TIDMIGR
RNS Number : 6369H
International Greetings PLC
02 December 2015
2 December 2015
International Greetings PLC
("International Greetings" or the "Group")
Interim Results
International Greetings PLC, 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 2015.
Financial Highlights
-- Sales at GBP120 million in line with expectations, 7% up on
the prior period (2014 H1: GBP112 million)
-- Gross profit margins at 18.2% (2014 H1: 18.0%) in line with
expectations, reflecting H1 regional sales mix
-- Adjusted profit before tax(a) up by 32% to GBP5.2 million (2014 H1: GBP4.0 million)
-- Key objective to grow adjusted fully diluted earnings per
share(b) fully on track - up 33.3% on prior
year to 6.4p (2014 H1: 4.8p)
-- Net debt at 30 September 2015 reduced by 13% to GBP78.0 million (2014 H1: GBP89.9 million)
-- Interim dividend of 0.75p per share (2015 H1: nil) to be paid on Tuesday 19 January, 2016
Operational highlights
-- Record volumes produced in our China manufacturing facility
-- Further gift wrap production efficiencies yielded in Europe
and UK following investment, with new gift wrap conversion
facilities on schedule to be operational in the US in early
2016
-- Excellent response to new licensed products, including those
launched under the 'Star Wars', 'Minions'
and 'Coca-Cola' brands
-- Order book for FY15/16 in line with Board expectations and already building for FY16/17
Paul Fineman, Chief Executive said:
"We are pleased to report that all regions have again traded
profitably during the period. In particular we have experienced
continued improvement in performance in the key US market, whilst
all other regions are also trading fully in line with
expectations.
"Our focus on innovative and highly commercial design, customer
service and fast payback investment, continues to deliver both
margin improvement and profit growth. We are on course to achieve
targeted growth in underlying earnings per share and remain firmly
focused on further reducing leverage, by ensuring profit is
efficiently converted into cash."
(a) Adjusted profit before tax is stated before exceptional
items and Long Term Incentive Plan (LTIP) charges
(b) Adjusted fully diluted earnings per share is stated before
exceptional items and LTIP charges
For further information, please contact:
International Greetings Tel: 01525 887310
plc
Paul Fineman, Chief Executive
Anthony Lawrinson, Chief
Financial Officer
Cenkos Securities plc Tel: 0207 397
Bobbie Hilliam 8900
Harry Pardoe
FTI Consulting Tel: 020 37270
Jonathon Brill 1000
Tom Hufton
International Greetings PLC
Interim report 2015
Welcome to International Greetings
We are one of the world's leading designers, manufacturers,
importers and distributors of gift packaging and greetings, social
expression giftware, stationery and creative play products.
Our mission
To succeed by design in all that we do. To drive profitable
growth through exceptional customer service, industry leading
innovation and great value.
Highlights
-- Record levels of gift bags, greeting cards and over 70
million crackers produced in our factory based in China
-- Excellent response to new licensed products, including those
launched under the 'Star Wars', 'Minions' and 'Coca Cola'
brands
-- Further gift wrap production efficiencies yielded in Europe
and UK following investment, with new gift wrap conversion
facilities on schedule to be operational in the US in early
2016
-- Order book for FY2015/16 in line with expectations and already building for FY2016/17
-- Record sales revenue resulting in all regions trading profitably
-- Net debt GBP12 million lower than the same time last year
-- Key goal to grow adjusted fully diluted earnings per share(a)
fully on track - up 33.3% on prior year to 6.4p (2014 H1: 4.8p)
-- The Board is pleased to declare an interim dividend of 0.75p per share
(a) Adjusted fully diluted earnings per share is stated before
exceptional items and Long Term Incentive Plan (LTIP) charged
Where we operate
With over 5,000 customers selling our products in over 100,000
stores across 80 countries we enjoy a considerable market
presence.
Chairman's statement
"We commit to excellence in all that we do, in order to be the
partner of choice, whether this be to our customer, supplier,
associates or advisers."
John Charlton
Chairman
We have been successful in achieving the three key financial
objectives that we set ourselves, namely profit before tax,
earnings per share growth and a reduction in our borrowings.
We are pleased to report a most satisfactory performance for our
Group in the six months ending 30 September 2015. As you will see
upon reading the operational and financial review from Paul Fineman
- our Group CEO; we have been successful in achieving the three key
financial objectives that we set ourselves, namely profit before
tax, earnings per share growth and a reduction in our borrowings.
We continue to operate in an ever changing retail market;
accordingly our focus is to be able to react swiftly to any
volatility in demand, whilst at the same time taking advantage of
opportunities for profitable growth and development. To this end,
our Group is now in a much stronger position to grow by both
organic and acquisition strategies.
In closing this introduction to our interim report, may I as
always take this opportunity to place on record our thanks to all
our associates throughout the Group. It is through their efforts,
enthusiasm and commitment that we continue to make the progress
that we are and deliver a pleasing set of results at the half year
stage.
John Charlton
Chairman
Chief Executive Officer's review
"Design is at the heart of what we do"
Paul Fineman
CEO
Key achievements
-- Key goal to grow adjusted fully diluted earnings per share(a)
on track - up 33.3% on prior year to 6.4p (2014 H1: 4.8p)
-- Adjusted profit(b) up by 32% to GBP5.2 million (2014 H1: GBP4.0 million)
-- Sales in line with expectations up 7% on the prior year period
-- Further gift wrap production efficiencies yielded in Europe and UK following investment
-- USA commercial and operational objectives successfully
managed under the direction of new CEO of International Greetings
USA.
-- Excellent Christmas cracker manufacturing season in China
successfully completed with record levels of gift bags and greeting
cards being produced.
a) Adjusted fully diluted EPS is stated before exceptional items and LTIP charges.
b) Adjusted profit before tax is stated before exceptional items and LTIP charges.
Overview
A pleasing six month period including the successful fulfilment
of commercial and operational objectives, resulting in Group sales
and profit for the six months ended 30 September 2015 being in line
with expectations. Both of our key targets of adjusted profit
before tax(a) and adjusted fully diluted earnings per share(b) are
significantly up on the prior period. We are also pleased to report
that net debt at the end of the period was significantly
reduced.
Operational review
We are pleased to report that all regions have again traded
profitably during the period.
In particular we have experienced continued improvement in
performance in the key US market, whilst all other regions are also
trading fully in line with expectations.
-- In Europe, manufacturing efficiencies together with product
and customer channel mix have enabled us to combat
the effect of a weaker Euro to US Dollar exchange rate impacting
margins on imported products.
-- In the UK, sales growth has been underpinned by a strong
portfolio of licensed brands including the 'Star Wars',
'Minions' and 'Coca-Cola' franchises. We are also on track to
deliver the expected annual efficiencies resulting from
investment in our manufacturing facilities in Wales.
-- Once again the performance of our China-based Christmas
cracker manufacturing operation has exceeded targeted
efficiencies and we have produced on time and delivered in
excess of 70 million crackers in the 2015 season.
We have continued to carefully invest effectively in
semi-automation in our facility in China to mitigate the
challenges
associated with availability and cost of labour and to diversify
the range of manufactured product. We will produce
record levels of gift bags and greeting cards during the
year.
-- US profit performance was most encouraging on improved sales
and the prospects in that market remain strong.
The business is benefiting from a period of stability,
re-invigoration and operational efficiency under the direction
of
Gideon Schlessinger who commenced his role as CEO of
International Greetings USA in April.
-- Our joint venture business in Australia continues to deliver
sales growth and is on track to meet profit expectations.
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.
Design remains at the heart of everything we do. Our ability to
leverage our huge design portfolio across our global markets is
being further enhanced with the launch of a new generation 'Digital
Asset Management' facility that provides a 'user friendly', live
and accessible 'archive' of our intellectual property throughout
our Group.
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Our flexible approach provides our global customer base with a
compelling 'good, better, best' offering to suit their consumers'
requirements and has resulted in our products being offered for
sale in over 100,000 retail outlets in more than 80 countries
worldwide.
Financial review
While to some degree this will prove to be timing, revenue has
pleasingly risen by 7% to GBP119.8 million (2014 H1: GBP111.9
million) and at like-for-like exchange rates this improvement would
be stronger still. This reflects good performance in all our
markets. Half year timing is different to the prior year with
earlier phasing of deliveries to customers.
Gross profit margins before exceptional items at 18.2% (2014 H1:
18.0%) were slightly improved, with underlying strong improvement
in the USA offset by lower gross margins in the UK although this
latter element simply reflects sales mix at the half year.
Underlying efficiency improvements are materialising 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 higher in absolute terms at GBP16.0 million
(2014 H1: GBP15.3 million) but actually slightly lower as a
percentage of sales. The increases arose in the US marketplace
reflecting (inter alia) our substantial investment in a new
leadership team and funding of profitable growth opportunities.
Operating profit before exceptional costs and LTIP charges
improved strongly by 19% to GBP6.5 million (2014 H1: GBP5.5
million) while profit before tax, exceptional items and LTIP
charges was up 32% to GBP5.2 million from GBP4.0 million in the
equivalent period last year. Like sales, this increase partly
reflects advantageous phasing but the Group's performance to date
and outlook for the full year is nonetheless firmly in line with
management expectations. LTIP charges rose slightly from GBP0.2
million to GBP0.3 million.
There were no exceptional charges during the period (2014 H1:
GBP0.8 million in respect of our new investment in Wales and the
acquisition of the trade and assets of Enper in the Netherlands).
After allowing for such costs in the prior period, profit before
tax and after exceptional items and LTIP charges was GBP4.9
million, up 65% on the prior year (2014 H1: GBP3.0 million).
Finance expenses in the period were again substantially lower on
the prior year period at GBP1.3 million (2014 H1: GBP1.5 million)
reflecting the continued effect of improved borrowing costs,
efficient use of lower cost asset based lending ("ABL") working
capital facilities and lower average indebtedness.
The effective underlying tax rate was 23% (2014 H1: 23%). This
rate does not yet reflect the expected 18% rate of tax in the UK as
the relevant Finance Bill is not yet law, but does take into
account our ongoing ability to recognise further tax losses in the
USA as profitable growth continues. There are still unrecognised
losses with a tax value of $2.3 million in the USA and GBP0.3
million in the UK which can be reflected in the balance sheet as
profitability progresses. Cash tax is increasingly payable in most
of our geographic regions of operation as historical losses are
fully utilised.
Stated before exceptional items and LTIP charges, basic earnings
per share were in line with expectations and much improved at 6.5p
(2014 H1: 4.9p), and 6.2p (2014 H1: 3.5p) after exceptional items
and LTIP charges. Our primary measure of performance is adjusted
fully diluted earnings per share (stated before exceptional items
and LTIP charges) and this was up 33% to 6.4p (2014 H1: 4.8p). See
note 6 to the interim financial statements.
Capital expenditure in the six months was GBP1.7 million (2014
H1: GBP1.4 million), slightly higher than the prior period in which
capital expenditure was particularly low following our previous
investments in the Netherlands and Wales. The current period also
reflected the initial costs of the investment in an improved
converting capability in the US operation as well as further
investment in efficiency in Europe and China. Note also that the
site at Aberbargoed in Wales, previously used for printing, has now
been reclassified to "Assets held for sale" following full
relocation of printing to the Penallta site.
Cash used by operations was GBP44.6 million, pleasingly lower
than the prior period (2014 H1: GBP46.4 million) reflecting
improved profitability, the absence of exceptional items and our
incessant focus on working capital, though 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 dynamics in cash used by operations at the end of the period
compared to the prior period show a much higher balance in trade
receivables at GBP86.1 million (2014 H1: GBP76.0 million)
reflecting the earlier sales profile although this is largely
offset by increased balances in trade and other payables at GBP55.3
million (2014 H1: GBP45.7 million). Stock levels were largely
unchanged compared to the prior year at this point in the cycle.
All of these dynamics simply reflect the highly variable phasing of
deliveries to customer requirements from year to year.
Cash flows associated with interest, tax and dividends in
aggregate were largely stable from period to period, though of
course the dividend of GBP0.8 million in the prior period was the
outflow to our joint venture partner in Australia while the
dividend of GBP0.6 million in the current period represents payment
in September 2015 of the final dividend declared in respect of the
year ended 31 March 2015.
Pleasingly, net debt at 30 September 2015 was substantially
lower at GBP78.0 million (2014 H1: GBP89.9 million). Building on
our achievement at 31 March 2015 of leverage (net debt relative to
EBITDA) below two times, our focus on reduction of average and
year-end debt and the associated interest cost has not wavered. Our
new promise to further reduce average leverage in the current and
subsequent years is on track.
Dividend
Following our return to the dividend list, a final dividend for
the year ended 31 March 2015 of 1p per share was paid in September
2015 and the Board is pleased to declare an interim dividend of
0.75p per share (2014 H1: nil) in line with our intention to
steadily increase total dividends whilst still preserving
sufficient cash to reduce leverage and fund growth. This will be
paid on Tuesday 19 January 2016 to shareholders on the register on
Friday 11 December 2015.
Current trading outlook
Overall trading activities are in line with expectations with a
strong order book in place for the balance of FY2015/16 and already
beginning to build for FY2016/17.
Our focus on excellent and highly commercial design, customer
service and innovation, continues 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, whilst continuing to identify
and implement fast pay-back investments and delivering ever
improving shareholder returns.
Paul Fineman
Chief Executive Officer
Consolidated income statement
six months ended 30 September 2015
Unaudited six months 12 months
ended 30 Sep 2014 ended 31 Mar 2015
------------------------------------- --------------------------------------
Unaudited
six months
ended Before Exceptional Before Exceptional
30 Sep exceptional items exceptional items
2015 items (note 3) Total items (note 3) Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------- ----------- ------------ ------------ --------- ------------ ------------ ----------
Revenue 119,818 111,923 - 111,923 229,025 - 229,025
Cost of sales (97,952) (91,734) (767) (92,501) (189,048) (592) (189,640)
-------------------------- ----------- ------------ ------------ --------- ------------ ------------ ----------
Gross profit 21,866 20,189 (767) 19,422 39,977 (592) 39,385
18.2% 18.0% 17.4% 17.5% 17.2%
Selling expenses (6,068) (5,740) - (5,740) (11,063) - (11,063)
Administration expenses (9,944) (9,524) (99) (9,623) (18,395) (716) (19,111)
Other operating income 349 353 72 425 745 73 818
-------------------------- ----------- ------------ ------------ --------- ------------ ------------ ----------
Operating profit/(loss) 6,203 5,278 (794) 4,484 11,264 (1,235) 10,029
Finance expenses (1,276) (1,497) - (1,497) (2,726) - (2,726)
-------------------------- ----------- ------------ ------------ --------- ------------ ------------ ----------
Profit/(loss) before tax 4,927 3,781 (794) 2,987 8,538 (1,235) 7,303
Income tax
(charge)/credit (1,133) (869) 80 (789) (1,708) 362 (1,346)
-------------------------- ----------- ------------ ------------ --------- ------------ ------------ ----------
Profit/(loss) from
continuing operations
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for the period 3,794 2,912 (714) 2,198 6,830 (873) 5,957
-------------------------- ----------- ------------ ------------ --------- ------------ ------------ ----------
Attributable to:
Owners of the Parent
Company 3,643 2,005 5,605
Non-controlling interests 151 193 352
-------------------------- ----------- ------------ ------------ --------- ------------ ------------ ----------
Earnings per ordinary share
Unaudited six months Unaudited six months 12 months
ended 30 Sep 2015 ended 30 Sep 2014 ended 31 Mar 2015
----------------------- ----------------------- --------------------
Diluted Basic Diluted Basic Diluted Basic
---------------------------------------------- ------------ --------- ------------ --------- ---------- --------
Adjusted earnings per share excluding
exceptional items and LTIP charges 6.4p 6.5p 4.8p 4.9p 11.5p 12.0p
Cost per share on LTIP charges (0.4p) (0.3p) (0.2p) (0.2p) (0.8p) (0.8p)
---------------------------------------------- ------------ --------- ------------ --------- ---------- --------
Adjusted earnings per share excluding
exceptional items 6.0p 6.2p 4.6p 4.7p 10.7p 11.2p
Cost per share on exceptional items - - (1.2p) (1.2p) (1.4p) (1.5p)
---------------------------------------------- ------------ --------- ------------ --------- ---------- --------
Earnings per share 6.0p 6.2p 3.4p 3.5p 9.3p 9.7p
---------------------------------------------- ------------ --------- ------------ --------- ---------- --------
Consolidated statement of comprehensive income
six months ended 30 September 2015
Unaudited Unaudited
six months six months 12 months
ended ended ended
30 Sep 30 Sep 31 Mar
2015 2014 2015
GBP000 GBP000 GBP000
-------------------------------------------------------------------------- ----------- ----------- ----------
Profit for the period 3,794 2,198 5,957
Other comprehensive income:
Exchange difference on translation of foreign operations (687) (707) (1,405)
Transfer to profit and loss on maturing cash flow hedges (net of tax) (572) (101) 577
Net loss on cash flow hedges (net of tax) (1) 577 572
Other comprehensive income for period, net of tax,
items which may be reclassified to profit and loss in subsequent periods (1,260) (231) (256)
Total comprehensive income for the period, net of tax 2,534 1,967 5,701
Attributable to:
Owners of the Parent Company 2,541 1,877 5,601
Non-controlling interests (7) 90 100
-------------------------------------------------------------------------- ----------- ----------- ----------
2,534 1,967 5,701
-------------------------------------------------------------------------- ----------- ----------- ----------
Consolidated statement of changes in equity
six months ended 30 September 2015
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 31 March
2015 2,910 4,801 17,164 572 (1,825) 36,042 59,664 2,920 62,584
Profit for the
period - - - - - 3,643 3,643 151 3,794
Other
comprehensive
income - - - (573) (529) - (1,102) (158) (1,260)
---------------- -------- ----------- --------- --------- ------------ --------- ------------ ------------ --------
Total
comprehensive
income for the
period - - - (573) (529) 3,643 2,541 (7) 2,534
Equity-settled
share-based
payment - - - - - 165 165 - 165
Options
exercised 33 4 - - - (30) 7 - 7
Equity
dividends paid - - - - - (588) (588) - (588)
---------------- -------- ----------- --------- --------- ------------ --------- ------------ ------------ --------
At 30 September
2015 2,943 4,805 17,164 (1) (2,354) 39,232 61,789 2,913 64,702
---------------- -------- ----------- --------- --------- ------------ --------- ------------ ------------ --------
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
---------------- -------- ----------- --------- --------- ------------ --------- ------------ ------------ -------
year ended 31 March 2015
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
year - - - - - 5,605 5,605 352 5,957
Other
comprehensive
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income - - - 1,149 (1,153) - (4) (252) (256)
---------------- -------- ----------- --------- --------- ------------ --------- ------------ ------------ --------
Total
comprehensive
income for the
year - - - 1,149 (1,513) 5,605 5,601 (100) 5,701
Equity-settled
share-based
payment - - - - - 512 512 - 512
Options
exercised 14 25 - - - - 39 - 39
Equity
dividends paid - - - - - - - (829) (829)
---------------- -------- ----------- --------- --------- ------------ --------- ------------ ------------ --------
At 31 March
2015 2,910 4,801 17,164 572 (1,825) 36,042 59,664 2,920 62,584
---------------- -------- ----------- --------- --------- ------------ --------- ------------ ------------ --------
Consolidated balance sheet
as at 30 September 2015
Unaudited Unaudited
as at as at As at
30 Sep 30 Sep 31 March
2015 2014 2015
Note GBP000 GBP000 GBP000
----------------------------------------------------- ----- ---------- ---------- ---------
Non-current assets
Property, plant and equipment 28,093 30,891 29,875
Intangible assets 31,634 32,140 31,692
Deferred tax assets 3,342 3,255 4,121
----------------------------------------------------- ----- ---------- ---------- ---------
Total non-current assets 63,069 66,286 65,688
----------------------------------------------------- ----- ---------- ---------- ---------
Current assets
Inventory 66,129 66,362 46,162
Assets held for sale - land and buildings 1,250 - -
Trade and other receivables 86,131 75,993 21,525
Derivative financial assets 166 - 799
Cash and cash equivalents 4 1,327 1,005 2,846
----------------------------------------------------- ----- ---------- ---------- ---------
Total current assets 155,003 143,360 71,312
----------------------------------------------------- ----- ---------- ---------- ---------
Total assets 218,072 209,646 137,000
----------------------------------------------------- ----- ---------- ---------- ---------
Equity
Share capital 2,943 2,908 2,910
Share premium 3,465 3,456 3,461
Reserves 16,149 17,127 17,251
Retained earnings 39,232 32,103 36,042
----------------------------------------------------- ----- ---------- ---------- ---------
Equity attributable to owners of the Parent Company 61,789 55,594 59,664
----------------------------------------------------- ----- ---------- ---------- ---------
Non-controlling interests 2,913 2,910 2,920
----------------------------------------------------- ----- ---------- ---------- ---------
Total equity 64,702 58,504 62,584
----------------------------------------------------- ----- ---------- ---------- ---------
Non-current liabilities
Loans and borrowings 4 20,395 25,496 23,089
Deferred income 1,013 1,226 1,277
Provisions 862 906 862
Other financial liabilities 3,133 3,873 3,466
----------------------------------------------------- ----- ---------- ---------- ---------
Total non-current liabilities 25,403 31,501 28,694
----------------------------------------------------- ----- ---------- ---------- ---------
Current liabilities
Bank overdraft 4 2,871 4,412 1,568
Loans and borrowings 4 52,370 56,611 3,546
Deferred income 626 674 632
Provisions 108 114 106
Income tax payable 1,706 1,499 2,192
Trade and other payables 55,287 45,677 26,868
Other financial liabilities 14,999 10,654 10,810
----------------------------------------------------- ----- ---------- ---------- ---------
Total current liabilities 127,967 119,641 45,722
----------------------------------------------------- ----- ---------- ---------- ---------
Total liabilities 153,370 151,142 74,416
----------------------------------------------------- ----- ---------- ---------- ---------
Total equity and liabilities 218,072 209,646 137,000
----------------------------------------------------- ----- ---------- ---------- ---------
Consolidated cash flow statement
six months ended 30 September 2015
Unaudited Unaudited
six months six months 12 months
ended ended ended
30 Sep 30 Sep 31 Mar
2015 2014 2015
GBP000 GBP000 GBP000
--------------------------------------------------------- ----------- ----------- ----------
Cash flows from operating activities
Profit for the year 3,794 2,198 5,957
Adjustments for:
Depreciation 1,869 2,619 4,535
Amortisation of intangible assets 201 263 428
Finance expenses 1,276 1,497 2,726
Income tax charge 1,133 789 1,346
(Profit)/loss on sales of property, plant and equipment (62) (6) 206
Loss on external sale of intangible fixed assets - - 10
Equity-settled share-based payment 300 173 623
--------------------------------------------------------- ----------- ----------- ----------
Operating profit after adjustments for non-cash items 8,511 7,533 15,831
Change in trade and other receivables (64,612) (56,219) (1,269)
Change in inventory (20,698) (17,334) 3,223
Change in trade and other payables 32,548 20,509 1,409
Change in provisions and deferred income (305) (930) (1,343)
--------------------------------------------------------- ----------- ----------- ----------
(Cash used by)/cash generated from operations (44,556) (46,441) 17,851
Tax paid (838) (769) (1,263)
Interest and similar charges paid (1,219) (1,632) (2,775)
--------------------------------------------------------- ----------- ----------- ----------
Net cash (outflow)/inflow from operating activities (46,613) (48,842) 13,813
--------------------------------------------------------- ----------- ----------- ----------
Cash flow from investing activities
Proceeds from sale of property, plant and equipment 104 21 55
Business acquired - (1,451) (1,451)
Acquisition of intangible assets (193) (143) (234)
Acquisition of property, plant and equipment (1,539) (1,294) (2,322)
Receipt of government grants - - 401
--------------------------------------------------------- ----------- ----------- ----------
Net cash outflow from investing activities (1,628) (2,867) (3,551)
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--------------------------------------------------------- ----------- ----------- ----------
Cash flows from financing activities
Proceeds from issue of share capital 7 32 39
Repayment of secured borrowings (640) (4,182) (7,133)
Net movement in credit facilities 46,715 48,179 (4,840)
Payment of finance lease liabilities (301) (297) (599)
New bank loans raised 285 327 365
Loan arrangement fees - (165) (183)
Equity dividend paid (588) - -
Dividends paid to non-controlling interests - (829) (829)
----------------------------------------------------- -------- -------- ---------
Net cash inflow/(outflow) from financing activities 45,478 43,065 (13,180)
----------------------------------------------------- -------- -------- ---------
Net increase in cash and cash equivalents (2,763) (8,644) (2,918)
Cash and cash equivalents at beginning of period 1,278 5,582 5,582
Effect of exchange rate fluctuations on cash held (59) (345) (1,386)
----------------------------------------------------- -------- -------- ---------
Cash and cash equivalents at end of the period (1,544) (3,407) 1,278
----------------------------------------------------- -------- -------- ---------
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 2015 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.
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 2015.
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.
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 2015.
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 income or expense 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 2015
Revenue - external 57,151 12,901 35,803 13,963 - 119,818
- inter segment 1,381 - - - (1,381) -
------------------------------------------ ------------ ---------- --------- ---------- ------------- ----------
Total segment revenue 58,532 12,901 35,803 13,963 (1,381) 119,818
------------------------------------------ ------------ ---------- --------- ---------- ------------- ----------
Segment result before exceptional items 3,558 835 1,796 509 - 6,698
Exceptional items - - - - - -
------------------------------------------ ------------ ---------- --------- ---------- ------------- ----------
Segment result 3,558 835 1,796 509 - 6,698
------------------------------------------ ------------ ---------- --------- ---------- ------------- ----------
Central administration costs (495)
Net finance expenses (1,276)
Income tax (1,133)
------------------------------------------ ------------ ---------- --------- ---------- ------------- ----------
Profit for the six months ended 30
September 2015 3,794
------------------------------------------ ------------ ---------- --------- ---------- ------------- ----------
Balances at 30 September 2015
Segment assets 141,597 24,388 35,441 13,304 3,342 218,072
------------------------------------------ ------------ ---------- --------- ---------- ------------- ----------
Segment liabilities (77,767) (19,340) (44,382) (8,721) (3,160) (153,370)
------------------------------------------ ------------ ---------- --------- ---------- ------------- ----------
Capital expenditure
- property, plant and equipment 653 261 396 229 - 1,539
- intangible 162 - 31 - - 193
Depreciation 1,091 332 362 84 - 1,869
Amortisation 133 20 29 19 - 201
------------------------------------------ ------------ ---------- --------- ---------- ------------- ----------
UK and Asia Europe USA Australia Eliminations Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------------------- ------------ ---------- ---------- ---------- ------------- ----------
Six months ended 30 September 2014
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)
(MORE TO FOLLOW) Dow Jones Newswires
December 02, 2015 02:00 ET (07:00 GMT)
----------------------------------------- ------------ ---------- ---------- ---------- ------------- ----------
Segment result 2,748 823 617 594 - 4,782
----------------------------------------- ------------ ---------- ---------- ---------- ------------- ----------
Central administration costs (298)
Net finance expenses (1,497)
Income tax (789)
----------------------------------------- ------------ ---------- ---------- ---------- ------------- ----------
Profit for the six months ended 30
September 2014 2,198
----------------------------------------- ------------ ---------- ---------- ---------- ------------- ----------
Balances at 30 September 2014
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
----------------------------------------- ------------ ---------- ---------- ---------- ------------- ----------
Year ended 31 March 2015
Revenue - external 108,255 35,871 57,921 26,978 - 229,025
- inter segment 1,572 180 - - (1,752) -
----------------------------------------- ------------ ---------- ---------- ---------- ------------- ----------
Total segment revenue 109,827 36,051 57,921 26,978 (1,752) 229,025
----------------------------------------- ------------ ---------- ---------- ---------- ------------- ----------
Segment result before exceptional items 5,258 3,263 2,409 1,092 - 12,022
Exceptional items (786) (99) (350) - - (1,235)
----------------------------------------- ------------ ---------- ---------- ---------- ------------- ----------
Segment result 4,472 3,164 2,059 1,092 - 10,787
----------------------------------------- ------------ ---------- ---------- ---------- ------------- ----------
Central administration costs (758)
Net finance expenses (2,726)
Income tax (1,346)
----------------------------------------- ------------ ---------- ---------- ---------- ------------- ----------
Profit for the year ended 31 March 2015 5,957
----------------------------------------- ------------ ---------- ---------- ---------- ------------- ----------
Balances at 31 March 2015
Segment assets 101,139 15,692 8,242 7,806 4,121 137,000
----------------------------------------- ------------ ---------- ---------- ---------- ------------- ----------
Segment liabilities (36,695) (9,957) (21,725) (3,721) (2,318) (74,416)
----------------------------------------- ------------ ---------- ---------- ---------- ------------- ----------
Capital expenditure
- property, plant and equipment 1,562 355 325 80 - 2,322
- intangible 157 12 25 40 - 234
Depreciation 2,862 731 714 228 - 4,535
Amortisation 282 41 64 41 - 428
----------------------------------------- ------------ ---------- ---------- ---------- ------------- ----------
3 Exceptional items
Six months Six months 12 months
ended ended ended
30 Sep 30 Sep 31 Mar
2015 2014 2015
GBP000 GBP000 GBP000
----------------------------------------------------- ------------ ----------- ----------
Restructuring of operational activities
Efficiency programme in the UK and Asia(a) - 695 786
Management restructuring in the USA(b) - - 350
Costs relating to acquisitions Enper Giftwrap BV(c) - 99 99
----------------------------------------------------- ------------ ----------- ----------
Total restructuring costs - 794 1,235
Income tax credit - (80) (362)
----------------------------------------------------- ------------ ----------- ----------
- 714 873
------------------------------------------------------------------ ----------- ----------
a) Costs associated with major upgrade to manufacturing facilities in Wales.
b) Costs associated with restructuring the leadership team in the USA.
c) Costs relating to acquisition of trade and certain assets of Enper Giftwrap BV.
4 Cash, loans and borrowings
Six months Six months 12 months
ended ended ended
30 Sep 30 Sep 31 Mar
2015 2014 2015
GBP000 GBP000 GBP000
------------------------------------------------------- ----------- ----------- ----------
Secured bank loan (short term) (5,429) (3,083) (3,166)
Secured bank loan (long term) (20,553) (25,754) (23,259)
Asset backed loans (42,585) (47,465) (544)
Revolving credit facilities (4,471) (6,173) -
Loan arrangement fees 273 368 334
------------------------------------------------------- ----------- ----------- ----------
Total loans (72,765) (82,107) (26,635)
Cash and bank deposits 1,327 1,005 2,846
Bank overdraft (2,871) (4,412) (1,568)
------------------------------------------------------- ----------- ----------- ----------
Cash and cash equivalents per cash flow statement (1,544) (3,407) 1,278
------------------------------------------------------- ----------- ----------- ----------
Finance leases (3,733) (4,427) (4,016)
------------------------------------------------------- ----------- ----------- ----------
Net debt used in the Chief Executive Officer's review (78,042) (89,941) (29,373)
------------------------------------------------------- ----------- ----------- ----------
5 Taxation
Six months Six months 12 months
ended ended ended
30 Sep 30 Sep 31 Mar
2015 2014 2015
GBP000 GBP000 GBP000
------------------------------------------------------------ ----------- ----------- ----------
Current tax expenses
Current income tax charge 481 250 1,478
Deferred tax expense
Relating to original and reversal of temporary differences 652 539 (132)
------------------------------------------------------------ ----------- ----------- ----------
(MORE TO FOLLOW) Dow Jones Newswires
December 02, 2015 02:00 ET (07:00 GMT)
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