TIDMIGR
RNS Number : 6680Y
International Greetings PLC
03 December 2014
3 December 2014
International Greetings PLC ("the Company" or "the Group")
Interim Results
International Greetings PLC ('International Greetings' or 'the
Group'), one of the world's leading designers, innovators and
manufacturers of gift packaging and greetings, social expression
giftware , stationery and creative play products, announces its
Interim Results for the six months ended 30 September 2014.
Financial Highlights
-- Sales at GBP111.9 million are in line with expectations,
slightly up on the prior period after allowing for the GBP2 million
impact of foreign exchange translation (2013 H1: GBP113.6
million)
-- Gross profit margins at 18.0% (2013 H1: 19.0%), reflecting H1 geographic sales mix
-- Profit before tax, non-cash long term incentive plan charges
and exceptional items up by 7.1% to GBP4.0 million (2013 H1: GBP3.7
million)
-- Key goal to grow fully diluted earnings per share (pre
exceptional items and LTIP charges) on track - up 23% on prior year
to 4.8p (2013 H1: 3.9p)
-- Net debt at 30 September 2014 at GBP89.9 million (2013 H1:
GBP84.8 million) reflecting the investment in Enper of GBP1.6
million and the effect of short-term working capital dynamics
-- Core banking facilities extended to 2018 on improved terms.
Operational highlights
-- Excellent Christmas cracker manufacturing season in China
completed on time in full, producing 74 million crackers in the
2014 season
-- Integration of our Dutch acquisition, Enper, successfully completed to plan
-- Further gift wrap production efficiencies yielded in Europe following investment
-- HM The Queen and HRH The Duke of Edinburgh formally opened
our facility in Wales in April following the completion to time and
budget of our major investment in new high definition printing
presses
-- Excellent response to new licensed products, including
creative play and gift packaging ranges of 'Frozen' from Disney
-- Order book for FY14/15 in line with expectations and already building for FY15/16.
Paul Fineman, Chief Executive said:
"We are encouraged that the first half of the year has seen all
regions trading profitably and overall in line with
expectations.
"The key investments made in our manufacturing facilities have
enabled us to deliver record levels of volumes in several of our
key product categories and has further enhanced our ability to
continue to enjoy excellent customer relationships and market
leading positions.
"We are on course to achieve targeted growth in underlying
earnings per share and remain firmly focused on reducing leverage
through converting profit into cash."
For further information, please contact:
International Greetings plc Tel: 01525 887 310
Paul Fineman, Chief Executive
Anthony Lawrinson, Chief Financial
Officer
Cenkos Securities plc Tel: 0207 397 8900
Bobbie Hilliam
FTI Consulting Tel: 020 7831 3113
Jonathon Brill
Georgina Goodhew
Chief Executive Officer's review
Driving growth in earnings
Key achievements
-- Key goal to grow adjusted fully diluted earnings per share(a)
on track - up 23% on prior year to 4.8p (2013 H1: 3.9p)
-- Adjusted profit(b) up by 7.1% to GBP4.0 million (2013 H1: GBP3.7 million)
-- Sales in line with expectations, slightly up on the prior
period after allowing for the impact of foreign exchange
translation
-- Further gift wrap production efficiencies yielded in Europe following investment
-- Similar investment programme in Wales completed to time and
budget, performing on plan in early months. This facility was
formally opened by HM The Queen and HRH The Duke of Edinburgh on 30
April 2014
-- Integration of our Dutch acquisition, Enper, successfully completed to plan
-- Excellent Christmas cracker manufacturing season in China successfully completed
-- Core banking facilities extended to 2018 on improved terms
(a) Adjusted fully diluted earnings per share is pre-exceptional
items and LTIP charges.
(b) Adjusted profit is profit before tax, non-cash long term
incentive plan ("LTIP") charges and exceptional items.
Overview
A solid six month period with some important operational plans
relating to our acquisition in the Netherlands and our major
investment in Wales now completed very satisfactorily. Sales and
profit for the six months ended 30 September 2014 are overall in
line with expectations with both our key targets of a) profit
before tax, exceptional items and long term incentive plan ("LTIP")
charges and b) fully diluted earnings per share (pre exceptional
items and LTIP charges), significantly up on the prior period. Net
debt at the end of the period was in line with expectations.
Operational review
We are pleased to report that all regions have again traded
profitably during the period.
We have experienced continued improvement in performance in both
the UK and Asia region and again in Europe, compared to the same
period last year.
It is no coincidence that these are the areas where we have
recently invested and an excellent performance has been delivered
by our manufacturing facilities throughout the Group:
-- In Europe, our investment during FY12/13 in new
state-of-the-art high-definition printing facilities and enhanced
by the acquisition of the trade and assets of Enper in July 2014,
underpinned growing levels of gift wrap production and profitable
sales growth.
-- In the UK our project to introduce similar technology to our
gift wrap plant in Wales completed to time and budget and we were
privileged and delighted that our new operation was formally opened
by HM The Queen and HRH The Duke of Edinburgh on 30 April 2014. We
have begun to see the positive effect of this investment having
operated on dual platforms in the current year - the full shift to
this environmentally friendly, high definition, high speed
technology takes place in FY15/16.
-- We are now appraising whether to invest in the US marketplace
to match the same technological platform.
We are also delighted with the performance of our China-based
Christmas cracker manufacturing operation, where we have produced
on time and delivered in full on 74 million crackers in the 2014
season, exceeding targeted efficiencies and implementing further
initiatives for continued improvement. While China remains our
preferred location for this activity, we continue to carefully
invest effectively in semi-automation to mitigate the challenges
associated with availability and cost of labour.
US profit performance held steady on improved sales and the
prospects in that market remain strong despite our short term
operational challenges following the sad loss of our US CEO, Rich
Eckman following his battle with cancer. The process to recruit a
new CEO in the USA is well underway and proceeding
satisfactorily.
Our joint venture business in Australia continues to manage the
fast paced and changing market dynamics through growth with new
customers, product categories and channels. Whilst, in the short
term, this will impact profitability, we are encouraged at the
prospects now offered through establishing new opportunities for
expansion.
Demand for our core product categories remains strong in all
regions in which we operate. In FY14/15, our sales volumes of gift
wrap, gift bags and Christmas crackers will reach record levels and
we continue to enjoy excellent and long-term relationships with
many of the world's leading retail groups. Our teams throughout the
Group, remain committed to delivering great value, together with
the highest standards of service to our customers, supported by our
investment in manufacturing, sourcing, design and innovation.
Our flexible approach has resulted in our products being offered
for sale in over 100,000 retail outlets in more than 80 countries
and includes a brand and product portfolio, which provides our
global customer base with a compelling 'good, better, best'
offering to suit their consumers' requirements.
Financial review
While revenue is reported at GBP111.9 million, apparently down
on 2013 (H1: GBP113.6 million), this reflects the GBP2.0 million
impact of exchange rates on translation of overseas sales and at
like-for-like rates, sales are in fact slightly higher than the
prior year. This predominantly reflects incremental growth in
Europe and the US market - though in both cases at lower margin
than other business. The timing of sales at the half year as usual
heavily reflects the phasing of deliveries to customer
requirements, with several major international retailers ordering
deliveries later in the year, resulting in H2 weighting for
FY14/15.
Gross profit margins at 18.0% (2013 H1: 19.0%) were lower,
reflecting the above mentioned incremental sales in the US and
Europe at lower margin but especially the effect of the transition
taking place in our joint venture in Australia. However, efficiency
in China, the UK and Europe has driven margins higher in those
areas as expected. Half year margins are always coloured materially
by timing both in product mix and type of customer and are only a
general indicator of full year outturn.
Overhead costs were lower at GBP15.3 million (2013 H1: GBP16.5
million) reflecting the impact of cost saving initiatives -
particularly in the UK - from last year and also some timing
associated with changes in mix.
Operating profit before exceptional costs and LTIP charges
(which are non cash) was steady at GBP5.5 million (2013 H1: GBP5.5
million) while profit before tax, exceptional items and LTIP
charges was up 7.1% to GBP4.0 million from GBP3.7 million in the
equivalent period last year. LTIP charges were steady at GBP0.2
million in both periods.
Exceptional charges of GBP0.7 million in respect of our new
investment in Wales and GBP0.1 million in respect of the
acquisition of the trade and assets of Enper in the Netherlands
were entirely as expected and previously communicated. After
allowing for such costs, profit before tax and after exceptional
items and LTIP charges was GBP3.0 million, up 72% on the prior year
(2013 H1: GBP1.7 million). Just GBP0.3 million of this exceptional
item flowed as cash in the period as the majority relates to
accelerated depreciation on the assets that are no longer required
with the new platform fully operational.
Finance expenses before exceptional items in the period were
substantially lower at GBP1.5 million (2013 H1: GBP1.8 million)
reflecting the full year effect of improved borrowing costs and our
ability to rely on efficient use of lower cost asset based lending
("ABL") working capital facilities during peak period as our
overall debt profile falls. Our facilities with HSBC were again
renewed during the period on improved, more flexible terms and with
increased maturity profile out to 2018 (previously 2016) while
facilities in the Netherlands and the USA were also renewed,
extended and improved. Finance costs after exceptional items were
also GBP1.5 million (2013 H1: GBP2.2 million).
The effective underlying tax rate was 23% (2013 H1: 25%). This
rate has fallen again, reflecting continued reductions in the UK
rate of taxation and our ability to recognise tax losses in the USA
as profitable growth continues. There are still unrecognised losses
with a tax value of $3.8 million in the USA and GBP0.3 million in
the UK which can be reflected in the balance sheet as profitability
progresses.
Stated before exceptional items and LTIP charges, basic earnings
per share were in line with expectations at 4.9p (2013 H1: 4.0p),
and 3.5p (2013 H1: 1.4p) after exceptional items and LTIP charges.
Our primary measure of adjusted fully diluted earnings per share
(stated before exceptional items and LTIP charges) was also in line
with expectations at 4.8p (2013 H1: 3.9p). See note 6 of the
interim financial statements.
Capital expenditure in the six months was GBP1.4 million (2013
H1: GBP2.3 million) reflecting the tail end of the investment in
Wales and ongoing capital expenditure to improve our business. As
previously announced, we also invested EUR2.0 million (GBP1.6
million) to purchase the trade and assets of Enper in the
Netherlands and integration of this business has already completed,
leaving our Dutch business well positioned to achieve the planned
synergies in FY15/16.
Cash used by operations was GBP46.4 million, higher than the
prior period (2013 H1: GBP38.9 million), but as usual this profile
reflects the seasonality of the business as 65% of the sales in the
six month period occurred in the last two months.
The increase in cash used by operations at the end of the period
over the prior period is reflected predominantly in trade and other
receivables which were GBP76.0 million (2013 H1: GBP68.1 million)
whereas stock levels were slightly lower at GBP66.4 million (2013
H1: GBP67.0 million). Both dynamics simply reflect the highly
variable phasing of deliveries to customer requirements from year
to year.
Net debt at 30 September 2014 was consequently higher at GBP89.9
million (2013 H1: GBP84.8 million) but other than the investment in
Enper of GBP1.6 million, this is mainly the effect of short-term
working capital dynamics. Reduction of debt and the associated
interest cost remains a key focus and our programme to reduce year
end net debt is on track.
The Board will not be declaring an interim dividend (2013 H1:
GBPnil) but intends to actively review this position as we come
ever closer to achieving our key leverage target at year end of net
debt to EBITDA below 2 times.
Current trading outlook
Overall trading activities are in line with expectations with a
strong order book in place for the balance of FY14/15 and already
beginning to build for FY15/16.
Operational improvements, prudent investment in projects with
early payback and a focus on customer service and innovation,
continue to deliver margin and profit growth.
We are on course to achieve targeted growth in underlying
earnings per share and remain firmly focused on reducing leverage
through converting profit into cash.
Paul Fineman
CEO
Consolidated income statement
six months ended 30 September 2014
Unaudited six months Unaudited six months 12 months ended
ended 30 Sep 2014 ended 30 Sep 2013 31 Mar 2014
---------------------------------- -------------------------------- -----------------------------------
Before Exceptional Before Exceptional Before Exceptional
exceptional items items exceptional exceptional items
(note (note (note
items 3) Total items 3) Total items 3) Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------- ----------- ----------- -------- -------- ----------- --------- ----------- ----------- ---------
Continuing
operations
Revenue 111,923 - 111,923 113,556 - 113,556 224,462 - 224,462
Cost of
sales (91,734) (767) (92,501) (91,995) (1,478) (93,473) (183,238) (2,006) (185,244)
---------------- ----------- ----------- -------- -------- ----------- --------- ----------- ----------- ---------
Gross profit 20,189 (767) 19,422 21,561 (1,478) 20,083 41,224 (2,006) 39,218
18.0% 17.4% 19.0% 17.7% 18.4% 17.5%
Selling
expenses (5,740) - (5,740) (6,308) - (6,308) (12,108) - (12,108)
Administration
expenses (9,524) (99) (9,623) (10,228) - (10,228) (19,191) - (19,191)
Other operating
income 353 72 425 315 72 387 737 147 884
Loss on
disposal
of property,
plant and
equipment - - - (6) - (6) - - -
---------------- ----------- ----------- -------- -------- ----------- --------- ----------- ----------- ---------
Operating
profit/(loss) 5,278 (794) 4,484 5,334 (1,406) 3,928 10,662 (1,859) 8,803
Finance
expenses (1,497) - (1,497) (1,792) (403) (2,195) (3,177) (439) (3,616)
---------------- ----------- ----------- -------- -------- ----------- --------- ----------- ----------- ---------
Profit/(loss)
before tax 3,781 (794) 2,987 3,542 (1,809) 1,733 7,485 (2,298) 5,187
Income tax
(charge)/credit (869) 80 (789) (886) 416 (470) (1,840) 381 (1,459)
---------------- ----------- ----------- -------- -------- ----------- --------- ----------- ----------- ---------
Profit/(loss)
from continuing
operations
for the
period 2,912 (714) 2,198 2,656 (1,393) 1,263 5,645 (1,917) 3,728
---------------- ----------- ----------- -------- -------- ----------- --------- ----------- ----------- ---------
Attributable
to:
Owners of
the Parent
Company 2,005 792 3,010
Non-controlling
interests 193 471 718
---------------- ----------- ----------- -------- -------- ----------- --------- ----------- ----------- ---------
Earnings per ordinary share
Unaudited six months Unaudited six months 12 months ended
ended 30 Sep 2014 ended 30 Sep 2013 31 Mar 2014
---------------------- ---------------------- -----------------
Diluted Basic Diluted Basic Diluted Basic
------------------ ----------- --------- ----------- --------- --------- ------
Adjusted earnings
per share
excluding
exceptional
items and
LTIP charges 4.8p 4.9p 3.9p 4.0p 8.4p 8.6p
Loss per share
on LTIP charges (0.2p) (0.2p) (0.2p) (0.2p) (0.1p) (0.1p)
------------------ ----------- --------- ----------- --------- --------- ------
Adjusted earnings
per share
excluding
exceptional
items 4.6p 4.7p 3.7p 3.8p 8.3p 8.5p
Loss per share
on exceptional
items (1.2p) (1.2p) (2.4p) (2.4p) (3.2p) (3.3p)
------------------ ----------- --------- ----------- --------- --------- ------
Earnings per
share 3.4p 3.5p 1.3p 1.4p 5.1p 5.2p
------------------ ----------- --------- ----------- --------- --------- ------
Consolidated statement of comprehensive income
six months ended 30 September 2014
Unaudited Unaudited
six months six months 12 months
ended ended ended
30 Sep 30 Sep 31 Mar
2014 2013 2014
GBP000 GBP000 GBP000
------------------------------------ ----------- ----------- ----------
Profit for the period 2,198 1,263 3,728
Other comprehensive income:
Exchange difference on translation
of foreign operations (707) (1,558) (2,257)
Net loss on cash flow hedges
(net of tax) 476 220 (126)
Other comprehensive income for
period, net of tax (231) (1,338) (2,383)
Total comprehensive income for
the period, net of tax 1,967 (75) 1,345
Attributable to:
Owners of the Parent Company 1,877 42 1,366
Non-controlling interests 90 (117) (21)
------------------------------------ ----------- ----------- ----------
1,967 (75) 1,345
------------------------------------ ----------- ----------- ----------
Consolidated statement of changes in equity
six months ended 30 September 2014
Share
premium
and capital Non-
Share redemption Merger Hedging Translation Retained Shareholder controlling
capital reserve reserves reserves reserve earnings equity interest Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------- ------- ----------- -------- -------- ----------- -------- ----------- ----------- ------
At 1 April 2014 2,896 4,776 17,164 (577) (672) 29,925 53,512 3,649 57,161
------------------- ------- ----------- -------- -------- ----------- -------- ----------- ----------- ------
Profit for the
period - - - - - 2,005 2,005 193 2,198
Other comprehensive
income - - - 476 (604) - (128) (103) (231)
------------------- ------- ----------- -------- -------- ----------- -------- ----------- ----------- ------
Total comprehensive
income for the
period - - - 476 (604) 2,005 1,877 90 1,967
Equity-settled
share-based
payment - - - - - 173 173 - 173
Options exercised 12 20 - - - - 32 - 32
Equity dividends
paid - - - - - - - (829) (829)
------------------- ------- ----------- -------- -------- ----------- -------- ----------- ----------- ------
At 30 September
2014 2,908 4,796 17,164 (101) (1,276) 32,103 55,594 2,910 58,504
------------------- ------- ----------- -------- -------- ----------- -------- ----------- ----------- ------
six months ended 30 September 2013
Share
premium
and capital Non-
Share redemption Merger Hedging Translation Retained Shareholder controlling
capital reserve reserves reserves reserve earnings equity interest Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------- ------- ----------- -------- -------- ----------- -------- ----------- ----------- --------
At 1 April 2013 2,838 4,658 17,164 (451) 846 26,833 51,888 4,684 56,572
Profit for the
period - - - - - 792 792 471 1,263
Other
comprehensive
income - - - 220 (970) - (750) (588) (1,338)
----------------- ------- ----------- -------- -------- ----------- -------- ----------- ----------- --------
Total
comprehensive
income for the
period - - - 220 (970) 792 42 (117) (75)
Equity-settled
share-based
payment - - - - - 5 5 - 5
Options exercised 51 91 - - - - 142 - 142
Equity dividends
paid - - - - - - - (1,014) (1,014)
----------------- ------- ----------- -------- -------- ----------- -------- ----------- ----------- --------
At 30 September
2013 2,889 4,749 17,164 (231) (124) 27,630 52,077 3,553 55,630
----------------- ------- ----------- -------- -------- ----------- -------- ----------- ----------- --------
year ended 31 March 2014
Share
premium
and capital Non-
Share redemption Merger Hedging Translation Retained Shareholder controlling
capital reserve reserves reserves reserve earnings equity interest Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------- ------- ----------- -------- -------- ----------- -------- ----------- ----------- --------
At 1 April 2013 2,838 4,658 17,164 (451) 846 26,833 51,888 4,684 56,572
Profit for the
year - - - - - 3,010 3,010 718 3,728
Other
comprehensive
income - - - (126) (1,518) - (1,644) (739) (2,383)
----------------- ------- ----------- -------- -------- ----------- -------- ----------- ----------- --------
Total
comprehensive
income for the
year - - - (126) (1,518) 3,010 1,366 (21) 1,345
Equity-settled
share-based
payment - - - - - 82 82 - 82
Options exercised 58 118 - - - - 176 - 176
Equity dividends
paid - - - - - - - (1,014) (1,014)
----------------- ------- ----------- -------- -------- ----------- -------- ----------- ----------- --------
At 31 March 2014 2,896 4,776 17,164 (577) (672) 29,925 53,512 3,649 57,161
----------------- ------- ----------- -------- -------- ----------- -------- ----------- ----------- --------
Consolidated balance sheet
as at 30 September 2014
Unaudited Unaudited
as at as at As at
30 Sep 30 Sep 31 March
2014 2013 2014
Note GBP000 GBP000 GBP000
------------------------------- ----- ---------- ---------- ---------
Non-current assets
Property, plant and
equipment 30,891 28,732 32,049
Intangible assets 32,140 32,397 31,950
Deferred tax assets 3,255 4,007 3,665
------------------------------- ----- ---------- ---------- ---------
Total non-current assets 66,286 65,136 67,664
------------------------------- ----- ---------- ---------- ---------
Current assets
Inventory 66,362 67,032 48,460
Trade and other receivables 75,993 68,140 19,690
Cash and cash equivalents 4 1,005 1,275 8,111
------------------------------- ----- ---------- ---------- ---------
Total current assets 143,360 136,447 76,261
------------------------------- ----- ---------- ---------- ---------
Total assets 209,646 201,583 143,925
------------------------------- ----- ---------- ---------- ---------
Equity
Share capital 2,908 2,889 2,896
Share premium 3,456 3,409 3,436
Reserves 17,127 18,149 17,255
Retained earnings 32,103 27,630 29,925
------------------------------- ----- ---------- ---------- ---------
Equity attributable
to owners of the Parent
Company 55,594 52,077 53,512
------------------------------- ----- ---------- ---------- ---------
Non-controlling interests 2,910 3,553 3,649
------------------------------- ----- ---------- ---------- ---------
Total equity 58,504 55,630 57,161
------------------------------- ----- ---------- ---------- ---------
Non-current liabilities
Loans and borrowings 4 25,496 27,205 28,145
Deferred income 1,226 1,096 1,592
Provisions 906 861 860
Other financial liabilities 3,873 1,667 4,202
------------------------------- ----- ---------- ---------- ---------
Total non-current liabilities 31,501 30,829 34,799
------------------------------- ----- ---------- ---------- ---------
Current liabilities
Bank overdraft 4 4,412 3,019 2,529
Loans and borrowings 4 56,611 54,256 9,695
Deferred income 674 555 1,202
Provisions 114 104 165
Income tax payable 1,499 1,332 2,052
Trade and other payables 45,677 44,707 25,818
Other financial liabilities 10,654 11,151 10,504
------------------------------- ----- ---------- ---------- ---------
Total current liabilities 119,641 115,124 51,965
------------------------------- ----- ---------- ---------- ---------
Total liabilities 151,142 145,953 86,764
------------------------------- ----- ---------- ---------- ---------
Total equity and liabilities 209,646 201,583 143,925
------------------------------- ----- ---------- ---------- ---------
Consolidated cash flow statement
six months ended 30 September 2014
Unaudited Unaudited
six months six months 12 months
ended ended ended
30 Sep 30 Sep 31 Mar
2014 2013 2014
GBP000 GBP000 GBP000
--------------------------------------- ----------- ----------- ----------
Cash flows from operating activities
Profit for the year 2,198 1,263 3,728
Adjustments for:
Depreciation 2,619 2,649 5,032
Amortisation of intangible
assets 263 176 576
Finance expenses - continuing
operations 1,497 2,195 3,616
Income tax charge - continuing
operations 789 470 1,459
(Profit)/loss on sales of property,
plant and equipment (6) 6 4
Loss on external sale of intangible
fixed assets - 10 -
Equity-settled share-based
payment 173 5 82
--------------------------------------- ----------- ----------- ----------
Operating profit after adjustments
for non-cash items 7,533 6,774 14,497
Change in trade and other receivables (56,219) (46,879) 1,520
Change in inventory (17,334) (17,142) (722)
Change in trade and other payables 20,509 18,657 (48)
Change in provisions and deferred
income (930) (352) (84)
--------------------------------------- ----------- ----------- ----------
(Cash used by)/cash generated
from operations (46,441) (38,942) 15,163
Tax paid (769) (39) (60)
Interest and similar charges
paid (1,632) (1,759) (3,221)
--------------------------------------- ----------- ----------- ----------
Net cash (outflow)/inflow from
operating activities (48,842) (40,740) 11,882
Cash flow from investing activities
Proceeds from sale of property,
plant and equipment 21 33 140
Business acquired (1,451) - -
Acquisition of intangible assets (143) (105) (206)
Acquisition of property, plant
and equipment(a) (1,294) (2,147) (5,085)
Receipt of government grants - 120 1,049
--------------------------------------- ----------- ----------- ----------
Net cash outflow from investing
activities (2,867) (2,099) (4,102)
--------------------------------------- ----------- ----------- ----------
Cash flows from financing activities
Proceeds from issue of share
capital 32 142 176
Repayment of secured borrowings (4,182) (4,336) (5,646)
Net movement in credit facilities 48,179 42,642 (2,671)
Payment of finance lease liabilities (297) (125) (296)
New bank loans raised 327 3,100 5,000
New finance leases - 2 -
Loan arrangement fees (165) - (180)
Dividends paid to non-controlling
interests (829) (1,014) (1,014)
--------------------------------------- ----------- ----------- ----------
Net cash inflow/(outflow) from
financing activities 43,065 40,411 (4,631)
--------------------------------------- ----------- ----------- ----------
Net increase in cash and cash
equivalents (8,644) (2,428) 3,149
Cash and cash equivalents at
beginning of period 5,582 1,965 1,965
Effect of exchange rate fluctuations
on cash held (345) (1,281) 468
--------------------------------------- ----------- ----------- ----------
Cash and cash equivalents at
end of the period (3,407) (1,744) 5,582
--------------------------------------- ----------- ----------- ----------
(a) In the current period GBPnil of new finance leases have been
shown netted off against acquisitions of property, plant and
equipment, (2013: GBPnil, twelve months ended 31 March 2014:
GBP3,329,000).
Notes to the interim financial statements
1 Accounting policies
Basis of preparation
The financial information contained in this interim report does
not constitute statutory accounts as defined in Section 434 of the
Companies Act 2006 and is unaudited.
The Group interim report has been prepared and approved by the
Directors in accordance with International Financial Reporting
Standards as adopted by the EU ("Adopted IFRS"). The financial
information for the year ended 31 March 2014 is extracted from the
statutory accounts of the Group for that financial year and does
not constitute statutory accounts as defined in Section 434 of the
Companies Act 2006. The auditor's report was (i) unqualified; (ii)
did not include a reference to any matters to which the auditor
drew attention by way of emphasis without qualifying their report;
and (iii) did not contain a statement under Section 498 (2) of the
Companies Act 2006.
Going concern basis
The borrowing requirement of the Group increases steadily over
the period from July and peaks in October, due to the seasonality
of the business, as sales of wrap and crackers are mainly for the
Christmas market, before then reducing.
As with any company placing reliance on external entities for
financial support, the Directors acknowledge that there can be no
certainty that this support will continue although, at the date of
approval of this interim report, they have no reason to believe
that it will not do so.
After making enquiries, the Directors have a reasonable
expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future.
Thus, they continue to adopt the going concern basis of accounting
in preparing the financial statements.
The interim report does not include all the information and
disclosures required in the annual financial statements and should
be read in conjunction with the Group's annual financial statements
for the year ended 31 March 2014.
Significant accounting policies
The accounting policies adopted in the preparation of the
interim report are consistent with those followed in the
preparation of the Group's annual financial statements for the year
ended 31 March 2014.
2 Segmental information
The Group has one material business activity being the design,
manufacture and distribution of gift packaging and greetings,
stationery and creative play products.
For management purposes the Group is organised into four
geographic business units.
The results below are allocated based on the region in which the
businesses are located; this reflects the Group's management and
internal reporting structure. The decision was made during 2011 to
focus Asia as a service provider of manufacturing and procurement
operations, whose main customers are our UK businesses. Both the
China factory and the majority of the Hong Kong procurement
operations are now overseen by our UK operational management team
and we therefore continue to include Asia within the internal
reporting of the UK operations, such that UK and Asia comprise an
operating segment. The chief operating decision maker is the
Board.
Intra-segment pricing is determined on an arm's length basis.
Segment results include items directly attributable to a segment as
well as those that can be allocated on a reasonable basis.
Financial performance of each segment is measured on operating
profit. Interest expense or revenue and tax are managed on a Group
basis and not split between reportable segments.
Segment assets are all non-current and current assets, excluding
deferred tax and income tax receivable. Where cash is shown in one
segment, which nets under the Group's banking facilities, against
overdrafts in other segments, the elimination is shown in the
eliminations column. Similarly inter-segment receivables and
payables are eliminated.
UK and
Asia Europe USA Australia Eliminations Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------- -------- -------- -------- --------- ------------ ---------
Six months ended
30 September 2014
Continuing operations
Revenue - external 54,604 14,234 29,701 13,384 - 111,923
- inter segment 1,040 180 - - (1,220) -
----------------------- -------- -------- -------- --------- ------------ ---------
Total segment
revenue 55,644 14,414 29,701 13,384 (1,220) 111,923
----------------------- -------- -------- -------- --------- ------------ ---------
Segment result
before exceptional
items 3,443 922 617 594 - 5,576
Exceptional items (695) (99) - - - (794)
----------------------- -------- -------- -------- --------- ------------ ---------
Segment result 2,748 823 617 594 - 4,782
----------------------- -------- -------- -------- --------- ------------ ---------
Central administration
costs (298)
Net finance expenses (1,497)
Income tax (789)
----------------------- -------- -------- -------- --------- ------------ ---------
Profit from continuing
operations for
the six months
ended 30 September
2014 2,198
----------------------- -------- -------- -------- --------- ------------ ---------
Balances at 30
September 2014
----------------------- -------- -------- -------- --------- ------------ ---------
Continuing operations
----------------------- -------- -------- -------- --------- ------------ ---------
Segment assets 139,278 25,247 28,677 13,189 3,255 209,646
----------------------- -------- -------- -------- --------- ------------ ---------
Segment liabilities (78,980) (20,370) (40,767) (8,264) (2,761) (151,142)
----------------------- -------- -------- -------- --------- ------------ ---------
Capital expenditure
----------------------- -------- -------- -------- --------- ------------ ---------
- property, plant
and equipment 946 113 176 59 - 1,294
- intangible 83 7 25 28 - 143
Depreciation 1,812 376 334 97 - 2,619
Amortisation 144 40 38 41 - 263
----------------------- -------- -------- -------- --------- ------------ ---------
UK and
Asia Europe USA Australia Eliminations Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------- -------- -------- -------- --------- ------------ ---------
Six months ended
30 September 2013
Continuing operations
Revenue - external 57,631 13,316 28,323 14,286 - 113,556
- inter segment 1,015 290 - - (1,305) -
----------------------- -------- -------- -------- --------- ------------ ---------
Total segment revenue 58,646 13,606 28,323 14,286 (1,305) 113,556
----------------------- -------- -------- -------- --------- ------------ ---------
Segment result
before exceptional
items 3,223 679 705 1,363 - 5,970
Exceptional items (1,406) - - - - (1,406)
----------------------- -------- -------- -------- --------- ------------ ---------
Segment result 1,817 679 705 1 ,363 - 4,564
----------------------- -------- -------- -------- --------- ------------ ---------
Central administration
costs (636)
Net finance expenses (2,195)
Income tax (470)
----------------------- -------- -------- -------- --------- ------------ ---------
Profit from continuing
operations for
the six months
ended 30 September
2013 1,263
----------------------- -------- -------- -------- --------- ------------ ---------
Balances at 30
September 2013
Continuing operations
Segment assets 134,248 24,703 25,921 13,691 3,020 201,583
----------------------- -------- -------- -------- --------- ------------ ---------
Segment liabilities (75,054) (21,032) (41,555) (7,248) (1,064) (145,953)
----------------------- -------- -------- -------- --------- ------------ ---------
Capital expenditure
- property, plant
and equipment 1,470 198 392 87 - 2,147
- intangible 24 9 72 - - 105
Depreciation 1,810 394 333 112 - 2,649
Amortisation 84 27 22 43 - 176
----------------------- -------- -------- -------- --------- ------------ ---------
UK and
Asia Europe USA Australia Eliminations Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------- -------- -------- -------- --------- ------------ --------
Year ended 31 March
2014
Continuing operations
Revenue - external 110,516 34,396 53,153 26,397 - 224,462
- inter segment 1,583 292 - - (1,875) -
----------------------- -------- -------- -------- --------- ------------ --------
Total segment revenue 112,099 34,688 53,153 26,397 (1,875) 224,462
----------------------- -------- -------- -------- --------- ------------ --------
Segment result
before exceptional
items 3,533 2,556 3,026 2,107 - 11,222
Exceptional items (1,859) - - - - (1,859)
----------------------- -------- -------- -------- --------- ------------ --------
Segment result 1,674 2,556 3,026 2,107 - 9,363
----------------------- -------- -------- -------- --------- ------------ --------
Central administration
costs (560)
Net finance expenses (3,616)
Income tax (1,459)
----------------------- -------- -------- -------- --------- ------------ --------
Profit from continuing
operations year
ended 31 March
2014 3,728
----------------------- -------- -------- -------- --------- ------------ --------
Balances at 31
March 2014
Continuing operations
Segment assets 105,987 15,983 10,395 8,230 3,330 143,925
----------------------- -------- -------- -------- --------- ------------ --------
Segment liabilities (47,428) (10,390) (24,730) (2,499) (1,717) (86,764)
----------------------- -------- -------- -------- --------- ------------ --------
Capital expenditure
- property, plant
and equipment 6,923 296 952 153 - 8,324
- intangible 225 20 111 - - 356
Depreciation 3,403 750 653 226 - 5,032
Amortisation 386 59 47 84 - 576
----------------------- -------- -------- -------- --------- ------------ --------
3 Exceptional items
Six months Six months 12 months
ended ended ended
30 Sep 30 Sep 31 Mar
2014 2013 2014
GBP000 GBP000 GBP000
------------------------------- ----------- ----------- ----------
Restructuring of operational
activities
Efficiency programme in the
UK (note a) 695 1,406 1,859
Costs relating to acquisition
of Enper (note b) 99 - -
Accelerated amortisation of
loan arrangement fees (note
c) - 403 439
------------------------------- ----------- ----------- ----------
Total restructuring costs 794 1,809 2,298
Income tax credit (80) (416) (381)
------------------------------- ----------- ----------- ----------
714 1,393 1,917
------------------------------- ----------- ----------- ----------
a) Costs associated with major upgrade to manufacturing
facilities in Wales and restructuring of UK operations.
b) Costs relating to acquisition of trade and certain assets of
Enper Giftwrap BV.
c) Accelerated amortisation of bank arrangement fees as a result
of renegotiation banking facilities to fund the investment in
Wales.
4 Cash, loans and borrowings
Six months Six months 12 months
ended ended ended
30 Sep 30 Sep 31 Mar
2014 2013 2014
GBP000 GBP000 GBP000
-------------------------------------- ----------- ----------- ----------
Secured bank loan (short term) (3,083) (5,242) (4,535)
Secured bank loan (long term) (25,754) (27,321) (28,222)
Asset backed loans (47,465) (35,925) (5,336)
Revolving credit facilities (6,173) (13,272) -
Loan arrangement fees 368 299 253
-------------------------------------- ----------- ----------- ----------
Total loans (82,107) (81,461) (37,840)
Cash and bank deposits 1,005 1,275 8,111
Bank overdraft (4,412) (3,019) (2,529)
-------------------------------------- ----------- ----------- ----------
Cash and cash equivalents per
cash flow statement (3,407) (1,744) 5,582
-------------------------------------- ----------- ----------- ----------
Finance leases (4,427) (1,639) (4,689)
-------------------------------------- ----------- ----------- ----------
Net debt used in the Chief Executive
Officer's review (89,941) (84,844) (36,947)
-------------------------------------- ----------- ----------- ----------
5 Taxation
Six months Six months 12 months
ended ended ended
30 Sep 30 Sep 31 Mar
2014 2013 2014
GBP000 GBP000 GBP000
----------------------------------- ----------- ----------- ----------
Current tax expenses
Current income tax charge 250 467 1,221
Deferred tax expense
Relating to original and reversal
of temporary differences 539 3 238
----------------------------------- ----------- ----------- ----------
Total tax in income statement 789 470 1,459
----------------------------------- ----------- ----------- ----------
Taxation for the six months to 30 September 2014 is based on the
effective rate of taxation, which is estimated to apply in each
country for the year ended 31 March 2015.
6 Earnings per share
Six months ended Six months ended 12 months ended
30 Sep 2014 30 Sep 2013 31 Mar 2014
------------------- ------------------- ------------------
Diluted Basic Diluted Basic Diluted Basic
---------------------- ---------- ------- ---------- ------- -------- --------
Adjusted earnings
per share excluding
exceptional
items and LTIP
charge 4.8p 4.9p 3.9p 4.0p 8.4p 8.6p
Loss per share
on LTIP charge (0.2p) (0.2p) (0.2p) (0.2p) (0.1p) (0.1p)
---------------------- ---------- ------- ---------- ------- -------- --------
Adjusted earnings
per share excluding
exceptional
items 4.6p 4.7p 3.7p 3.8p 8.3p 8.5p
Loss per share
on exceptional
items (1.2p) (1.2p) (2.4p) (2.4p) (3.2p) (3.3p)
---------------------- ---------- ------- ---------- ------- -------- --------
Earnings per
share 3.4p 3.5p 1.3p 1.4p 5.1p 5.2p
---------------------- ---------- ------- ---------- ------- -------- --------
The basic earnings per share is based on the profit attributable
to equity holders of the Parent Company of GBP2,005,000 (2013:
GBP792,000) and the weighted average number of ordinary shares in
issue of 57,949,000 (2013: 57,215,000) calculated as follows:
As at As at As at
Weighted average number of shares 30 Sep 30 Sep 31 Mar
in thousands of shares 2014 2013 2014
---------------------------------------- ------- ------- -------
Issued ordinary shares at 1 April 57,926 56,768 56,768
Shares issued in respect of exercising
of share options 23 447 751
---------------------------------------- ------- ------- -------
Weighted average number of shares
at end of the period 57,949 57,215 57,519
---------------------------------------- ------- ------- -------
Total number of options, over 5p ordinary shares, in issue at 30
September 2014 was 1,639,285.
Adjusted basic earnings per share excludes exceptional items
charged of GBP794,000 (2013: GBP1,809,000) along with the tax
relief attributable to those items of GBP80,000 (2013: GBP416,000).
This gives an adjusted profit of GBP2,719,000 (2013:
GBP2,185,000).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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