 1,478
The principal assumptions applied by the actuaries at 28 June 2014 were:
Half year2014 Half year2013 Full year2013
Rate of increase in pensions in payment 3.00% 3.15% 3.20%
Rate of increase in deferred pensions 2.00% 2.40% 2.20%
Discount rate 4.04% 4.70% 4.48%
Inflation assumption - RPI 3.10% 3.25% 3.30%
- CPI 2.10% 2.50% 2.30%
The mortality assumptions adopted at 28 June 2014 imply the following life
expectancies at age 65:
Half year2014 Half year2013 Full year2013
Male currently aged 40 24.7 yrs 24.6 yrs 24.6 yrs
Female currently aged 40 27.2 yrs 28.1 yrs 27.1 yrs
Male currently aged 65 22.5 yrs 22.2 yrs 22.4 yrs
Female currently aged 65 24.8 yrs 25.5 yrs 24.7 yrs
Analysis of the movement in the balance sheet liability:
Half year2014 Half year2013 Full year2013
£'000 £'000 £'000
At start of period 16,611 22,894 22,894
Administrative expenses 208 207 478
Net finance charge 354 471 924
Exceptional items 423 - 76
Contributions by employer - normal - flexible early retirement offer (1,709)(253) (1,584)- (3,175)-
Remeasurement losses/(gains) on post employment obligations 3,101 (4,913) (4,586)
At end of period 18,735 17,075 16,611
13 Analysis of net cash
Half year2014 Half year2013 Full year2013
£'000 £'000 £'000
Other financial assets - bank deposits 8,600 3,200 4,950
Cash at bank and in hand 14,132 7,601 6,557
Short term deposits 3,400 4,200 4,250
Cash and cash equivalents 17,532 11,801 10,807
Current borrowings - finance leases - (79) -
Non current borrowings - bank loans - (90) -
Net cash 26,132 14,832 15,757
14 Cash generated from operations
Half year2014 £'000 Half year2013(restated)£'000 Full Year2013 £'000
Operating profit - continuing operations 4,670 3,680 10,137
- discontinued operation (59) 380 920
Adjustments for:
Depreciation charge 406 676 1,364
Amortisation of intangibles 168 205 400
Exceptional non cash items 423 - 76
Decrease in exceptional accrual/provisions (24)
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