TIDMIGR
RNS Number : 8847D
International Greetings PLC
10 December 2009
10th December 2009
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 wrap, stationery, crackers, cards, and accessories,
announces its Interim Results for the six months ended 30th September 2009 (2009
H1).
Financial highlights
* Revenue:
*
* As a result of management's focus on more profitable business, and in line with
the Board's expectations, revenue from continuing operations has reduced to
GBP93.8m (2008 H1: GBP99.1m)
* Business returned to profit:
*
* Profit before tax from continuing operations GBP0.8m (2008 H1: loss of GBP0.6m
before significant items; loss of GBP6.8m after significant items)
* Net debt reduced by 10.6% to GBP101.2m (2008 H1: GBP113.2m)
* Down 19% on a constant exchange basis.
* Reduced Operating cash outflow for the half year GBP28.6m (2008 H1: GBP42.4m)
Operational highlights
* Growth in sales of everyday product lines, particularly within the value and
discount retail sector
* Turnaround of US operations progressing well
* Continuing to drive operational efficiencies and Group-wide benefits and
opportunities
* Board confident in full year outlook
Paul Fineman, Chief Executive said:
"Following the significant changes implemented last year we have focussed on
driving operational improvements and enhancing margins, resulting in our ability
to generate cash. We are encouraged by the results, and importantly we have
returned the business to profit.
"We will continue to drive growth and synergies from our existing businesses by
sharing best practice, and developing a Group-wide culture. We are, in
particular, growing our everyday product business within the value retail
sector."
Keith James, Chairman said:
"The team's dedication and hard work has enabled us to return the business to
profit at the half year. While market conditions remain challenging, we are
confident that the good progress we are making should continue for the rest of
the year."
+-------------------------------------+----------+------------------------+
| For further information, please | | |
| contact: | | |
| | | |
+-------------------------------------+----------+------------------------+
| International Greetings plc | | Tel: 01707 630630 |
| Paul Fineman, Chief Executive | | |
| Sheryl Tye, Finance Director | | |
| | | |
+-------------------------------------+----------+------------------------+
| Arden Partners plc | | Tel: 020 7614 5917 |
| Richard Day | | |
| Colin Smith | | |
| | | |
+-------------------------------------+----------+------------------------+
| Financial Dynamics | | Tel: 020 7831 3113 |
| Jonathon Brill | | |
| Caroline Stewart | | |
+-------------------------------------+----------+------------------------+
Chief Executive's Review
Overview
Following the significant changes to the business last year, the first six
months of this year have seen the Group return to profit sooner than the Board
expected.
Whilst market conditions have remained challenging, the changes we have already
made have led to a more balanced, stable business. Our order book and deliveries
were strong in the period, and we benefitted in the six months from a more
Group-wide culture under the mantra 'Synergise to maximise' that we expect will
continue to benefit the business and increase further cross-selling
opportunities across our international operations.
Financial Review
The results for the six months ended 30th September 2009 now include, from 1st
August 2009, the Group's Australian business, Artwrap PTY, which had previously
been accounted for as an associate (see note 5 to the Interim Financial
Statements). The Group's holding in Artwrap PTY is unchanged at 50%.
Revenue from continuing operations for the period was GBP93.8m (2008 H1:
GBP99.1m), including GBP4.8m of sales at Artwrap PTY. On a constant exchange
basis, revenue for the period declined a further GBP4.5m. The decrease in
turnover was expected due to the Group's focus on higher quality and margin
business. As a result, profit before tax from continuing operations increased to
GBP0.8m (2008 H1: loss of GBP0.6m before significant items; GBP6.8m after
significant items).
Finance expenses in the period were GBP1.8m (2008 H1: GBP3.6m).
There were no significant items during the period (2008 H1: loss of GBP6.2m),
and no discontinued operations (2008 H1: loss of GBP0.5m after tax, relating to
the Glitterwrap party business).
Basic earnings per share for the period were 0.0p (2009 H1: loss of 10.8p).
The effective tax rate at 68% (2008 H1: 33% credit) is as a result of normal
levels of taxation on the Group's profitable subsidiaries, but without the
benefit of tax relief for losses in unprofitable operations.
Net debt at 30th September 2009 was down 10.6% to GBP101.2m (2008 H1:
GBP113.2m). At 30th September 2009 the US$ exchange rate was $1.61, compared
with $1.78 at 30th September 2008, and on a constant exchange basis net debt has
reduced by 19%. The Group's banks remain supportive, and further details of the
Group's banking facility are included in note 1 of the Interim Financial
Statements.
Following the progress made last year in reducing our exposure to higher risk
customers, trade and other receivables reduced to GBP59.5m (2008 H1: GBP80.0m).
On a constant exchange basis trade receivables were down 31%.
Stock levels, another key focus area, were down 23% on a constant exchange
basis. Including Artwrap PTY, stock reduced to GBP66.0m (2008 H1: GBP73.1m).
Capital expenditure in the six months was minimal at GBP0.7m, and deferred
acquisition costs were GBP0.8m cash, with GBP1.5m in shares allotted. This
allotment of 3.6m shares was successfully placed with a range of institutional
shareholders, which has helped to broaden our shareholder base.
The Board will not be declaring an interim dividend (2008 H1: nil).
Operational Review
The significant changes introduced last year helped us to return the business to
profit. We are creating a culture of sharing Group best practice while focussing
our efforts on strengthening margin and improving cash generation. This will be
an evolving change which will bring many more benefits and opportunities.
However, we are pleased with progress made to date.
Our 'Synergise to maximise' mantra is creating a cohesive approach to how we do
business, both within the Group operations and how we cross-sell, grow our
business and provide our customers with an excellent service.
In the UK we saw the benefits of the significant restructuring that was
concluded last year. Management is implementing strict performance measurement
across the business to further drive efficiency, from customer service to
overhead control. For example, capital investment in IT, significant changes in
working practices in the UK and improved measurement of material wastage,
machine and staff productivity have driven operational benefits. Our other
manufacturing operations will be monitoring progress in the UK with a view to
adopting similar initiatives in their businesses.
In the UK and US, a major decision to rationalise our product ranges and to work
with our customers to provide products that are relevant, innovative and more
profitable has worked well. The re-structuring of our US operations is beginning
to deliver improved results. As well as implementing a strategy for profitable
growth we have improved working capital management and overhead control. We
anticipate that re-structuring will be complete mid 2010, and do not foresee
significant cash restructuring costs.
In Europe we had a mixed performance. Hoomark has performed well, whilst Weltec
and Anchor BV have found the first half of the year more challenging.
The performance of our customer service and manufacturing facilities in Hong
Kong and China has made a big contribution to the high standards of service
delivery of our UK and US businesses. During the period our China factory was
awarded Forestry Stewardship Council Accreditation - a globally recognised
standard that demonstrates our commitment to environmentally responsible
initiatives, and an important benchmark to most major retailers.
Artwrap PTY continued to make good progress in integrating within the Group and
sharing best practice. It is a great ambassador for all Group products, and has
had a very successful first half in terms of increased sales and a return to an
excellent level of profit.
Significant new launches and contracts won in the period, largely as a result of
Group cross-selling opportunities, include:
* The launch in 2009/10 of global product ranges including everyday greeting cards
and stationery products
* Expanding licensing relationships previously UK based, to the US and Australia
Further initiatives introduced across the Group to reduce costs and promote
sharing of best practice include developing our design asset management system.
We are investing GBP0.3m on rolling this capability out across the Group during
the year.
Current trading/outlook
Since the period end trading has continued in line with our expectations.
Christmas remains an important time of year for the Group, and we are encouraged
by early indications of our customers' sales performance. However, through the
Group's focus on creating more balance within the business, we have reduced, in
part, the seasonality within the results.
Growth of business with the value retailers and our everyday offering continues
to be strong, especially with our everyday greeting cards and stationery
products. We are particularly pleased to have secured an initial 3 year
commitment for the supply of greetings products to one of the UK's fastest
growing value retailers.
In October, we were delighted to sign a licence with US celebrity cook Paula
Deen. This licensing agreement will involve introducing to the market an
extensive collection of paper based products including stationery, recipe cards,
organizers, boxes and food containers. Our expertise in the licensing arena was
further evidenced in November when we received an award from Disney for 'Quality
Product of the Year', demonstrating our continued ability to innovate and drive
sales growth.
Although we expect conditions to remain challenging, the business has been
returned to profit and we are excited about the growth opportunities ahead.
International Greetings PLC
Interim Report 2009
Consolidated Income Statement
For the six months ended 30 September 2009
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| | Unaudited | | Unaudited | | | 12 | |
| | six | | six | | | months | |
| | months | | months | | | to 31 | |
| | ended 30 | | ended 30 | | | March | |
| | September | | September | | | 2009 | |
| | | | | | | | |
| | 2009 | | 2008 | | | | |
| | | | restated | | | | |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| | GBP000 | Before | Significant | Total | Before | Significant | Total |
| | | | items | GBP000 | significant | items | GBP000 |
| | | significant | GBP000 | | items | GBP000 | |
| | | | | | GBP000 | | |
| | | items | | | | | |
| | | GBP000 | | | | | |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| Continuing | | | | | | | |
| operations | | | | | | | |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| | | | | | | | |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| Revenue | 93,754 | 99,084 | - | 99,084 | 216,917 | - | 216,917 |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| Cost of sales | (76,756) | (82,229) | (2,477) | (84,706) | (180,318) | (8,360) | (188,678) |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| Gross Profit | 16,998 | 16,855 | (2,477) | 14,378 | 36,599 | (8,360) | 28,239 |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| | 18.1% | 17.0% | | 14.5% | 16.9% | | 13.0% |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| Selling expenses | (6,153) | (5,387) | (958) | (6,345) | (12,189) | (3,206) | (15,395) |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| Administrative | (8,848) | (10,429) | (1,631) | (12,060) | (22,455) | (9,431) | (31,886) |
| expenses | | | | | | | |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| Other operating | 712 | 496 | - | 496 | 1,267 | - | 1,267 |
| income | | | | | | | |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| Profit/(loss) on | - | 21 | 199 | 220 | 324 | (16) | 308 |
| sales of property, | | | | | | | |
| plant and equipment | | | | | | | |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| Operating | 2,709 | 1,556 | (4,867) | (3,311) | 3,546 | (21,013) | (17,467) |
| profit/(loss) | | | | | | | |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| | | | | | | | |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| Finance expenses | (1,839) | (2,258) | (1,379) | (3,637) | (3,993) | (1,436) | (5,429) |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| | | | | | | | |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| Share of post-tax | (39) | 126 | - | 126 | 120 | - | 120 |
| (loss)/profit of | | | | | | | |
| associate | | | | | | | |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| Profit/(loss) | 831 | (576) | (6,246) | (6,822) | (327) | (22,449) | (22,776) |
| before tax | | | | | | | |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| | | | | | | | |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| Income tax | (568) | 718 | 1,549 | 2,267 | (164) | (1,453) | (1,617) |
| (charge)/credit | | | | | | | |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| Profit/(loss) from | 263 | 142 | (4,697) | (4,555) | (491) | (23,902) | (24,393) |
| continuing | | | | | | | |
| operations | | | | | | | |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| Discontinued | | | | | | | |
| operations | | | | | | | |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| Loss from | - | (544) | - | (544) | (2,649) | (1,297) | (3,946) |
| discontinued | | | | | | | |
| operations (net of | | | | | | | |
| tax) | | | | | | | |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| Profit/(loss) for | 263 | (402) | (4,697) | (5,099) | (3,140) | (25,199) | (28,339) |
| the period | | | | | | | |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| Attributable to: | | | | | | | |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| Equity holders of | 18 | | | (5,099) | | | (28,339) |
| the parent company | | | | | | | |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| Non-controlling | 245 | | | - | | | - |
| interests | | | | | | | |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| | 263 | | | (5,099) | | | (28,339) |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| Earnings/(loss) per | | | | | | | |
| ordinary share | | | | | | | |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| Basic & Diluted | 0.0 p | | | (10.8 | | | (59.0 |
| | | | | p) | | | p) |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| Continuing | 0.0 p | | | (9.6 | | | (50.8 |
| operations | | | | p) | | | p) |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
| Discontinued | - | | | (1.2p) | | | (8.2p) |
| operations | | | | | | | |
+---------------------+-----------+-------------+-------------+----------+-------------+-------------+-----------+
International Greetings PLC
Interim Report 2009
Consolidated Statement of Comprehensive Income
For the six months ended 30 September 2009
+---------------------------------------------+------+-----------+--+-----------+--+----------+
| | | Unaudited | | Unaudited | | 12 |
| | | six | | six | | months |
| | | months | | months | | to 31 |
| | | ended 30 | | ended 30 | | March |
| | | September | | September | | 2009 |
| | | | | | | GBP000 |
| | | 2009 | | 2008 | | |
| | | GBP000 | | restated | | |
| | | | | GBP000 | | |
+---------------------------------------------+------+-----------+--+-----------+--+----------+
| | | | | | | |
+---------------------------------------------+------+-----------+--+-----------+--+----------+
| Profit/(loss) for the period | | 263 | | (5,099) | | (28,339) |
+---------------------------------------------+------+-----------+--+-----------+--+----------+
| | | | | | | |
+---------------------------------------------+------+-----------+--+-----------+--+----------+
| Other comprehensive income: | | | | | | |
+---------------------------------------------+------+-----------+--+-----------+--+----------+
| Exchange difference on translation of | | 585 | | 1,818 | | 1,707 |
| foreign operations | | | | | | |
+---------------------------------------------+------+-----------+--+-----------+--+----------+
| Net (loss)/gain on cash flow hedges | | (154) | | 605 | | 178 |
+---------------------------------------------+------+-----------+--+-----------+--+----------+
| Income tax credit/(charge) | | 43 | | (173) | | (53) |
+---------------------------------------------+------+-----------+--+-----------+--+----------+
| | | (111) | | 432 | | 125 |
+---------------------------------------------+------+-----------+--+-----------+--+----------+
| Other comprehensive income for the period, | | 474 | | 2,250 | | 1,832 |
| net of tax | | | | | | |
+---------------------------------------------+------+-----------+--+-----------+--+----------+
| | | | | | | |
+---------------------------------------------+------+-----------+--+-----------+--+----------+
| Total comprehensive income/(loss) for the period, | 737 | | (2,849) | | (26,507) |
| net of tax | | | | | |
+----------------------------------------------------+-----------+--+-----------+--+----------+
| | | | | | | |
+---------------------------------------------+------+-----------+--+-----------+--+----------+
| | | | | | | |
+---------------------------------------------+------+-----------+--+-----------+--+----------+
| Attributable to: | | | | | | |
+---------------------------------------------+------+-----------+--+-----------+--+----------+
| Equity holders of the parent company | | 492 | | (2,849) | | (26,507) |
+---------------------------------------------+------+-----------+--+-----------+--+----------+
| Non-controlling interests | | 245 | | - | | - |
+---------------------------------------------+------+-----------+--+-----------+--+----------+
| | | 737 | | (2,849) | | (26,507) |
+---------------------------------------------+------+-----------+--+-----------+--+----------+
| | | | | | | |
+---------------------------------------------+------+-----------+--+-----------+--+----------+
International Greetings PLC
Interim Report 2009
Consolidated Statement of Changes in Equity
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
| For the six | Share | Merger | Hedging | Trans-lation | Retained | Total | Non-controlling | Total |
| months ended 30 | capital | reserve | reserve | reserve | earnings | equity | interests | |
| September 2009 | and | | | | | attributable | | |
| | reserves | | | | | to equity | | |
| | | | | | | holders of | | |
| | | | | | | the parent | | |
| | | | | | | company | | |
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
| | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 |
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
| | | | | | | | | |
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
| Balance at 1 | 6,771 | 14,885 | - | 222 | 19,404 | 41,282 | - | 41,282 |
| April 2009 | | | | | | | | |
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
| | | | | | | | | |
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
| Profit for the | - | - | - | - | 18 | 18 | 245 | 263 |
| period | | | | | | | | |
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
| Other | - | - | (111) | 585 | - | 474 | - | 474 |
| comprehensive | | | | | | | | |
| (loss)/income | | | | | | | | |
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
| Total | - | - | (111) | 585 | 18 | 492 | 245 | 737 |
| comprehensive | | | | | | | | |
| (loss)/income | | | | | | | | |
| for the period | | | | | | | | |
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
| Equity settled | - | - | - | - | 37 | 37 | - | 37 |
| share based | | | | | | | | |
| payments | | | | | | | | |
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
| Impairment | - | (1,331) | - | - | 1,331 | - | - | - |
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
| Shares issued | 182 | 1,331 | - | - | - | 1,513 | - | 1,513 |
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
| Non-controlling | - | - | - | - | - | - | 2,171 | 2,171 |
| interests in | | | | | | | | |
| subsidiary | | | | | | | | |
| consolidated | | | | | | | | |
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
| Exchange | - | - | - | - | - | - | 214 | 214 |
| difference on | | | | | | | | |
| non-controlling | | | | | | | | |
| interests | | | | | | | | |
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
| Balance at 30 | 6,953 | 14,885 | (111) | 807 | 20,790 | 43,324 | 2,630 | 45,954 |
| September 2009 | | | | | | | | |
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
| | | | | | | | | |
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
| For the six | Share | Merger | Hedging | Tran-slation | Retained | Total | Non-controlling | Total |
| months ended 30 | capital | reserve | reserve | reserve | earnings | equity | interests | |
| September 2008 | and | | | | | attributable | | |
| | reserves | | | | | to equity | | |
| | | | | | | holder of | | |
| | | | | | | the parent | | |
| | | | | | | company | | |
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
| | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 |
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
| | | | | | | | | |
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
| Balance at 1 | 6,699 | 15,533 | (125) | (1,485) | 48,425 | 69,047 | - | 69,047 |
| April 2008 | | | | | | | | |
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
| | | | | | | | | |
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
| Prior year | - | - | - | - | (1,746) | (1,746) | - | (1,746) |
| adjustment | | | | | | | | |
| (note 7) | | | | | | | | |
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
| Balance at 1 | 6,699 | 15,533 | (125) | (1,485) | 46,679 | 67,301 | - | 67,301 |
| April 2008 | | | | | | | | |
| restated | | | | | | | | |
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
| | | | | | | | | |
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
| Loss for the | - | - | | - | (5,099) | (5,099) | - | (5,099) |
| period | | | | | | | | |
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
| Other | - | - | 432 | 1,756 | - | 2,188 | - | 2,188 |
| comprehensive | | | | | | | | |
| income | | | | | | | | |
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
| Prior year | - | - | - | 62 | - | 62 | - | 62 |
| adjustment | | | | | | | | |
| (note 7) | | | | | | | | |
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
| Total | - | - | 432 | 1,818 | (5,099) | (2,849) | - | (2,849) |
| comprehensive | | | | | | | | |
| income/(loss) | | | | | | | | |
| for the period | | | | | | | | |
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
| Balance at 30 | 6,699 | 15,533 | 307 | 333 | 41,580 | 64,452 | - | 64,452 |
| September 2008 | | | | | | | | |
+------------------+----------+---------+---------+--------------+----------+--------------+-----------------+---------+
International Greetings PLC
Interim Report 2009
Consolidated Statement of Changes in Equity
+--------------------+----------+---------+---------+-------------+----------+---------------+
| For the year ended | Share | Merger | Hedging | Translation | Retained | Total equity |
| 31 March 2009 | capital | reserve | reserve | reserve | earnings | attributable |
| | and | | | | | to equity |
| | reserves | | | | | holders of |
| | | | | | | the parent |
| | | | | | | company |
+--------------------+----------+---------+---------+-------------+----------+---------------+
| | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 |
+--------------------+----------+---------+---------+-------------+----------+---------------+
| | | | | | | |
+--------------------+----------+---------+---------+-------------+----------+---------------+
| Balance at 1 April | 6,699 | 15,533 | (125) | (1,485) | 46,679 | 67,301 |
| 2008 | | | | | | |
+--------------------+----------+---------+---------+-------------+----------+---------------+
| | | | | | | |
+--------------------+----------+---------+---------+-------------+----------+---------------+
| Loss for the year | - | - | - | - | (28,339) | (28,339) |
+--------------------+----------+---------+---------+-------------+----------+---------------+
| Other | - | - | 125 | 1,707 | - | 1,832 |
| comprehensive | | | | | | |
| income | | | | | | |
+--------------------+----------+---------+---------+-------------+----------+---------------+
| Total | - | - | 125 | 1,707 | (28,339) | (26,507) |
| comprehensive | | | | | | |
| income/(loss) for | | | | | | |
| the year | | | | | | |
+--------------------+----------+---------+---------+-------------+----------+---------------+
| Equity settled | - | - | - | - | 19 | 19 |
| share based | | | | | | |
| payments | | | | | | |
+--------------------+----------+---------+---------+-------------+----------+---------------+
| Impairment | - | (1,045) | - | - | 1,045 | - |
+--------------------+----------+---------+---------+-------------+----------+---------------+
| Shares issued | 72 | 397 | - | - | - | 469 |
+--------------------+----------+---------+---------+-------------+----------+---------------+
| Balance at 31 | 6,771 | 14,885 | - | 222 | 19,404 | 41,282 |
| March 2009 | | | | | | |
+--------------------+----------+---------+---------+-------------+----------+---------------+
Share capital and reserves
The following amounts have been merged for easier presentation:
Capital redemption reserve, which has been unchanged at GBP1,340,000 since 1
April 2008;
Share premium, which has been unchanged at GBP3,006,000 since 1 April 2008; and
Share capital, which at 1 April 2008 and 30 September 2008 this balance was
GBP2,353,000; at 31 March 2009 this balance was GBP2,425,000; and at 30
September 2009 this balance was GBP2,607,000.
3,642,268 ordinary shares were issued on 24 September 2009 at 41.56p (nominal
value at 5p) as deferred consideration for the purchase of Glitterwrap. The
merger reserve relating to the Glitterwrap investment has been transferred to
retained earnings in line with the impairment of goodwill made for the year
ended 31 March 2009.
International Greetings PLC
Interim Report 2009
Consolidated Balance Sheet
as at 30 September 2009
+------------------------------------------------+------------+------------+------------+
| | Unaudited | Unaudited | 12 months |
| | as at 30 | as at | to |
| | September | September | 31 March |
| | 2009 | 2008 | 2009 |
| | GBP000 | Restated | GBP000 |
| | | GBP000 | |
+------------------------------------------------+------------+------------+------------+
| Non-current assets | | | |
+------------------------------------------------+------------+------------+------------+
| Property, plant and equipment | 36,766 | 40,480 | 39,722 |
+------------------------------------------------+------------+------------+------------+
| Intangible assets | 31,468 | 35,876 | 30,380 |
+------------------------------------------------+------------+------------+------------+
| Investments in associates | - | 3,217 | 3,086 |
+------------------------------------------------+------------+------------+------------+
| Deferred tax assets | 2,985 | 5,376 | 2,885 |
+------------------------------------------------+------------+------------+------------+
| Total non-current assets | 71,219 | 84,949 | 76,073 |
+------------------------------------------------+------------+------------+------------+
| Current assets | | | |
+------------------------------------------------+------------+------------+------------+
| Inventory | 66,014 | 73,083 | 51,913 |
+------------------------------------------------+------------+------------+------------+
| Income tax receivable | - | 385 | - |
+------------------------------------------------+------------+------------+------------+
| Trade and other receivables | 59,462 | 80,008 | 28,464 |
+------------------------------------------------+------------+------------+------------+
| Cash and cash equivalents | 2,568 | 36 | 2,060 |
+------------------------------------------------+------------+------------+------------+
| Derivative financial instruments | - | 427 | - |
+------------------------------------------------+------------+------------+------------+
| Total current assets | 128,044 | 153,939 | 82,437 |
+------------------------------------------------+------------+------------+------------+
| Total assets | 199,263 | 238,888 | 158,510 |
+------------------------------------------------+------------+------------+------------+
| Equity | | | |
+------------------------------------------------+------------+------------+------------+
| Share capital | 2,607 | 2,353 | 2,425 |
+------------------------------------------------+------------+------------+------------+
| Share premium | 3,006 | 3,006 | 3,006 |
+------------------------------------------------+------------+------------+------------+
| Reserves | 16,921 | 17,513 | 16,447 |
+------------------------------------------------+------------+------------+------------+
| Retained earnings | 20,790 | 41,580 | 19,404 |
+------------------------------------------------+------------+------------+------------+
| Equity attributable to equity holders of the | 43,324 | 64,452 | 41,282 |
| parent company | | | |
+------------------------------------------------+------------+------------+------------+
| Non-controlling interests | 2,630 | - | - |
+------------------------------------------------+------------+------------+------------+
| Total equity | 45,954 | 64,452 | 41,282 |
+------------------------------------------------+------------+------------+------------+
| Non-current liabilities | | | |
+------------------------------------------------+------------+------------+------------+
| Loans and borrowings | 10,345 | 8,632 | 11,156 |
+------------------------------------------------+------------+------------+------------+
| Deferred income | 3,525 | 4,276 | 3,801 |
+------------------------------------------------+------------+------------+------------+
| Provisions | 1,368 | 1,345 | 1,067 |
+------------------------------------------------+------------+------------+------------+
| Other financial liabilities | - | 924 | 1,192 |
+------------------------------------------------+------------+------------+------------+
| Total non-current liabilities | 15,238 | 15,177 | 17,216 |
+------------------------------------------------+------------+------------+------------+
| Current liabilities | | | |
+------------------------------------------------+------------+------------+------------+
| Bank overdraft | 92,360 | 104,147 | 58,351 |
+------------------------------------------------+------------+------------+------------+
| Loans and borrowings | 1,086 | 442 | 1,091 |
+------------------------------------------------+------------+------------+------------+
| Deferred income | 751 | 953 | 952 |
+------------------------------------------------+------------+------------+------------+
| Provisions | - | 512 | - |
+------------------------------------------------+------------+------------+------------+
| Income tax payable | 779 | 34 | 494 |
+------------------------------------------------+------------+------------+------------+
| Trade and other payables | 30,783 | 34,641 | 26,356 |
+------------------------------------------------+------------+------------+------------+
| Derivative financial instruments | 413 | - | - |
+------------------------------------------------+------------+------------+------------+
| Other financial liabilities | 11,899 | 18,530 | 12,768 |
+------------------------------------------------+------------+------------+------------+
| Total current liabilities | 138,071 | 159,259 | 100,012 |
+------------------------------------------------+------------+------------+------------+
| Total liabilities | 153,309 | 174,436 | 117,228 |
+------------------------------------------------+------------+------------+------------+
| Total equity and liabilities | 199,263 | 238,888 | 158,510 |
+------------------------------------------------+------------+------------+------------+
International Greetings PLC
Interim Report 2009
Consolidated Cash Flow Statement
For the six months ended 30 September 2009
+----------------------------------------------------+------------+------------+----------+
| | Unaudited | Unaudited | 12 |
| | six months | six months | months |
| | to 30 | | to 31 |
| | September | to 30 | March |
| | 2009 | September | 2009 |
| | GBP000 | 2008 | GBP000 |
| | | Restated | |
| | | GBP000 | |
+----------------------------------------------------+------------+------------+----------+
| Cash flows from operating activities | | | |
+----------------------------------------------------+------------+------------+----------+
| Profit/(loss) for the period | 263 | (5,099) | (28,339) |
+----------------------------------------------------+------------+------------+----------+
| Adjustments for: | | | |
+----------------------------------------------------+------------+------------+----------+
| Depreciation and impairment of tangible fixed | 2,305 | 4,581 | 9,499 |
| assets | | | |
+----------------------------------------------------+------------+------------+----------+
| Amortisation and impairment of intangible assets | 73 | 101 | 6,150 |
+----------------------------------------------------+------------+------------+----------+
| Financial expenses - continuing operations | 1,839 | 3,634 | 5,429 |
+----------------------------------------------------+------------+------------+----------+
| Financial expenses - discontinued operations | - | 3 | 150 |
+----------------------------------------------------+------------+------------+----------+
| Share of loss/(profit) of associates - continuing | 39 | (126) | (120) |
| operations | | | |
+----------------------------------------------------+------------+------------+----------+
| Gain on discontinued associate included within | - | (77) | - |
| assets held for sale | | | |
+----------------------------------------------------+------------+------------+----------+
| Income tax credit - discontinued operations | - | (334) | - |
+----------------------------------------------------+------------+------------+----------+
| Income tax charge/(credit) - continuing operations | 568 | (2,267) | 1,617 |
+----------------------------------------------------+------------+------------+----------+
| Profit on sales of property, plant and equipment | 10 | (220) | (308) |
+----------------------------------------------------+------------+------------+----------+
| Equity settled share-based payment | 37 | - | 19 |
+----------------------------------------------------+------------+------------+----------+
| Operating profit/(loss) before changes in working | 5,134 | 196 | (5,903) |
| capital and provisions | | | |
+----------------------------------------------------+------------+------------+----------+
| Change in trade and other receivables | (31,942) | (41,394) | 7,856 |
+----------------------------------------------------+------------+------------+----------+
| Change in inventory | (7,459) | (15,211) | 6,858 |
+----------------------------------------------------+------------+------------+----------+
| Change in trade and other payables | 6,058 | 13,575 | 4,889 |
+----------------------------------------------------+------------+------------+----------+
| Change in provisions and deferred income | (440) | 477 | (1,779) |
+----------------------------------------------------+------------+------------+----------+
| Cash (used in)/generated from operations | (28,649) | (42,357) | 11,921 |
+----------------------------------------------------+------------+------------+----------+
| Tax (paid)/received | (134) | (3,613) | 1,862 |
+----------------------------------------------------+------------+------------+----------+
| Interest and similar charges (paid)/received | (1,597) | 861 | (5,429) |
+----------------------------------------------------+------------+------------+----------+
| Net cash (outflow)/inflow from operating | (30,380) | (45,109) | 8,354 |
| activities | | | |
+----------------------------------------------------+------------+------------+----------+
| Cash flow from investing activities | | | |
+----------------------------------------------------+------------+------------+----------+
| Proceeds from sale of property, plant and | 25 | 750 | 944 |
| equipment | | | |
+----------------------------------------------------+------------+------------+----------+
| Acquisition of subsidiary, including overdrafts | (3,918) | (485) | (469) |
| acquired | | | |
+----------------------------------------------------+------------+------------+----------+
| Acquisition of shares in associates | - | (781) | (781) |
+----------------------------------------------------+------------+------------+----------+
| Acquisition of intangible assets | (251) | (107) | (453) |
+----------------------------------------------------+------------+------------+----------+
| Acquisition of property plant and equipment | (458) | (1,203) | (1,725) |
+----------------------------------------------------+------------+------------+----------+
| Receipts from sales of investments | - | 1,796 | 1,796 |
+----------------------------------------------------+------------+------------+----------+
| Dividends received from associates | - | - | 166 |
+----------------------------------------------------+------------+------------+----------+
| Net cash outflow from investing activities | (4,602) | (30) | (522) |
+----------------------------------------------------+------------+------------+----------+
| Cash flows from financing activities | | | |
+----------------------------------------------------+------------+------------+----------+
| Change in borrowings | (527) | 54 | (470) |
+----------------------------------------------------+------------+------------+----------+
| Payment of finance lease liabilities | (12) | (39) | (52) |
+----------------------------------------------------+------------+------------+----------+
| New bank loans raised | - | 6,990 | 10,224 |
+----------------------------------------------------+------------+------------+----------+
| Net cash (outflow)/inflow from financing | (539) | 7,005 | 9,702 |
| activities | | | |
+----------------------------------------------------+------------+------------+----------+
| Net (decrease)/increase in cash and cash | (35,521) | (38,134) | 17,534 |
| equivalents | | | |
+----------------------------------------------------+------------+------------+----------+
| Cash and cash equivalents at beginning of period | (56,291) | (62,761) | (62,761) |
+----------------------------------------------------+------------+------------+----------+
| Effect of exchange rate fluctuations on cash held | 2,020 | (3,216) | (11,064) |
+----------------------------------------------------+------------+------------+----------+
| Cash and cash equivalents at end of period | (89,792) | (104,111) | (56,291) |
+----------------------------------------------------+------------+------------+----------+
+----------------------------------------------------+------------+-------------+------------+
| | As at 30 | As at 30 | As at |
| | | | 31 |
+----------------------------------------------------+------------+-------------+------------+
| | September | September | March |
+----------------------------------------------------+------------+-------------+------------+
| | 2009 | 2008 | 2009 |
+----------------------------------------------------+------------+-------------+------------+
| | GBP000 | GBP000 | GBP000 |
+----------------------------------------------------+------------+-------------+------------+
| Cash and cash equivalents per balance sheet | 2,568 | 36 | 2,060 |
+----------------------------------------------------+------------+-------------+------------+
| Bank overdrafts | (92,360) | (104,147) | (58,351) |
+----------------------------------------------------+------------+-------------+------------+
| Cash and cash equivalents per cash flow statement | (89,792) | (104,111) | (56,291) |
+----------------------------------------------------+------------+-------------+------------+
International Greetings PLC
Interim Report 2009
Notes to the interim report
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 IFRSs"). The financial information for the year ended 31 March 2009 is
extracted from the statutory accounts of the Group for that financial year and
does not constitute statutory accounts as defined in Section 240 of the
Companies Act 1985. The report of the auditors was (i) unqualified; (ii) did not
include a reference to any matters to which the auditors drew attention by way
of emphasis without qualifying their report, and (iii) did not contain a
statement under section 237 (2) or (3) of the Companies Act 1985.
The interim report has been prepared on the going concern basis notwithstanding
the net current liabilities at 30 September 2009 of GBP10.0 million. The
Directors believe this to be appropriate because as in previous years, the Group
relies primarily on a short term facility for its working capital needs and its
principal bank has confirmed, without prejudice to the on demand nature of the
facility, and assuming the business performs in line with expectations, that
sufficient of the current facility will be renewed on 31 July 2010. The
Directors consider that this will enable the company to continue to meet its
liabilities as they fall due for payment. 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 it will not do
so.
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 as at 31 March 2009.
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 2009, except for the adoption
of new Standards and Interpretations as of 1 April 2009, noted below:
IFRS 2 Share-based Payment - Vesting Conditions and Cancellations
The Standard has been amended to clarify the definition of vesting conditions
and to prescribe the accounting treatment of an award that is effectively
cancelled because a non-vesting condition is not satisfied. The adoption of this
amendment did not have any impact on the financial position or performance of
the Group.
IFRS 8 Operating Segments
This Standard requires disclosure of information about the Group's operating
segments and replaces the requirement to determine primary (business) and
secondary (geographical) reporting segments of the Group. Adoption of this
Standard has resulted in Australia being reflected as a distinct operating
segment following the consolidation of Artwrap Pty Limited into the Group.
Additional disclosures about each of these segments are shown in Note 3,
including revised comparative information.
IAS 1 Revised Presentation of Financial Statements
The revised Standard separates owner and non-owner changes in equity. The
statement of changes in equity includes only details of transactions with
owners, with non-owner changes in equity presented as a single line. In
addition, the Standard introduces the statement of comprehensive income: it
presents all items of recognised income and expense, either in one single
statement, or in two linked statements. The Group has elected to present two
statements.
2 Seasonality of operations
Due to the seasonal nature of the business, higher bank borrowings are usually
expected in September and October in relation to the payment for the increased
purchases of raw materials in production for the goods, and finished goods to be
sold during the peak Christmas season. Higher sales are mainly attributed to the
increased demand for gift wrap and crackers during Christmas.
3 Segmental information
Segmental information is presented in respect of the Group's geographical
segments which are the primary basis of segmental reporting.
Geographical analysis
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.
Management monitors the operating results of its business units separately for
the purpose of making decisions about resource allocation and performance
assessment.
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.
+---------------------+----------+----------+----------+---------+------------+---------------+-----------+
| | UK | Europe | USA | Asia | Australia | Eliminations | Group |
+---------------------+----------+----------+----------+---------+------------+---------------+-----------+
| Six months ended 30 | | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 |
| September 2009 | GBP000 | | | | | | |
+---------------------+----------+----------+----------+---------+------------+---------------+-----------+
| Revenue - external | 52,713 | 12,361 | 22,862 | 1,001 | 4,817 | - | 93,754 |
+---------------------+----------+----------+----------+---------+------------+---------------+-----------+
| - intra segment | 2,463 | 938 | - | 5,198 | - | (8,599) | - |
+---------------------+----------+----------+----------+---------+------------+---------------+-----------+
| | | | | | | | |
+---------------------+----------+----------+----------+---------+------------+---------------+-----------+
| Total segment | 55,176 | 13,299 | 22,862 | 6,199 | 4,817 | (8,599) | 93,754 |
| revenue | | | | | | | |
+---------------------+----------+----------+----------+---------+------------+---------------+-----------+
| | | | | | | | |
+---------------------+----------+----------+----------+---------+------------+---------------+-----------+
| Segment operating | 1,289 | 666 | (350) | 343 | 742 | 19 | 2,709 |
| profit/(loss) | | | | | | | |
+---------------------+----------+----------+----------+---------+------------+---------------+-----------+
| Net finance | | | | | | | (1,839) |
| expenses | | | | | | | |
+---------------------+----------+----------+----------+---------+------------+---------------+-----------+
| Share of post-tax | | | | | | | (39) |
| loss of associates | | | | | | | |
+---------------------+----------+----------+----------+---------+------------+---------------+-----------+
| Income tax charge | | | | | | | (568) |
+---------------------+----------+----------+----------+---------+------------+---------------+-----------+
| Profit for six months ended 30 September 2009 | | | 263 |
+----------------------------------------------------------------+------------+---------------+-----------+
| | | | | | | | |
+---------------------+----------+----------+----------+---------+------------+---------------+-----------+
| Balances at 30 | | | | | | | |
| September 2009 | | | | | | | |
+---------------------+----------+----------+----------+---------+------------+---------------+-----------+
| Segment assets | 125,962 | 33,782 | 28,945 | 24,909 | 12,137 | (26,472) | 199,263 |
+---------------------+----------+----------+----------+---------+------------+---------------+-----------+
| Segment liabilities | | (31,930) | (46,683) | (9,367) | (6,879) | 22,664 | (153,309) |
| | (81,114) | | | | | | |
+---------------------+----------+----------+----------+---------+------------+---------------+-----------+
| | | | | | | | |
+---------------------+----------+----------+----------+---------+------------+---------------+-----------+
| Capital expenditure | | | | | | | |
+---------------------+----------+----------+----------+---------+------------+---------------+-----------+
| - property, plant | 250 | 153 | 23 | 32 | - | - | 458 |
| and equipment | | | | | | | |
+---------------------+----------+----------+----------+---------+------------+---------------+-----------+
| - intangible | 243 | 8 | - | - | - | - | 251 |
+---------------------+----------+----------+----------+---------+------------+---------------+-----------+
| | | | | | | | |
+---------------------+----------+----------+----------+---------+------------+---------------+-----------+
| Depreciation | 1,019 | 554 | 402 | 309 | 21 | - | 2,305 |
+---------------------+----------+----------+----------+---------+------------+---------------+-----------+
| Amortisation | | 3 | 22 | - | - | - | 73 |
| | 48 | | | | | | |
+---------------------+----------+----------+----------+---------+------------+---------------+-----------+
| | | | | | | | |
+---------------------+----------+----------+----------+---------+------------+---------------+-----------+
3 Segmental information continued
+----------------------+---------+---------+---------+---------+-----------+--------------+----------+
| | UK | Europe | USA | Asia | Australia | Eliminations | Group |
+----------------------+---------+---------+---------+---------+-----------+--------------+----------+
| Six months ended 30 | | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 |
| September 2008 | GBP000 | | | | | | |
+----------------------+---------+---------+---------+---------+-----------+--------------+----------+
| Continuing | | | | | | | |
| operations | | | | | | | |
+----------------------+---------+---------+---------+---------+-----------+--------------+----------+
| Revenue - external | 62,199 | 12,239 | 17,241 | 7,405 | - | - | 99,084 |
+----------------------+---------+---------+---------+---------+-----------+--------------+----------+
| - intra segment | 3,196 | 2,267 | - | 5,970 | - | (11,433) | - |
+----------------------+---------+---------+---------+---------+-----------+--------------+----------+
| Total segment | | 14,506 | 17,241 | 13,375 | - | (11,433) | 99,084 |
| revenue | 65,395 | | | | | | |
+----------------------+---------+---------+---------+---------+-----------+--------------+----------+
| Segment operating | (310) | 729 | 124 | 852 | - | 161 | 1,556 |
| (loss)/ | | | | | | | |
| profit before | | | | | | | |
| significant items | | | | | | | |
| and discontinued | | | | | | | |
| operations | | | | | | | |
+----------------------+---------+---------+---------+---------+-----------+--------------+----------+
| Significant items | (2,131) | (1,735) | - | (1,001) | - | - | (4,867) |
+----------------------+---------+---------+---------+---------+-----------+--------------+----------+
| Segment operating | (2,441) | (1,006) | 124 | (149) | - | 161 | (3,311) |
| (loss)/profit from | | | | | | | |
| continuing | | | | | | | |
| operations | | | | | | | |
+----------------------+---------+---------+---------+---------+-----------+--------------+----------+
| Post-tax loss from | - | - | (544) | - | - | - | (544) |
| discontinued | | | | | | | |
| operations | | | | | | | |
+----------------------+---------+---------+---------+---------+-----------+--------------+----------+
| Segment operating | (2,441) | (1,006) | (420) | (149) | - | 161 | (3,855) |
| loss | | | | | | | |
+----------------------+---------+---------+---------+---------+-----------+--------------+----------+
| Post-tax loss from | | | | | | | 544 |
| discontinued | | | | | | | |
| operations | | | | | | | |
+----------------------+---------+---------+---------+---------+-----------+--------------+----------+
| Net finance expenses | | | | | | | (3,637) |
+----------------------+---------+---------+---------+---------+-----------+--------------+----------+
| Share of post-tax | | | | | | | 126 |
| profit of associates | | | | | | | |
+----------------------+---------+---------+---------+---------+-----------+--------------+----------+
| Income tax credit | | | | | | | 2,267 |
+----------------------+---------+---------+---------+---------+-----------+--------------+----------+
| Loss from continuing operations six months ended 30 | | | (4,555) |
| September 2008 | | | |
+----------------------+---------+---------+---------+---------+-----------+--------------+----------+
+---------------------+----------+----------+----------+---------+---------------------+-----------+
| | UK | Europe | USA | Asia | Eliminations | Group |
+---------------------+----------+----------+----------+---------+---------------------+-----------+
| Balances at 30 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 |
| September 2008 | | | | | | |
+---------------------+----------+----------+----------+---------+---------------------+-----------+
| Segment assets | 143,087 | 34,143 | 50,436 | 29,188 | (21,183) | 235,671 |
+---------------------+----------+----------+----------+---------+---------------------+-----------+
| Investment in | 3,217 | - | - | - | - | 3,217 |
| associates | | | | | | |
+---------------------+----------+----------+----------+---------+---------------------+-----------+
| Segment assets | 146,304 | 34,143 | 50,436 | 29,188 | (21,183) | 238,888 |
+---------------------+----------+----------+----------+---------+---------------------+-----------+
| Segment liabilities | (96,892) | (35,256) | (52,220) | (9,047) | 18,979 | (174,436) |
+---------------------+----------+----------+----------+---------+---------------------+-----------+
| | | | | | | |
+---------------------+----------+----------+----------+---------+---------------------+-----------+
| Capital expenditure | | | | | | |
+---------------------+----------+----------+----------+---------+---------------------+-----------+
| - property, plant | 103 | 545 | 285 | 270 | - | 1,203 |
| and equipment | | | | | | |
+---------------------+----------+----------+----------+---------+---------------------+-----------+
| - intangible | 107 | - | - | - | - | 107 |
+---------------------+----------+----------+----------+---------+---------------------+-----------+
| Depreciation | 1,310 | 763 | 628 | 277 | - | 2,978 |
+---------------------+----------+----------+----------+---------+---------------------+-----------+
| Amortisation | 46 | 55 | - | - | - | 101 |
+---------------------+----------+----------+----------+---------+---------------------+-----------+
| Impairment of fixed | - | - | - | 1,603 | - | 1,603 |
| assets | | | | | | |
+---------------------+----------+----------+----------+---------+---------------------+-----------+
| | | | | | | |
+---------------------+----------+----------+----------+---------+---------------------+-----------+
3 Segmental information continued
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| | | UK | Europe | USA | Asia | Eliminations | Group |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| Year ended 31 March 2009 | | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| Continuing operations | | | | | | | |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| Revenue - external | | 126,114 | 34,211 | 43,143 | 13,449 | - | 216,917 |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| - intra segment | | 2,530 | 2,544 | - | 7,090 | (12,164) | - |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| Total segment revenue | | 128,644 | 36,755 | 43,143 | 20,539 | (12,164) | 216,917 |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| | | | | | | | |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| Segment operating | | 2,122 | 1,633 | (686) | 164 | 313 | 3,546 |
| profit/(loss) before | | | | | | | |
| significant items and | | | | | | | |
| discontinued operations | | | | | | | |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| Significant items | | (8,612) | (707) | (9,837) | (1,857) | - | (21,013) |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| Segment operating | | (6,490) | 926 | (10,523) | (1,693) | 313 | (17,467) |
| (loss)/profit from | | | | | | | |
| continuing operations | | | | | | | |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| Post-tax loss from | | - | - | (3,946) | - | - | (3,946) |
| discontinued operations | | | | | | | |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| Segment operating | | (6,490) | 926 | (14,469) | (1,693) | 313 | (21,413) |
| (loss)/profit | | | | | | | |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| Post-tax loss from | | | | | | | 3,946 |
| discontinued operations | | | | | | | |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| Net finance expenses | | | | | | | (5,429) |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| Share of post-tax profit | | | | | | | 120 |
| of associates | | | | | | | |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| Income tax charge | | | | | | | (1,617) |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| Loss from continuing operations year ended 31 March 2009 | | (24,393) |
+----------------------------------------------------------------------------+--------------+-----------+
| | | | | | | | |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| Balances at 31 March 2009 | | | | | | | |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| Segment assets | | 86,293 | 28,396 | 28,882 | 18,219 | (6,366) | 155,424 |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| Investment in associates | | 3,086 | - | - | - | - | 3,086 |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| Segment assets | | 89,379 | 28,396 | 28,882 | 18,219 | (6,366) | 158,510 |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| Segment liabilities | | (46,217) | (27,753) | (49,261) | (1,309) | 7,312 | (117,228) |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| | | | | | | | |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| Capital expenditure | | | | | | | |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| - property, plant and | | 519 | 515 | 266 | 425 | - | 1,725 |
| equipment | | | | | | | |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| - intangible | | 145 | 218 | 90 | - | - | 453 |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| | | | | | | | |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| Depreciation | | 2,502 | 1,003 | 980 | 573 | - | 5,058 |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| Amortisation | | 105 | 2 | 280 | - | - | 387 |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| Impairment of fixed | | 600 | 51 | 2,121 | 1,669 | - | 4,441 |
| assets | | | | | | | |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| Impairment of intangible | | - | 68 | 5,695 | - | - | 5,763 |
| assets | | | | | | | |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
| | | | | | | | |
+---------------------------+----+----------+----------+----------+----------+--------------+-----------+
4 Earnings per share
+----------------------------------------+--+---+-----------+-----------+---------+
| | | | As at 30 | As at 30 | As at |
| | | | | | 31 |
+----------------------------------------+--+---+-----------+-----------+---------+
| | | | September | September | March |
+----------------------------------------+--+---+-----------+-----------+---------+
| | | | 2009 | 2008 | 2009 |
+----------------------------------------+--+---+-----------+-----------+---------+
| | | | | restated | |
+----------------------------------------+--+---+-----------+-----------+---------+
| Adjusted basic earnings/(loss) per share | | | |
| excluding significant | | | |
+-----------------------------------------------+-----------+-----------+---------+
| items and discontinued operations | | | 0.0p | 0.3p | (1.0p) |
+----------------------------------------+--+---+-----------+-----------+---------+
| Loss per share on significant items | | | - | (9.9p) | (49.8p) |
+----------------------------------------+--+---+-----------+-----------+---------+
| Loss per share on discontinued | | | - | (1.2p) | (8.2p) |
| operations | | | | | |
+----------------------------------------+--+---+-----------+-----------+---------+
| Basic earnings/(loss) per share | | | 0.0p | (10.8p) | (59.0p) |
+----------------------------------------+--+---+-----------+-----------+---------+
| Diluted earnings/(loss) per share | | | 0.0p | (10.8p) | (59.0p) |
+----------------------------------------+--+---+-----------+-----------+---------+
The basic earnings per share is based on the profit of GBP18,000 (2008: loss of
GBP5,099,000) and a weighted average number of ordinary shares in issue of
48,676,872 (2008: 47,056,685) calculated as follows:
+----------------------------------------+--+---+-----------+-----------+-----------+
| Weighted average number of shares | | | September | September | March |
+----------------------------------------+--+---+-----------+-----------+-----------+
| in thousands of shares | | | 2009 | 2008 | 2009 |
+----------------------------------------+--+---+-----------+-----------+-----------+
| Issued ordinary shares at start of | | | 48,498 | 47,057 | 47,057 |
| period | | | | | |
+----------------------------------------+--+---+-----------+-----------+-----------+
| Shares issued in respect of | | | 179 | - | 959 |
| acquisitions | | | | | |
+----------------------------------------+--+---+-----------+-----------+-----------+
| Shares issued in respect of exercising of | - | - | 2 |
| share options | | | |
+-----------------------------------------------+-----------+-----------+-----------+
| Weighted average number of shares at the end | 48,677 | 47,057 | 48,018 |
| of the period | | | |
+----------------------------------------+--+---+-----------+-----------+-----------+
There were no share options exercisable at 30 September 2009. Total number of
options, over 5p ordinary shares, in issue as at 30 September 2009 was
6,182,556. The average number in issue during the period was 5,962,442.
5 Business combination
(a) Consolidation of Artwrap Pty Limited
On 3 October 2007, the Group acquired 50% of the ordinary shares in Artwrap Pty
Limited ('Artwrap'), a designer and distributor of gift wrap and greetings
products based in Australia. Initial consideration of GBP1,701,000 was paid in
October 2007 and deferred consideration of GBP781,000 was paid in August 2008.
The purchase agreement contained an option for the Group to buy any of the
remaining 50% of its share. Previously the Group had waived all rights to this
option. However, this waiver expired on 31 July 2009, and accordingly from 1
August 2009, Artwrap has been consolidated as a subsidiary and the remaining 50%
interest is shown as a non-controlling interest. Previously, Artwrap had been
recorded as an associate of the Group.
The fair value of the identifiable assets and liabilities of Artwrap as at 1
August 2009, the date of consolidation were:
+------------------------------------------------------+------------------+
| | Preliminary |
+------------------------------------------------------+------------------+
| | fair value and |
+------------------------------------------------------+------------------+
| | book value |
+------------------------------------------------------+------------------+
| | recognised on |
+------------------------------------------------------+------------------+
| | 1 August 2009 |
+------------------------------------------------------+------------------+
| | GBP000 |
+------------------------------------------------------+------------------+
| Intangible assets | 18 |
+------------------------------------------------------+------------------+
| Property, plant and equipment | 298 |
+------------------------------------------------------+------------------+
| Deferred tax assets | 282 |
+------------------------------------------------------+------------------+
| Inventory | 6,809 |
+------------------------------------------------------+------------------+
| Trade and other receivables | 2,008 |
+------------------------------------------------------+------------------+
| | 9,415 |
+------------------------------------------------------+------------------+
| | |
+------------------------------------------------------+------------------+
| Bank overdrafts | (3,168) |
+------------------------------------------------------+------------------+
| Trade and other payables | (1,906) |
+------------------------------------------------------+------------------+
| | (5,074) |
+------------------------------------------------------+------------------+
| | |
+------------------------------------------------------+------------------+
| Net assets | 4,341 |
+------------------------------------------------------+------------------+
| 50% interest on consolidation | 2,171 |
+------------------------------------------------------+------------------+
| Goodwill arising on consolidation | 876 |
+------------------------------------------------------+------------------+
| Total cost of investment (see below) | 3,047 |
+------------------------------------------------------+------------------+
From 1 August 2009, Artwrap has contributed, net of the amount of
non-controlling interest, GBP245,000 profit after tax to the Group.
The goodwill recognised above is attributed to the expected synergies and other
benefits from combining the assets and activities of Artwrap with those of the
Group.
The investment in associates are as follows:
+------------------------------------------------------+------------------+
| | 2009 |
| | GBP000 |
+------------------------------------------------------+------------------+
| At 1 April 2009 | 3,086 |
+------------------------------------------------------+------------------+
| Loss for the period to 31 July 2009, net of tax | (39) |
+------------------------------------------------------+------------------+
| Transfer 50% interest in associates into investment | (3,047) |
| in subsidiary (see above) | |
+------------------------------------------------------+------------------+
| At 30 September 2009 | - |
+------------------------------------------------------+------------------+
(b) Deferred consideration paid to Glitterwrap Inc.
On 4 September 2007, the Group acquired 100% of the issued share capital of
Glitterwrap Inc, a supplier of giftware and party products based in the USA.
Initial consideration of GBP1,295,000 was paid, GBP635,000 in cash and
GBP660,000 by the issue of 232,024 new ordinary shares. During the year ended 31
March 2008, Glitterwrap was merged into the operations of International
Greetings USA Inc.
During the year ended 31 March 2009 a payment of GBP938,000 was made, GBP469,000
in cash and GBP469,000 by the issue of 1,438,359 new ordinary shares.
On 24 September 2009, deferred consideration of GBP1,513,854 was paid by the
issue of 3,642,268 new ordinary shares at 41.56p per share. At 30 September
2009, the future deferred consideration payable was GBP763,927 at the exchange
rate prevailing at that date, to be payable in August 2010, with GBP327,312 of
this payable by shares. The Dollar values payable remain the same and the
difference is due to both the appreciation of Sterling against the US Dollar
from March 2009 to September 2009, and the unwinding of the fair value discount
factor.
6 Income tax
The major components of income tax expense in the interim report are:
+--------------------------------------------+------------+-----------+-----------+
| | Six months | Six | 12 months |
| | ended 30 | months | to 31 |
| | September | ended 30 | March |
| | 2009 | September | 2009 |
| | GBP000 | 2008 | GBP000 |
| | | GBP000 | |
+--------------------------------------------+------------+-----------+-----------+
| Current income tax | | | |
+--------------------------------------------+------------+-----------+-----------+
| Current income tax charge/(credit) | 431 | 87 | (193) |
+--------------------------------------------+------------+-----------+-----------+
| Deferred tax | | | |
+--------------------------------------------+------------+-----------+-----------+
| Relating to origination and reversal of | 137 | (2,354) | 1,810 |
| temporary differences | | | |
+--------------------------------------------+------------+-----------+-----------+
| | | | |
+--------------------------------------------+------------+-----------+-----------+
| Income tax charge/(credit) | 568 | (2,267) | 1,617 |
+--------------------------------------------+------------+-----------+-----------+
Taxation for the six months to 30 September is based on the effective rate of
taxation, which is estimated to apply in each country for the year ending 31
March 2010.
7 Restatement of comparative information
As a result of prior year adjustments made in the financial statements for the
year ended 31 March 2009, certain comparatives for the period to 30 September
2008 are required to be restated. These are shown as follows:
+------------------------------+------------+--------------+------------+----------+
| | 2008 | Note a) | Note b) | 2008 |
| | Previously | Party | Changes in | Restated |
| | stated | business | disclosure | GBP000 |
| | GBP000 | discontinued | GBP000 | |
| | | GBP000 | | |
+------------------------------+------------+--------------+------------+----------+
| Continuing operations | | | | |
+------------------------------+------------+--------------+------------+----------+
| Revenue | 100,503 | (1,349) | (70) | 99,084 |
+------------------------------+------------+--------------+------------+----------+
| Cost of sales | (79,910) | 1,285 | (6,081) | (84,706) |
+------------------------------+------------+--------------+------------+----------+
| Gross profit | 20,593 | (64) | (6,151) | 14,378 |
+------------------------------+------------+--------------+------------+----------+
| | | | | |
+------------------------------+------------+--------------+------------+----------+
| Selling expenses | (10,055) | 855 | 2,855 | (6,345) |
+------------------------------+------------+--------------+------------+----------+
| Administrative expenses | (15,655) | 167 | 3,428 | (12,060) |
+------------------------------+------------+--------------+------------+----------+
| Other operating income | 628 | - | (132) | 496 |
+------------------------------+------------+--------------+------------+----------+
| Profit on sales of fixed | 220 | | - | 220 |
| assets | | | | |
+------------------------------+------------+--------------+------------+----------+
| Operating (loss)/profit | (4,269) | 958 | - | (3,311) |
+------------------------------+------------+--------------+------------+----------+
| Finance expenses | (3,634) | (3) | - | (3,637) |
+------------------------------+------------+--------------+------------+----------+
| Share of profit of | 126 | - | - | 126 |
| associates (net of tax) | | | | |
+------------------------------+------------+--------------+------------+----------+
| (Loss)/profit before tax | (7,777) | 955 | - | (6,822) |
+------------------------------+------------+--------------+------------+----------+
| Income tax credit/(charge) | 2,630 | (363) | - | 2,267 |
+------------------------------+------------+--------------+------------+----------+
| (Loss)/profit from | (5,147) | 592 | - | (4,555) |
| continuing operations | | | | |
+------------------------------+------------+--------------+------------+----------+
| Profit/(loss) from | 48 | (592) | - | (544) |
| discontinued operations (net | | | | |
| of tax) | | | | |
+------------------------------+------------+--------------+------------+----------+
| Loss for the year | (5,099) | - | - | (5,099) |
| attributable to equity | | | | |
| holders of the parent | | | | |
| company | | | | |
| | | | | |
+------------------------------+------------+--------------+------------+----------+
International Greetings PLC
Interim Report 2009
Notes to the interim report continued
7 Restatement of comparative information continued
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| | 2008 | | Note a) | | 2008 | | |
| | Previously | | Party | | Restated | | |
| | stated | | business | | | | |
| | | | discontinued | | | | |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| Adjusted basic (loss)/earnings | (1.0p) | | 1.3p | | 0.3p | | |
| per share excluding | | | | | | | |
| significant items and | | | | | | | |
| discontinued operations | | | | | | | |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| Loss per share on significant | (9.9p) | | 0.0p | | (9.9p) | | |
| items | | | | | | | |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| Earnings/(loss) per share on | 0.1p | | (1.3p) | | (1.2p) | | |
| discontinued operations | | | | | | | |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| Basic and diluted loss per | (10.8p) | | 0.0p | | (10.8p) | | |
| share | | | | | | | |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| | | | | | | | |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| Balance Sheet | 2008 | | Note b) | | Note c) | | 2008 |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| | Previously | | Engravings | | Inventory | | Restated |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| | stated | | | | | | |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| | GBP000 | | GBP000 | | GBP000 | | GBP000 |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| Assets | | | | | | | |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| Property, plant and equipment | 41,034 | | (554) | | - | | 40,480 |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| Intangible assets | 35,876 | | - | | - | | 35,876 |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| Investment in associates | 3,217 | | - | | - | | 3,217 |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| Deferred tax assets | 5,376 | | - | | - | | 5,376 |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| Inventory | 72,862 | | 2,208 | | (1,987) | | 73,083 |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| Income tax receivable | 82 | | - | | 303 | | 385 |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| Trade and other receivables | 81,662 | | (1,654) | | - | | 80,008 |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| Cash and cash equivalents | 36 | | - | | - | | 36 |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| Derivative financial | 427 | | - | | - | | 427 |
| instruments | | | | | | | |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| Total assets | 240,572 | | - | | (1,684) | | 238,888 |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| Equity | | | | | | | |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| Share capital | 2,353 | | - | | - | | 2,353 |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| Share premium | 3,006 | | - | | - | | 3,006 |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| Reserves | 17,451 | | - | | 62 | | 17,513 |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| Retained earnings brought | 48,425 | | - | | (1,746) | | 46,679 |
| forward | | | | | | | |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| Loss for the year | (5,099) | | - | | | | (5,099) |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| Retained earnings carried | 43,326 | | - | | (1,746) | | 41,580 |
| forward | | | | | | | |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| Total equity attributable to | 66,136 | | - | | (1,684) | | 64,452 |
| equity holders of the parent | | | | | | | |
| company | | | | | | | |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| Total liabilities | 174,436 | | - | | - | | 174,436 |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
| Total equity and liabilities | 240,572 | | - | | (1,684) | | 238,888 |
+--------------------------------+------------+----+--------------+---+-----------+--+----------+
a) In order to comply with IFRS the discontinued Party business has been removed
from continuing operations for both years, and shown separately. The September
2008 discontinued business included the final changes for the discontinued
Halloween Express associate which was sold in April 2008.
b) The Board has re-categorised between overheads and cost of sales to show all
distribution costs, and all costs of design and production of stock within cost
of sales.
Engravings used in the printing machines were not reported consistently across
the Group, with amounts included in fixed assets, inventory or prepayments. The
Group now shows all its engravings within inventory as work in progress due to
its short but variable useful life. The prior year comparative has been adjusted
to reflect this with GBP554,000 moving from fixed assets and GBP1,654,000 moving
from prepayments.
c) Material errors regarding stock valuation in two of the operating companies
mean that at 30 September 2008, the inventory was overstated by GBP1,987,000,
with an impact on opening reserves of GBP1,746,000 net of tax and reserves of
GBP62,000 being the exchange difference on translation. There was no effect on
the income statement for the period.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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