REG - St. Ives PLC - Full Year Results <Origin Href="QuoteRef">SIV.L</Origin> - Part 2
03/10/2017 07:05
- Part 2: For the preceding part double click ID:nRSC4904Sa
154,258 77,700 393,154
Group sales 3,807 11,215 77 15,099
Intercompany eliminations (2,055) (11,732) (1,312) (15,099)
Total revenue 162,948 153,741 76,465 393,154
Operating profit before Adjusting Items 20,214 4,310 2,581 27,105
Adjusting Items (33,283) (28,599) (5,639) (67,521)
Statutory loss from operations (13,069) (24,289) (3,058) (40,416)
Net pension finance expense (635)
Other finance expense (3,017)
Statutory loss before tax (44,068)
Income tax credit 710
Statutory net loss for the period (43,358)
52 weeks to 29 July 2016
Strategic Marketing Marketing Activation Books Total
£'000 £'000 £'000 £'000
Revenue
External sales 138,745 159,694 69,107 367,546
Group sales 6,987 10,411 17 17,415
Intercompany eliminations (1,577) (15,298) (540) (17,415)
Total revenue 144,155 154,807 68,584 367,546
Operating profit before Adjusting Items 19,354 8,084 5,842 33,280
Adjusting Items (18,140) (15,752) (1,231) (35,123)
Statutory profit /(loss) from operations 1,214 (7,668) 4,611 (1,843)
Net pension finance expense (972)
Other finance expense (2,899)
Statutory loss before tax (5,714)
Income tax charge (2,391)
Statutory net loss for the period (8,105)
Geographical segments
The Strategic Marketing, Marketing Activation and Books segments operate
primarily in the UK, deriving more than 83% of the total revenue from
customers located in the UK and 13% of the total revenue from customers
located in the US.
The largest customer of the Group accounted for £30.0 million (2016: £25.9
million) of revenue in the current period.
3. Adjusting items
Adjusting items disclosed on the face of the Consolidated Income Statement are
as follows:
Expense/(income) 2017 2017 2016 2016
£'000 £'000 £'000 £'000
Restructuring items
Redundancies and other charges 3,003 1,612
Costs associated with empty properties - 976
3,003 2,588
St Ives Defined Benefits Pension Scheme costs
Administrative costs 756 582
Curtailment credit - (198)
Other 497 327
1,253 711
Costs related to acquisitions made in prior periods
Amortisation of acquired intangibles 9,953 9,237
Impairment of goodwill and other assets 33,058 12,712
Costs associated with prior period acquisitions and setup of subsidiaries 99 785
Contingent consideration required to be treated as remuneration 15,550 8,220
Increase/(decrease) in deferred consideration 7,362 (781)
66,022 30,173
Adjusting Items in administrative expenses 70,278 33,472
(Profit)/loss on disposal of property, plant and equipment (2,760) 1,651
Adjusting Items before interest and tax 67,518 35,123
Net pension finance charge in respect of defined benefits pension scheme 638 972
Adjusting Items before tax 68,156 36,095
Income tax credit (5,694) (3,931)
Adjusting Itemsafter tax 62,462 32,164
Restructuring items
The restructuring items in the current period include redundancy and
restructuring costs of £1.5 million relating to the Books segment and £1.3
million relating to the Marketing Activation segment. During the period,
redundancy costs of £0.2 million relating to the restructuring of Digital
businesses, were incurred in the Strategic Marketing segment.
The profit on disposal of property, plant and equipment of £2.8 million
relates to the sale of the Group's properties in Burnley, Peterborough and
Roche. These items are recorded in the Marketing Activation segment.
3. Adjusting items (continued)
St Ives Defined Benefits Pension Scheme costs
The Scheme charges include service costs of £0.8 million, a net pension
finance charge of £0.6 million and costs in relation to running the scheme of
£0.5 million. These items are recorded in the Books segment.
Costs related to acquisitions made in prior periods
Charges relating to the amortisation of acquired customer relationships,
proprietary techniques and software of £9.8 million and £0.2 million are
recorded in the Strategic Marketing and Marketing Activation segments
respectively.
Impairment charges of £23.9 million and £3.5 million are recorded against SP
Group's and Tactical Solutions' respective assets due to continued decline in
operating profit as a result of lower level of promotional activities in the
grocery retail sector. Subsequent to the period end, the Group was informed by
Sainsbury's that it would not renew its contract for the provision of
marketing materials. As a result an impairment charge of £2.5 million has been
recorded against the goodwill of Service Graphics in the 2016/2017 financial
period. These charges have been recorded in the Marketing Activation segment.
Following the loss of the HarperCollins contract, an impairment charge of £2.9
million was recorded against non-current assets and inventories in the Books
segment.
An impairment charge of £0.3 million relating to obsolete software was
recorded within the Strategic Marketing segment.
In the current period, the tax credit of £5.7 million (2016: £3.9 million)
relates to the items discussed above. This tax credit includes an adjustment
of £0.8 million relating to the disposal of a subsidiary in a prior period.
4. Income tax credit/(charge).
Income tax credit/(charge) as shown in the Consolidated Income Statement is as
follows:
2017 2016
£'000 £'000
Total current tax charge:
Current period (4,512) (5,468)
Adjustments in respect of prior periods 682 (27)
Total current tax charge (3,830) (5,495)
Deferred tax on origination and reversal of temporary differences:
Deferred tax credit 4,761 3,181
Adjustments in respect of prior periods (221) (77)
Total deferred tax credit 4,540 3,104
Total income tax credit/(charge) 710 (2,391)
The income tax credit/(charge) charge on the loss before and after adjusting
items is as follows:
2017 2016
£'000 £'000
Tax charge on Adjusted profit before tax (4,984) (6,322)
Tax credit on Adjusting items 5,694 3,931
Total income tax credit/(charge) 710 (2,391)
4. Income tax charge (continued)
The income tax credit/(charge) can be reconciled to the loss before tax per
the Consolidated Income Statement as follows:
2017 2016
£'000 £'000
Loss before tax (44,068) (5,714)
Tax calculated at a rate of 24.02% (2016: 22.66%) 10,585 1,295
Non-deductible charges on impairment of assets (5,336) (2,469)
Expenses not deductible for tax purposes (7,486) (2,675)
Effect of tax deductible goodwill 634 423
Effect of change in United Kingdom corporate tax rate (287) 538
Credit on research and development activities 307 214
Other foreign taxes - (150)
Movement in deferred tax on industrial buildings 1,824 430
Utilisation of tax losses not previously recognised 9 107
Adjustments in respect of prior periods 460 (104)
Total income tax credit/(charge) 710 (2,391)
Income tax charge as shown in the Consolidated Statement of Comprehensive
Income is as follows:
2017 2016
£'000 £'000
United Kingdom corporation tax credit at 19.67% (2016: 20%) 548 415
Deferred tax on origination and reversal of temporary differences (2,132) (960)
Total income tax charge (1,584) (545)
Income tax (charge)/credit as shown in the Consolidated Statement of Changes
in Equity is as follows:
2017 2016
£'000 £'000
United Kingdom corporation tax credit at 19.67% (2016: 20%) (16) 255
Deferred tax on origination and reversal of temporary differences 63 (231)
Total income tax credit 47 24
5. Dividends
per share 2017 2016
£'000 £'000
Final dividend paid for the 52 weeks ended 31 July 2015 5.55p − 7,515
Interim dividend paid for the 26 weeks ended 29 January 2016 2.35p − 3,419
Final dividend paid for the 52 weeks ended 29 July 2016 5.45p 7,777 −
Interim dividend paid for the 26 weeks ended 27 January 2017 0.65p 928 −
Dividends paid during the period 8,705 10,934
Proposed final dividend at the period end of 1.30p per share(2016: 5.45p per share) 1.30p 1,857
6. Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following:
Number of shares
2017 2016
'000 '000
Weighted average number of ordinary shares for the purposes of basic earnings per share 142,642 136,633
Effectof dilutive potential ordinary shares:
Share options − 930
Weighted average number of ordinary shares for the purposes of adjusted diluted earnings per share 142,642 137,563
Basic and diluted earnings per share
2017 2016
Earnings Earnings Earnings Earnings
£'000 per share £'000 per share
pence pence
Earnings/(loss) and basic earnings/(loss) per share
Adjusted earnings and Adjusted basic earnings per share 19,104 13.39 24,059 17.61
Adjusting items (62,462) (43.79) (32,164) (23.54)
Loss and basic loss per share (43,358) (30.40) (8,105) (5.93)
Earnings/(loss) and diluted earnings/(loss) per share
Adjusted earnings and Adjusted diluted earnings per share 19,104 13.39 24,059 17.49
Adjusting Items (62,462) (43.79) (32,164) (23.38)
Loss and diluted loss per share (43,358) (30.40) (8,105) (5.89)
Adjusted earnings is calculated by adding back Adjusting Items, as adjusted
for tax, to the loss for the period.
7. Retirement benefits
The net obligation in respect of the St Ives Defined Benefits Pension Scheme
of £16.0 million at 28 July 2017 has decreased compared to 29 July 2016 (£26.4
million) primarily due to an increase in plan assets with plan liabilities
remaining broadly unchanged. In calculating the amount of plan liabilities, an
increase in the rate of inflation was offset by an increase in the discount
rate and a fall in the rate of increase in life expectancy.
8. Acquisition
The total impact on investing cash outflow in the current period relating to
acquisitions made in prior period is as follows:
£'000
The App Business Limited 469
Health Hive Limited 194
Net cash outflow 663
9. Notes to the condensed consolidated cash flow statement
Reconciliation of cash generated from operations
2017 2016
£'000 £'000
Loss from continuing operations (40,413) (1,843)
Adjustments for:
Depreciation of property, plant and equipment 6,149 7,201
Share of (profit)/loss from joint arrangement (355) 122
Impairment losses 33,058 12,712
Amortisation of intangible assets 10,624 10,016
(Profit)/loss on disposal of property, plant and equipment (2,818) 1,484
Share-based payment charge/(credit) 70 (238)
Settlement of share based payments - 108
Net increase in derivative liabilities - (175)
Decrease in defined benefits pension scheme obligations (2,789) (2,278)
Re-measurement of deferred consideration 7,362 (781)
Charge for contingent consideration required to be treated as remuneration 15,550 8,220
(Decrease)/increase in provisions (5) 55
Operating cash inflows before movements in working capital 26,433 34,603
Increase in receivables (130) (9,572)
Decrease/(increase) in inventory 583 (880)
Increase in payables 2,855 3,992
Increase/(decrease) in deferred income 948 (912)
Net decrease in provision for deemed remuneration - (3,581)
Cash generated from operations 30,689 23,650
Analysis of net debt
29 July Cash flow Foreign exchange gains/(losses) 28 July
2016 £'000 £'000 2017
£'000 £'000
Cash and cash equivalents 11,835 11,457 2,359 25,651
Bank loans (92,595) 15,000 (2,650) (80,245)
(80,760) 26,457 (291) (54,594)
Cash and cash equivalents (which are presented as a single class of assets on
the face of the consolidated balance sheet) comprise cash at bank and other
short-term highly liquid investments with a maturity of three months or less.
The effective interest rates on cash and cash equivalents are based on current
market rates.
10. Related parties
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note. No material related party transactions have been entered into during the
period, which might reasonably affect the decisions made by the users of these
financial statements.
No executive officers of the Company or their associates had material
transactions with the Group during the period.
11. Restatement
Previously the Group reported the employee costs of the Insight businesses,
part of Strategic Marketing segment, under administrative expenses. The
Group's accounting policy is to include these types of costs within cost of
sales and, accordingly, the comparatives have been re-stated to ensure
consistency.
The impact of the prior period adjustments on the previously reported
Consolidated Income Statement are summarised as follows:
52 weeks to 29 July 2016
Before Adjustments Adjustments Restated
£'000 £'000 £'000
Adjusted Results:
Cost of sales 249,730 12,738 262,468
Administrative expenses 59,570 (12,738) 46,832
Statutory Results:
Cost of sales 249,730 12,738 262,468
Administrative expenses 93,042 (12,738) 80,304
There is no impact on the Consolidated Statement of Comprehensive Income,
Consolidated Statement of Changes in Equity, Consolidated Balance Sheet or
Consolidated Cashflow for the comparatives.
12. Post balance sheet event
Subsequent to the period end, the Group reduced its term-loan by £5.5 million
to £24.5 million.
The foregoing contains forward looking statements made by the directors in
good faith based on information available to them up to 2 October 2017. Such
statements need to be read with caution due to inherent uncertainties,
including economic and business risk factors underlying such statement.
This information is provided by RNS
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