RNS Number:7619N
International Greetings PLC
13 December 2006
13 December 2006
INTERNATIONAL GREETINGS PLC
("International Greetings" or "the Group")
International growth continues to strengthen performance
International Greetings PLC (AIM:IGR), the global designer and manufacturer of
greetings products, film and television character based licensed stationery,
books and gifts, today announces interim results for the six months ended 30
September 2006.
Financial highlights:
* Turnover for the period was #85.1m (2005: #83.8m)
* Operating profit of #6.2m (2005: #6.5m**)
* Interest payable during the period increased to #1m (2005: #0.7m)
* Profit before tax of #5.2m (2005: #5.8m**)
* Adjusted *profit before tax amounted to #6.2m (2005: #6.5m**)
* Basic earnings per share for the period were 8.2p (2005: 9.3p**)
* Adjusted *earnings per share were 10.1p (2005: 10.6p**)
* Interim dividend increased 12.5% to 2.25p per share reflecting the
Board's continued confidence in the Group.
Operational highlights:
* Acquisitions of Alligator Books and the remaining 50% shareholding in
the Group's Dutch joint venture, Anchor International, performing well and
providing strong potential for future growth
* Continued growth in European sales underlined by 20% increase at
Hoomark
* Focus on developing business in the mass market retail sector in
Europe following the integration of Anchor International
* Full season of manufacturing in China with all orders on time and
within budget
* New distribution channel planned for the US, offering a complete range
of greetings and stationery products to mid-size retail groups
* Licensed range of Christmas products launched for the recently
released Warner Bros film "Happy Feet"
* Licences signed for "The Simpsons Movie", "Spider-Man 3", "Shrek 3"
and "Pirates of the Caribbean 3".
Commenting on the results, Nick Fisher, Joint Chief Executive, said: "Whilst we
operate in the highly competitive UK retail sector and are not immune to its
challenges, we have completed the majority of this season's deliveries to our
customers. Internationally, we have achieved our targets both in terms of
increased sales and new market opportunities in Europe and the US, and believe
we have put in place a strong foundation for future growth.
"As the only listed company in our sector in Europe, we have reinforced our
position as an industry consolidator and we continue to identify suitable
acquisitions in all our geographic areas of operation. This is an important part
of our future growth strategy."
For further information:
Nick Fisher, Joint Chief Executive, International Greetings: 01707 630 630
Richard Sunderland/Rachel Drysdale, Tavistock Communications: 020 7920 3150
* figure excludes amortisation of goodwill of #669,000 (6 months to 30 September
2005: #520,000, 12 months to 31 March 2006: #1,031,000), exceptional item of
#304,000 (6 months to 30 September 2005: #121,000, 12 months to 31 March 2006:
#3,310,000) and profit on disposal of fixed assets of #nil (6 months to 30
September 2005: #nil, 12 months to 31 March 2006: #1,838,000).
** figure restated following adoption of FRS20 (Share based payments)
CHAIRMAN'S STATEMENT 2006
I am pleased to announce the interim results for the six months to 30 September
2006, this being the first results announcement since I became Chairman
following this year's AGM. During the period we have seen a number of exciting
developments within the Group, particularly on an international level. We have
seen impressive sales growth in Europe, bedded down two acquisitions, developed
further our US strategy and completed the first full season of production at our
factory in China.
As we have indicated in previous years, the seasonality of the Group's business
means that the first six month figures are not a reliable indicator of the full
year figures, as turnover during the months of September and October, which
straddle the half-year end, accounts for just over a third of the Group's entire
annual turnover. As a result, the interim results are extremely sensitive to the
specific timing of deliveries to our customers.
Turnover for the period was #85.1m (2005: #83.8m), with operating profit of
#6.2m (2005: #6.5m**). Net interest payable during the period increased to #1.0m
from #0.7m last year, resulting in profit before tax of #5.2m (2005: #5.8m**).
Adjusted *profit before tax amounted to #6.2m (2005: #6.5m**). Basic earnings
per share for the period were 8.2p (2005: 9.3p**), whilst adjusted *earnings per
share were 10.1p (2005: 10.6p**)
The above figures include turnover of #4.8m and profit before tax of #0.5m
attributable to the acquisitions of Alligator Books and the remaining 50%
shareholding not previously owned in the Group's Dutch joint venture, Anchor
International, which were acquired in April and July respectively this year.
Both of these acquisitions have performed well and met our expectations with
regard to turnover and profit during the period. The integration of both
businesses into our existing operational structure has proceeded smoothly and
the potential for future growth opportunities is excellent.
European sales continue to grow impressively, with a 20% like-for-like increase
in turnover of our Hoomark division. We are concentrating on developing our
European business in the mass market retail sector, where we see considerable
scope for future growth. The integration of Anchor International has enabled us
to create a European stationery and gift division, which will play an important
part in our plans for further expansion in Europe.
I am pleased to report that all orders in our new factory in China were
completed on time and within budget and we continue to look for opportunities to
further expand production in this facility.
In the US, in addition to supplying the mass market and independent retail
sectors, we are planning to develop a new distribution channel, replicating the
Anker business model in the UK which will offer a complete range of greetings
and stationery products to mid-size retail groups.
Design and licensed merchandise, as always, play an important role in our
business. We have launched licensed ranges of Christmas products for the
recently released Warner Bros film "Happy Feet", and have signed licences for
"The Simpsons Movie", "Spider-Man 3", "Shrek 3" and "Pirates of the Caribbean
3", all due to be released during 2007.
Current Trading
The UK retail sector is operating in a highly competitive business climate. In
addition, consumers are carrying out their Christmas shopping later, seeking to
benefit from intense competition between the retailers. Although we have
completed the majority of this season's deliveries to our customers, we are not
immune from this challenging retail climate.
As the only listed company in our sector in Europe, we have reinforced our
position as an industry consolidator. Having successfully integrated two
businesses in the first half of the year, we continue to look for suitable
businesses to acquire in all the geographic areas in which we operate. This is
an important part of our future growth strategy. At the same time we remain
clearly focused on maximising sales opportunities in all our existing businesses
and markets, particularly Europe and the US, and are currently working on
designs and product ranges for Christmas 2007 for all our major UK retail
customers.
Reflecting our confidence in the outcome for the full year and our future plans
for growth, we are proposing to pay an interim dividend of 2.25p a share, an
increase of 12.5% over last year. The dividend will be paid on 25 January 2007
to all shareholders on the register on 22 December 2006.
On a personal note, I am delighted to have been appointed Chairman of
International Greetings and on behalf of the Board would like to thank John
Elfed Jones for the invaluable contribution he has made during his 10 year
tenure as Chairman. John remains on the Board as a non-executive Director, so we
will continue to benefit from his considerable experience and expertise.
Keith James OBE
Chairman
* figure excludes amortisation of goodwill of #669,000 (6 months to 30 September
2005: #520,000, 12 months to 31 March 2006: #1,031,000), exceptional item of
#304,000 (6 months to 30 September 2005: #121,000, 12 months to 31 March 2006:
#3,310,000) and profit on disposal of fixed assets of #nil (6 months to 30
September 2005: #nil, 12 months to 31 March 2006: #1,838,000).
** figure restated following adoption of FRS20 (Share based payments)
International Greetings PLC Interim Report 2006
Consolidated profit and loss account for the six months
to 30 September 2006
Note Unaudited Unaudited Audited
6 months to 6 months to 12 months to
30 Sept 2006 30 Sept 2005 31 Mar 2006
(restated (restated
-see note 1) -see note 1)
#000 #000 #000
Continuing
Operations Acquisitions Total
Turnover 2 80,271 4,822 85,093 83,771 198,139
---------------------------------------------------------------------------------------------------------
Operating profit before
exceptional item 2 5,906 567 6,473 6,615 18,320
Exceptional item 4 (304) - (304) (121) (3,310)
---------------------------------------------------------------------------------------------------------
Operating profit 5,602 567 6,169 6,494 15,010
Share of operating profit of
joint venture - - - - 7
---------------------------------------------------------------------------------------------------------
6,494 15,017
Profit on disposal of fixed
assets - - - - 1,838
Net interest payable (863) (95) (958) (670) (1,801)
---------------------------------------------------------------------------------------------------------
Profit before taxation 4,739 472 5,211 5,824 15,054
Taxation 6 (1,408) (1,637) (3,106)
---------------------------------------------------------------------------------------------------------
Profit for the period 3,803 4,187 11,948
---------------------------------------------------------------------------------------------------------
Earnings per share 5
Basic 8.2p 9.3p 26.2p
Diluted 8.1p 9.1p 25.8p
---------------------------------------------------------------------------------------------------------
Statement of recognised gains and losses
for the six months to 30 September 2006
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
30 Sept 2006 30 Sept 2005 31 Mar 2006
(restated- (restated-
see note 1) see note 1)
#000 #000 #000
Profit for the period 3,803 4,187 11,948
Currency translation differences
arising on foreign currency net (1,512) 703 914
investments
Share based payments 112 199 423
--------------------------------------------------------------------------------------------------
Total recognised gains and losses relating
to the period 2,403 5,089 13,285
--------------------------------------------------------------------------------------------------
International Greetings PLC Interim Report 2006
Consolidated balance sheet at 30 September 2006
Unaudited Unaudited Audited
30 Sept 2006 30 Sept 2005 31 Mar 2006
(restated- (restated-
see note 1) see note 1)
Note #000 #000 #000
Fixed assets
Intangible assets - goodwill 25,422 22,318 21,339
Tangible assets 40,017 46,381 37,134
Investments - 170 173
--------------------------------------------------------------------------------------------------
65,439 68,869 58,646
Current assets
Stocks 62,254 59,605 40,008
Debtors 75,460 68,045 29,863
Investments 15 58 65
Cash at bank and in hand 10 3 11,825
--------------------------------------------------------------------------------------------------
137,739 127,711 81,761
Creditors: amounts falling due within
one year (119,053) (120,991) (56,382)
--------------------------------------------------------------------------------------------------
Net current assets 18,686 6,720 25,379
Total assets less current liabilities 84,125 75,589 84,025
Creditors: amounts falling due after
more than one year (7,155) (5,467) (6,352)
Provisions for liabilities and charges (1,548) (1,781) (1,882)
--------------------------------------------------------------------------------------------------
Net assets 75,422 68,341 75,791
--------------------------------------------------------------------------------------------------
Capital and reserves
Called up share capital 2,314 2,306 2,308
Share premium account 2,455 15,079 2,386
Potential issue of shares 1,052 672 1,052
Other reserves 12,845 724 13,964
Profit and loss account 56,756 49,560 56,081
--------------------------------------------------------------------------------------------------
Equity shareholders' funds 7 75,422 68,341 75,791
--------------------------------------------------------------------------------------------------
International Greetings PLC Interim Report 2006
Consolidated cash flow statement
for the six months to 30 September 2006
Unaudited Unaudited Audited
6 months to 6 months to 12 Months
30 Sept 2006 30 Sept 2005 to 31 Mar 2006
Note #000 #000 #000
Net cash (outflow)/inflow from
operating activities 8 (40,073) (47,311) 2,706
Returns on investments and servicing
of finance 9 (1,020) (483) (1,232)
Taxation (703) (1,642) (5,980)
Capital expenditure 9 (6,610) (4,145) 7,809
Acquisitions and disposals 9 (16,372) (13,145) (13,078)
Equity dividends paid (3,240) (2,652) (3,578)
---------------------------------------------------------------------------------------------------
Cash (outflow) before financing (68,018) (69,378) (13,353)
Financing 9 973 (76) (630)
---------------------------------------------------------------------------------------------------
(Decrease) in cash (67,045) (69,454) (13,983)
---------------------------------------------------------------------------------------------------
Reconciliation of net cash flow to movement in net (debt)/funds
for the six months to 30 September 2006
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
30 Sept 2006 30 Sept 2005 31 Mar 2006
#000 #000 #000
(Decrease) in cash in the period (67,045) (69,454) (13,983)
Cash (outflow)/inflow from debt and lease
financing (935) 117 462
--------------------------------------------------------------------------------------------------
Change in net (debt) resulting from cash flows (67,980) (69,337) (13,521)
Translation differences 892 (564) (1,013)
--------------------------------------------------------------------------------------------------
Movement in net (debt) in the period (67,088) (69,901) (14,534)
Net (debt)/funds at beginning of period (10,744) 3,790 3,790
--------------------------------------------------------------------------------------------------
Net (debt) at end of period (77,832) (66,111) (10,744)
--------------------------------------------------------------------------------------------------
International Greetings PLC Interim report 2006
Notes:
1. Basis of preparation
The financial information contained in this interim report does not constitute
statutory accounts as defined in Section 240 of the Companies Act 1985 and is
unaudited.
The comparative figures for the year ended 31 March 2006 are an abridged version
of the published accounts and are not the company's statutory accounts for that
financial year. Those accounts have been reported on without qualification by
the auditors, and without any statement under Section 237 (2) or (3) of the
Companies Act 1985, and have been delivered to the Registrar of Companies.
The interim statement has been prepared under the same accounting policies as
those used for the financial statements for the year ended 31 March 2006, with
the exception of share options which are now accounted for under FRS20 (Share
based payments) -see note 3. The comparative figures for the 6 months ended 30
September 2005 and the year ended 31 March 2006 have been restated to
reflect this change where appropriate.
2. Acquisitions
(a) On 6 April 2006, the Group acquired 100% of the issued share capital of
Alligator Books Limited, a publisher and distributor of children's books and
stationery. An initial consideration of #2.5m was paid, #2.25m in cash and #0.25m
by the issue of 62,703 new ordinary shares. Further payments may become payable,
depending on profitability for the year ended 31 March 2007, in a mixture of
cash and shares. During the period from 7 April 2006 to 30 September 2006, the
Group's results include turnover of #3.5m, interest payable (including interest
on cash consideration) of #0.1m and profit before tax of #0.4m attributable to
Alligator.
(b) On 8 July 2006, the Group acquired the remaining 50% shareholding not
previously owned in the holding company (Leonard Henry Holdings BV) of the
Group's Dutch joint venture, Anchor International BV. Consideration of Euro1.26m
was paid, Euro1m in cash and Euro0.26m by the issue of 44,692 new ordinary shares.
During the period from 9 July 2006 to 30 September 2006, the Group's results
include turnover of #1.3m, interest payable (including interest on cash
consideration) of #nil and profit before tax of #0.1m attributable to Anchor
International BV.
3. Share based payments
The company has adopted FRS20 for the first time in this period and accordingly,
the period's operating profit is stated after charging #112,000 for the cost of
share options. The operating profits for the 6 months to 30 September 2005 and
the 12 months to 31 March 2006 have been restated to include charges of #199,000
and #423,000 respectively, and net assets as at 30 September 2005 and 31 March
2006 have been increased to reflect the tax impact of this change by #107,000
and #68,000 respectively.
4. Exceptional Item
The exceptional item of #304,000 during the six months to 30 September 2006
represents the costs incurred in merging the sales functions for the UK gift
wrap, Christmas cracker and card divisions.
The exceptional item of #121,000 during the six months to 30 September 2005
represented the costs associated with the transfer of manufacturing of greetings
cards and tags from Hatfield to a new facility in Latvia.
The exceptional items of #3,310,000 during the 12 months to 31 March 2006
represented #2,906,000 of costs incurred in restructuring the group's UK
operations and a one-off product safety recall and rectification cost of
#404,000.
5. Earnings per share
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
30 Sept 2006 30 Sept 2005 31 Mar 2006
(restated- (restated-
see note 1) see note 1)
Adjusted basic earnings per
share excluding exceptional
items, profit on disposal of
fixed assets and
amortisation of goodwill 10.1p 10.6p 28.0p
Loss per share on exceptional item (0.5p) (0.2p) (5.1p)
Earnings per share on profit
on disposal of fixed assets - - 5.5p
Loss per share on goodwill (1.4p) (1.1p) (2.2p)
-------------------------------------------------------------------------------------
Basic earnings per share 8.2p 9.3p 26.2p
-------------------------------------------------------------------------------------
Diluted earnings per share 8.1p 9.1p 25.8p
-------------------------------------------------------------------------------------
The calculation of basic earnings per share is based on 46,257,862 (6 months to
30 September 2005: 45,002,232, 12 months to 31 March 2006: 45,536,856) ordinary
shares being the average number of shares in issue during the period. The
calculation of diluted earnings per share is based on 47,003,239 (6 months to 30
September 2005: 45,822,342, 12 months to 31 March 2006: 46,304,602) ordinary
shares. The difference of 745,377 (6 months to 30 September 2005: 820,110, 12
months to 31 March 2006: 767,746) represents the dilutive effect of outstanding
employee share options which have been calculated in accordance with FRS 14.
Adjusted basic earnings per share excluding exceptional items, profit on
disposal of fixed assets and amortisation of goodwill is calculated after
adjusting for the exceptional item of #304,000 (6 months to 30 September 2005:
#121,000, 12 months to 31 March 2006: #3,310,000), the profit on disposal of
fixed assets of #nil (6 months to 30 September 2005: #nil, 12 months to 31 March
2006: #1,838,000), amortisation of goodwill of #669,000 (6 months to 30
September 2005: #520,000, 12 months to 31 March 2006: #1,031,000) and tax relief
attributable to these items of #113,000 (6 months to 30 September 2005: #60,000,
12 months to 31 March 2006: #1,691,000).
7. Reconciliation of movement in shareholders' funds
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
30 Sept 2006 30 Sept 2005 31 Mar 2006
(restated- (restated-see
see note 1) note 1)
#000 #000 #000
Profit for the period 3,803 4,187 11,948
Dividend (3,240) (2,652) (3,578)
--------------------------------------------------------------------------------------------------
563 1,535 8,370
Currency translation differences
arising on foreign currency net investments (1,512) 703 914
Share based payments 112 199 423
New share capital subscribed 468 12,541 12,879
Potential issue of shares - (254) 126
Purchase of own shares - - (538)
--------------------------------------------------------------------------------------------------
Net (reduction in)/addition to shareholders' funds (369) 14,724 22,174
Opening shareholders' funds 75,791 53,617 53,617
-------------------------------------------------------------------------------------------------
Closing shareholders' funds 75,422 68,341 75,791
-------------------------------------------------------------------------------------------------
8. Reconciliation of operating profit to net cash (outflow)/inflow from operating activities
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
30 Sept 2006 30 Sept 2005 31 Mar 2006
(restated- (restated-
see note 1) see note 1)
#000 #000 #000
Operating profit before exceptional item 6,473 6,615 18,320
Exceptional item (304) (121) (3,310)
Depreciation charge 3,255 2,592 5,745
FRS 20 charge 112 199 423
(Increase) in stocks (20,802) (29,500) (9,650)
(Increase) in debtors (44,131) (44,241) (5,715)
Increase/(decrease) in creditors 15,512 17,087 (2,833)
Deferred income (455) (193) (632)
Goodwill amortisation 669 520 1,031
Utilisation of provisions (402) (269) (673)
-----------------------------------------------------------------------------------------------
Net cash (outflow)/inflow from operating
activities (40,073) (47,311) 2,706
----------------------------------------------------------------------------------------------
9. Gross Cash Flow
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
30 Sept 2006 30 Sept 2005 31 Mar 2006
#000 #000 #000
Returns on investment and servicing of finance
Net interest paid (1,011) (474) (1,213)
Interest element of finance lease repayments (9) (9) (19)
-------------------------------------------------------------------------------------------
(1,020) (483) (1,232)
-------------------------------------------------------------------------------------------
Capital expenditure
Purchase of tangible fixed assets (7,005) (4,335) (11,225)
Disposal of tangible fixed assets 109 190 19,034
Disposal of investments 286 - -
-------------------------------------------------------------------------------------------
(6,610) (4,145) 7,809
-------------------------------------------------------------------------------------------
Acquisitions and disposals
Acquisition cost (13,714) (13,114) (13,047)
Net overdraft acquired with subsidiary (2,658) (31) (31)
-------------------------------------------------------------------------------------------
(16,372) (13,145) (13,078)
-------------------------------------------------------------------------------------------
Financing
New shares issued 38 41 379
Purchase of own shares - - (538)
New loan 1,203 - -
Repayment of amounts borrowed (177) (48) (99)
Capital element of finance lease payments (91) (69) (363)
Purchase of investments - - (9)
-------------------------------------------------------------------------------------------
973 (76) (630)
-------------------------------------------------------------------------------------------
10. Analysis of movement in net (debt)/funds
At Exchange Acquisition At
31 Mar 2006 Cash flow Movement of subsidiary 30 Sept 2006
#000 #000 #000 #000 #000
Cash at bank and in hand 11,825 (11,357) (458) - 10
Overdrafts (20,850) (53,030) 1,235 (2,658) (75,303)
--------------------------------------------------------------------------------------------------------
(9,025) (64,387) 777 (2,658) (75,293)
Banks loans (1,248) (1,026) 94 - (2,180)
Finance leases (471) 91 21 - (359)
--------------------------------------------------------------------------------------------------------
(1,719) (935) 115 - (2,539)
--------------------------------------------------------------------------------------------------------
Total net (debt)/funds (10,744) (65,322) 892 (2,658) (77,832)
--------------------------------------------------------------------------------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
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