TIDMIGR
RNS Number : 6124U
International Greetings PLC
04 December 2013
4(th) December 2013
International Greetings PLC ("the Company" or "the Group")
Interim Results
International Greetings PLC, one of the world's leading
designers, innovators and manufacturers of gift packaging and
greetings, stationery and creative play products, announces its
interim results for the six months ended 30 September 2013.
Financial highlights
* Sales in line with expectations at GBP113.6 million
(2012 H1: GBP115.2million), reflecting the phasing of
deliveries to customer requirements, resulting in H2
weighting
* Gross margin improved to 19.0% (2012 H1:18.4%)
* Operating profit before exceptional items up GBP0.1
million at GBP5.3 million (2012 H1: GBP5.2 million)
* Profit before tax and exceptional items up 7.9% to
GBP3.5 million (2012 H1: GBP3.3 million)
* Profit before tax in line with expectations at GBP1.7
million (2012 H1: GBP2.5 million) after planned
exceptional costs of GBP1.8 million in respect of our
new investment in Wales completed to planned
timescales, costs and service levels.(2012 H1:
GBP0.75 million)
* Debt reduction programme remains on track with net
debt level at GBP84.8 million (2012 H1: GBP84.6
million) including the capital investment in Wales
Operational highlights
* Manufacturing season in China successfully completed
on time and fully to customer requirements
* Strong manufacturing efficiencies and volume gains
achieved in Europe following investment last year
* Investment programme in Wales remains on track and on
budget
* Completed renegotiation of US banking facilities with
Sun Trust on improved terms, building on improvements
achieved with HSBC in April 2013
* Granted Royal Warrant for Gift Wrap, in addition to
established Royal Warrant for Christmas crackers
* Robust order book for the full year 2013/14, in line
with expectations
Paul Fineman, Chief Executive said:
"The first half of the year has seen a number of positive
operational developments across the Group and we are pleased to
report that all regions traded profitably during the period, with
notable improved performance in the UK and Europe and a strong
order book in the USA.
"We are particularly pleased to note the record levels of gift
wrap production and profitable sales growth in Europe following the
investment in our new, high definition printing facilities, which
underpinned this success. This bodes well for the recently
commenced project to bring similar technology to our gift wrap
plant in Wales. This exciting initiative is on track and on budget
to be operational in the Spring of 2014.
"We are confident that the Group remains well placed to meet the
needs of our customers, whilst continuing to provide excellent
customer service and innovation. We have a strong order book and
are on course to deliver targeted growth in underlying earnings per
share, whilst continuing to remain focussed on reducing
leverage."
For further information, please contact:
International Greetings plc Tel: 01525 887 310
Paul Fineman, Chief Executive
Anthony Lawrinson, Chief Financial
Officer
Cenkos Securities plc Tel: 0207 397 8900
Bobbie Hilliam
FTI Consulting Tel: 020 7831 3113
Jonathon Brill
Georgina Goodhew
Chief Executive Officer's review
Unwrapping progress
Paul Fineman
CEO
Key achievements
-- Profit before tax and exceptional items up by 7.9% to GBP3.5
million (2012 H1: GBP3.3 million)
-- Gross margin improved to 19.0% (2012 H1: 18.4%)
-- Sales in line with expectations
-- Christmas cracker manufacturing season in China successfully completed
-- Gift wrap production efficiencies and volume gains yielded in
Europe following investment last year
-- Investment programme in Wales on track and on budget
-- Re-negotiation of US banking facilities on improved terms
Overview
Sales and profit for the six months ended 30 September 2013 are
overall in line with expectations.
Operational review
We are pleased to report that all regions traded profitably
during the period, with notable improved performance in the UK and
Europe, compared to the same period last year, and a strong order
book in the USA. We are encouraged by the operational achievements,
and, in particular, an excellent performance delivered by our
manufacturing facilities throughout the Group.
In Europe, our investment during FY2013 in new state-of-the-art
high-definition printing facilities, underpinned record levels of
gift wrap production and profitable sales growth. This bodes well
for the recently commenced project to bring similar technology to
our gift wrap plant in Wales. This exciting initiative is on track
and on budget and expected to be operational in the spring of 2014.
In the meantime, our existing production facilities in the UK and
also in the USA are delivering to plan and in line with annual
forecasts.
We are also delighted with the performance of our relocated
China-based Christmas cracker manufacturing operation, where we
have produced on time and delivered in full, meeting targeted
efficiencies whilst implementing initiatives for continued
improvement.
The global nature of our business is demonstrated by the fact
that during the period our products have been distributed to over
80 countries and are sold in excess of 100,000 retail outlets
worldwide. Whilst providing our customers with a broad and flexible
portfolio of products and brands, we are experiencing increased
demand for the Group's generic brands, and, in particular, the Tom
Smith(TM) range of products. The brand's profile was further
enhanced by our participation in the Coronation Festival at
Buckingham Palace in July, following which, we were proud to
announce that the Royal Warrant granted to the Tom Smith(TM) brand
now applies to gift wrap as well as to the long-established
Christmas cracker category.
Financial review
Revenue from continuing operations for the period was in line
with expectations at GBP113.6 million (2012 H1: GBP115.2 million),
with particularly good progress in Europe where sales increased by
21%. The timing of sales at the half year merely reflects the
phasing of deliveries to customer requirements, with several major
international retailers now ordering deliveries later in the year,
resulting in H2 weighting for FY2013.
Gross profit margins at 19.0% (2012 H1: 18.4%) were 0.6% higher
with improved operational performance, particularly in China, being
the main driver. Overhead costs were steady at GBP16.5 million
(2012 H1: GBP16.5 million).
Operating profit before exceptional costs was up slightly at
GBP5.3 million (2012 H1: GBP5.2 million) while profit before tax
and exceptional items was up 7.9% to GBP3.5 million from GBP3.3
million in the equivalent period last year.
The planned exceptional charges of GBP1.8 million in respect of
our new investment in Wales and associated accelerated amortisation
of bank fees resulted in profit before tax and after exceptional
items being down 32% to GBP1.7 million (2012 H1: GBP2.5 million).
Of this charge, GBP0.6 million represents accelerated depreciation
(non-cash) on assets that will no longer be required once the new
machinery is operational and a further GBP0.8 million represents
provisions for redundancy and decommissioning costs and associated
costs that are only expected to flow out as cash in the next
financial year. The remaining GBP0.4 million is included within
finance expenses and relates to accelerated amortisation of bank
arrangement fees as a result of renegotiation of banking facilities
to accommodate the financing of the new investment.
Finance expenses before exceptional items in the period were
GBP1.8 million (2012 H1: GBP1.9 million). The Group's borrowing
costs are falling as certain qualifying leverage ratios are
achieved, triggering reduced margins on our banking facilities. Our
facilities with HSBC were increased and renewed in April 2013 on
improved terms, providing the capacity for the Group to make an
important capital investment at our manufacturing facilities in
Wales. Furthermore our US banking facilities were also renegotiated
and extended on favourable terms and at a reduced margin with
SunTrust just after the period end in October 2013. Reduction of
debt and the associated interest cost remains a key focus and our
programme for this is on-track. Finance costs after exceptional
items of GBP0.4 million (2012 H1: nil) were GBP2.2 million (2012
H1: GBP1.9 million).
The effective underlying tax rate was 25% (2012 H1: 26%). This
rate has fallen again, reflecting reductions in the UK rate of
taxation and our ability to recognise tax losses in the USA as
profitable growth continues. There are still unrecognised losses
with a tax value of $3.2 million in the USA and GBP0.7 million in
the UK which can be reflected in the balance sheet as US
profitability progresses.
Stated before exceptional items, basic earnings per share were
in line with expectations at 3.8p (2012 H1: 3.9p), and 1.4p (2012
H1: 3.4p) after exceptional items. Our primary measure of fully
diluted earnings per share before exceptional items was also in
line with expectations at 3.7p (2012 H1: 3.7p). See note 6 of the
interim financial statements.
Capital expenditure in the six months was GBP2.3 million (2012
H1: GBP1.4 million) reflecting the initial outlays on the
investment in Wales. Provided certain criteria are met, a
government grant is receivable against this investment and the
first contribution of GBP0.1 million was received in the period
slightly earlier than expected.
Cash used by operations was GBP38.9 million in line with the
prior year (2012 H1: GBP39.1 million), which reflects the
seasonality of the business as 53% of the sales in the six month
period occurred in the last two months.
Debtors and receivables at GBP68.1 million were lower than at H1
2012 (GBP69.3 million) whereas stock levels were higher at GBP67.0
million (2012 H1: GBP60.6 million). Both reflect the variable
phasing of deliveries to customer requirements in the current year
and stock build including that associated with a stronger order
book in Europe.
Net debt at 30 September 2013 was steady at GBP84.8 million
(2012 H1: GBP84.6 million) despite the effect of exchange rates
which increased debt by GBP0.2 million compared with the prior
year, and capital investment in Wales amounting to GBP1.0 million
at the end of H1.
The Board will not be declaring an interim dividend and will
keep this policy under review (2012 H1: nil).
Current trading outlook
We have a strong order book and are well placed to meet the
needs of our customers, whilst continuing to provide excellent
service levels as demonstrated by acknowledgements and awards we
are so pleased to receive.
Operational improvements, prudent investment in projects with
early pay back and a focus on customer service and innovation
continue to deliver margin and profit growth.
Sales achieved in the first half of the year reflect the
changing platform of delivery phasing required by several of the
world's major retailers.
We are on course to achieve targeted growth in underlying
earnings per share and remain focused on reducing leverage through
converting profit into cash.
Paul Fineman
CEO
Consolidated income statement
six months ended 30 September 2013
Unaudited Unaudited
six months six months 12 months
ended ended ended
30 Sep 30 Sep 31 Mar
2013 2013 2013 2012 2012 2012 2013 2013 2013
----------- ----------- -------- ----------- ----------- -------- ----------- ----------- ---------
Before Exceptional Before Exceptional Before Exceptional
exceptional items exceptional items exceptional items
items (note 3) Total items (note 3) Total items (note 3) Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------- ----------- ----------- -------- ----------- ----------- -------- ----------- ----------- ---------
Continuing
operations
Revenue 113,556 - 113,556 115,207 - 115,207 225,211 - 225,211
Cost of sales (91,995) (1,478) (93,473) (94,056) - (94,056) (183,941) (953) (184,894)
---------------- ----------- ----------- -------- ----------- ----------- -------- ----------- ----------- ---------
Gross profit 21,561 (1,478) 20,083 21,151 - 21,151 41,270 (953) 40,317
19.0% 17.7% 18.4% 18.4% 18.3% 17.9%
Selling expenses (6,308) - (6,308) (6,723) (750) (7,473) (12,790) (455) (13,245)
Administration
expenses (10,228) - (10,228) (9,849) - (9,849) (18,789) (195) (18,984)
Other operating
income 315 72 387 382 - 382 803 - 803
(Loss)/profit on
sales of
property,
plant, and
equipment (6) - (6) 251 - 251 252 - 252
---------------- ----------- ----------- -------- ----------- ----------- -------- ----------- ----------- ---------
Operating
profit/(loss) 5,334 (1,406) 3,928 5,212 (750) 4,462 10,746 (1,603) 9,143
Finance expenses (1,792) (403) (2,195) (1,929) - (1,929) (3,466) - (3,466)
---------------- ----------- ----------- -------- ----------- ----------- -------- ----------- ----------- ---------
Profit/(loss)
before tax 3,542 (1,809) 1,733 3,283 (750) 2,533 7,280 (1,603) 5,677
Income tax
(charge)/credit (886) 416 (470) (854) 224 (630) (1,890) 289 (1,601)
---------------- ----------- ----------- -------- ----------- ----------- -------- ----------- ----------- ---------
Profit/(loss)
from continuing
operations for
the period 2,656 (1,393) 1,263 2,429 (526) 1,903 5,390 (1,314) 4,076
---------------- ----------- ----------- -------- ----------- ----------- -------- ----------- ----------- ---------
Attributable to:
Owners of the
Parent Company 792 1,874 3,401
Non-controlling
interest 471 29 675
---------------- ----------- ----------- -------- ----------- ----------- -------- ----------- ----------- ---------
Earnings per ordinary share
Unaudited Unaudited
six months six months 12 months
ended ended ended
30 Sep 30 Sep 31 Mar
2013 2012 2013
----------------- ----------------- -----------------
Diluted Basic Diluted Basic Diluted Basic
------------------------------- -------- ------- -------- ------- -------- -------
Adjusted earnings per share
excluding exceptional items 3.7p 3.8p 3.7p 3.9p 7.8p 8.1p
Loss per share on exceptional
items (2.4p) (2.4p) (0.5p) (0.5p) (2.0p) (2.1p)
Earnings per share from
continuing operations 1.3p 1.4p 3.2p 3.4p 5.8p 6.0p
Earnings per share 1.3p 1.4p 3.2p 3.4p 5.8p 6.0p
------------------------------- -------- ------- -------- ------- -------- -------
Consolidated statement of comprehensive income
six months ended 30 September 2013
six months six months 12 months
ended ended ended
30 Sep 30 Sep 31 Mar
2013 2012 2013
GBP000 GBP000 GBP000
---------------------------------------------------------- ----------- ----------- ----------
At 1 April 2013 1,263 1,903 4,076
Other comprehensive income:
Exchange difference on translation of foreign operations (1,558) (473) 633
Net (loss)/profit on cash flow hedges (net of tax) 220 (181) (5)
Other comprehensive income for period, net of tax (1,338) (654) 628
Total comprehensive income for the period, net of tax (75) 1,249 4,704
Attributable to:
Owners of the Parent Company 42 1,260 3,796
Non-controlling interests (117) (11) 908
---------------------------------------------------------- ----------- ----------- ----------
(75) 1,249 4,704
---------------------------------------------------------- ----------- ----------- ----------
Consolidated statement of changes in equity
six months ended 30 September 2013
Share
premium
and
capital Non-
Share redemption Merger Hedging Translation Retained Shareholder controlling
capital reserve reserves reserves reserve earnings equity interest Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------- ------- ---------- -------- -------- ----------- -------- ----------- ----------- -------
At 31 March
2013 2,838 4,658 17,164 (451) 846 26,833 51,888 4,684 56,572
Profit for the
year - - - - - 792 792 471 1,263
Other comprehensive
income - - - 220 (970) - (750) (588) (1,338)
------------------- ------- ---------- -------- -------- ----------- -------- ----------- ----------- -------
Total comprehensive
income for the
year - - - 220 (970) 792 42 (117) (75)
Equity-settled
share-based
payment - - - - - 5 5 - 5
Options exercised 51 91 - - - - 142 - 142
Equity dividends
paid - - - - - - - (1,014) (1,014)
------------------- ------- ---------- -------- -------- ----------- -------- ----------- ----------- -------
At 30 September
2013 2,889 4,749 17,164 (231) (124) 27,630 52,077 3,553 55,630
------------------- ------- ---------- -------- -------- ----------- -------- ----------- ----------- -------
For the six months ended 30 September 2012
Share
premium
and
capital Non-
Share redemption Merger Hedging Translation Retained Shareholder controlling
capital reserve reserves reserves reserve earnings equity interest Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------- ------- ---------- -------- -------- ----------- -------- ----------- ----------- ------
At 1 April 2012 2,750 4,480 17,164 (446) 446 23,410 47,804 4,744 52,548
Profit for the
period - - - - - 1,874 1,874 29 1,903
Other comprehensive
income - - - (181) (433) - (614) (40) (654)
-------------------- ------- ---------- -------- -------- ----------- -------- ----------- ----------- ------
Total comprehensive
income for the
year - - - (181) (433) 1,874 1,260 (11) 1,249
Equity-settled
share-based
payment - - - - - 55 55 - 55
Options exercised 78 159 - - - - 237 - 237
Equity dividends
paid - - - - - - - (968) (968)
-------------------- ------- ---------- -------- -------- ----------- -------- ----------- ----------- ------
At 30 September
2012 2,828 4,639 17,164 (627) 13 25,339 49,356 3,765 53,121
-------------------- ------- ---------- -------- -------- ----------- -------- ----------- ----------- ------
For the year ended 31 March 2013
Share
premium
and
capital Non-
Share redemption Merger Hedging Translation Retained Shareholder controlling
capital reserve reserves reserves reserve earnings equity interest Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------- ------- ---------- -------- -------- ----------- -------- ----------- ----------- ------
At 1 April 2012 2,750 4,480 17,164 (446) 446 23,410 47,804 4,744 52,548
Profit for the
year - - - - - 3,401 3,401 675 4,076
Other comprehensive
income - - - (5) 400 - 395 233 628
-------------------- ------- ---------- -------- -------- ----------- -------- ----------- ----------- ------
Total comprehensive
income for the
year - - - (5) 400 3,401 3,796 908 4,704
Equity-settled
share-based
payment - - - - - 22 22 - 22
Options exercised 88 178 - - - - 266 - 266
Equity dividends
paid - - - - - - - (968) (968)
-------------------- ------- ---------- -------- -------- ----------- -------- ----------- ----------- ------
At 31 March
2013 2,838 4,658 17,164 (451) 846 26,833 51,888 4,684 56,572
-------------------- ------- ---------- -------- -------- ----------- -------- ----------- ----------- ------
Consolidated balance sheet
six months ended 30 September 2013
Unaudited Unaudited
as at as at As at
30 Sep 30 Sep 31 March
2013 2012 2013
Note GBP000 GBP000 GBP000
----------------------------------------------------- ----- ---------- ---------- ---------
Non-current assets
Property, plant and equipment 28,732 30,360 29,993
Intangible assets 32,397 32,502 32,795
Deferred tax assets 4,007 4,159 4,250
----------------------------------------------------- ----- ---------- ---------- ---------
Total non-current assets 65,136 67,021 67,038
----------------------------------------------------- ----- ---------- ---------- ---------
Current assets
Inventory 67,032 60,615 50,114
Trade and other receivables 68,140 69,289 23,285
Cash and cash equivalents 4 1,275 3,403 2,301
----------------------------------------------------- ----- ---------- ---------- ---------
Total current assets 136,447 133,307 75,700
----------------------------------------------------- ----- ---------- ---------- ---------
Total assets 201,583 200,328 142,738
----------------------------------------------------- ----- ---------- ---------- ---------
Equity
Share capital 2,889 2,828 2,838
Share premium 3,409 3,299 3,318
Reserves 18,149 17,890 18,899
Retained earnings 27,630 25,339 26,833
----------------------------------------------------- ----- ---------- ---------- ---------
Equity attributable to owners of the Parent Company 52,077 49,356 51,888
----------------------------------------------------- ----- ---------- ---------- ---------
Non-controlling interests 3,553 3,765 4,684
----------------------------------------------------- ----- ---------- ---------- ---------
Total equity 55,630 53,121 56,572
----------------------------------------------------- ----- ---------- ---------- ---------
Non-current liabilities
Loans and borrowings 4 27,205 28,854 29,479
Deferred income 1,096 1,604 1,329
Provisions 861 899 862
Other financial liabilities 1,667 526 1,803
----------------------------------------------------- ----- ---------- ---------- ---------
Total non-current liabilities 30,829 31,883 33,473
----------------------------------------------------- ----- ---------- ---------- ---------
Current liabilities
Bank overdraft 4 3,019 5,820 336
Loans and borrowings 4 54,256 53,199 12,847
Deferred income 555 550 550
Provisions 104 172 107
Income tax payable 1,332 580 904
Trade and other payables 44,707 45,191 28,995
Other financial liabilities 11,151 9,812 8,954
----------------------------------------------------- ----- ---------- ---------- ---------
Total current liabilities 115,124 115,324 52,693
----------------------------------------------------- ----- ---------- ---------- ---------
Total liabilities 145,953 147,207 86,166
----------------------------------------------------- ----- ---------- ---------- ---------
Total equity and liabilities 201,583 200,328 142,738
----------------------------------------------------- ----- ---------- ---------- ---------
Consolidated cash flow statement
six months ended 30 September 2013
Unaudited Unaudited
six months six months 12 months
Ended ended Ended
30 Sep 30 Sep 31 Mar
2013 2012 2013
GBP000 GBP000 GBP000
--------------------------------------------------------- ----------- ----------- ----------
Cash flows from operating activities 1,263 1,903 4,076
Profit for the year
Adjustments for: 2,649 1,914 3,807
Depreciation
Amortisation of intangible assets 176 318 494
Finance expenses - continuing operations 2,195 1,929 3,466
Income tax credit - continuing operations 470 630 1,601
Loss/(profit) on sales of property, plant and equipment 6 (251) (252)
Loss on external sale of intangible fixed assets 10 1 -
Equity-settled share-based payment 5 55 22
--------------------------------------------------------- ----------- ----------- ----------
Operating profit after adjustments for non-cash items 6,774 6,499 13,214
Change in trade and other receivables (46,879) (48,675) (1,965)
Change in inventory (17,142) (18,116) (7,171)
Change in trade and other payables 18,657 21,754 4,356
Change in provisions and deferred income (352) (524) (901)
--------------------------------------------------------- ----------- ----------- ----------
Cash (used by)/generated from operations (38,942) (39,062) 7,533
Tax paid (39) (452) (937)
Interest and similar charges paid (1,759) (1,757) (3,285)
Receipts from sales of property for resale - - -
--------------------------------------------------------- ----------- ----------- ----------
Net cash (outflow)/inflow from operating activities (40,740) (41,271) 3,311
--------------------------------------------------------- ----------- ----------- ----------
Cash flow from investing activities
Proceeds from sale of property, plant and equipment 33 403 421
Acquisition of intangible assets (105) (88) (242)
Acquisition of property, plant and equipment (2,147) (1,339) (1,884)
Receipt of government grant 120 - -
--------------------------------------------------------- ----------- ----------- ----------
Net cash (outflow) from investing activities (2,099) (1,024) (1,705)
--------------------------------------------------------- ----------- ----------- ----------
Cash flows from financing activities
Proceeds from issue of share capital 142 237 266
Repayment of secured borrowings (4,336) (3,504) (4,060)
Net movement in credit facilities 42,642 43,543 2,748
Payment of finance lease liabilities (125) (37) (115)
New bank loans raised 3,100 - -
New finance leases (a) 2 - 1,764
Loan arrangement fees - (444) (444)
Dividends paid to non-controlling interests (1,014) (968) (968)
--------------------------------------------------------- ----------- ----------- ----------
Net cash inflow/(outflow) from financing activities 40,411 38,827 (809)
--------------------------------------------------------- ----------- ----------- ----------
Net increase in cash and cash equivalents (2,428) (3,468) 797
Cash and cash equivalents at end of period 1,965 1,223 1,223
Effect of exchange rate fluctuations on cash held (1,281) (172) (55)
--------------------------------------------------------- ----------- ----------- ----------
Cash and cash equivalents at end of the period (1,744) (2,417) 1,965
--------------------------------------------------------- ----------- ----------- ----------
(a) In 2011/12 fixed assets of GBP1,764,000 shown as acquisition
of property, plant and equipment were purchased, cash inflow from
new finance leases represents proceeds received in respect of these
assets which are now held by the Group under finance leases.
1 Accounting policies
Basis of preparation
The financial information contained in this interim report does
not constitute statutory accounts as defined in Section 434 of the
Companies Act 2006 and is unaudited.
The Group interim report has been prepared and approved by the
Directors in accordance with International Financial Reporting
Standards as adopted by the EU ("Adopted IFRS"). The financial
information for the year ended 31 March 2013 is extracted from the
statutory accounts of the Group for that financial year and does
not constitute statutory accounts as defined in Section 434 of the
Companies Act 2006. The auditor's report was (i) unqualified; (ii)
did not include a reference to any matters to which the auditor
drew attention by way of emphasis without qualifying their report;
and (iii) did not contain a statement under Section 498 (2) of the
Companies Act 2006.
Going concern basis
The borrowing requirement of the Group increases steadily over
the period from July and peaks between September and November
before then reducing due to the seasonality of the business. This
is due to the sales of wrap and crackers which are mainly for the
Christmas market.
As with any company placing reliance on external entities for
financial support, the Directors acknowledge that there can be no
certainty that this support will continue although, at the date of
approval of this interim report, they have no reason to believe
that it will not do so.
After making enquiries, the Directors have a reasonable
expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future.
Thus, they continue to adopt the going concern basis of accounting
in preparing the financial statements.
The interim report does not include all the information and
disclosures required in the annual financial statements and should
be read in conjunction with the Group's annual financial statements
for the year ended 31 March 2013.
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 2013.
2 Segmental information
The Group has one material business activity being the design,
manufacture, import and distribution of gift packaging and
greetings, social expression giftware, stationery and creative play
products.
For management purposes the Group is organised into four
geographic business units.
The results below are allocated based on the region in which the
businesses are located; this reflects the Group's management and
internal reporting structure. The decision was made during 2011 to
focus Asia as a service provider of manufacturing and procurement
operations, whose main customers are our UK businesses. Both the
China factory and the majority of the Hong Kong procurement
operations are now overseen by our UK operational management team
and we therefore continue to include Asia within the internal
reporting of the UK operations, such that UK and Asia comprise an
operating segment. The chief operating decision maker is the
Board.
Intra-segment pricing is determined on an arm's length basis.
Segment results include items directly attributable to a segment as
well as those that can be allocated on a reasonable basis.
Financial performance of each segment is measured on operating
profit. Interest expense or revenue and tax are managed on a Group
basis and not split between reportable segments.
Segment assets are all non-current and current assets, excluding
deferred tax and income tax receivable. Where cash is shown in one
segment, which nets under the Group's banking facilities, against
overdrafts in other segments, the elimination is shown in the
eliminations column. Similarly inter-segment receivables and
payables are eliminated.
UK and
Asia Europe USA Australia Eliminations Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------ -------- -------- -------- --------- ------------ ---------
Six months ended 30 September
2013
Continuing operations
Revenue - external 57,631 13,316 28,323 14,286 - 113,556
- inter-segment 1,015 290 - - (1,305) -
------------------------------ -------- -------- -------- --------- ------------ ---------
Total segment revenue 58,646 13,606 28,323 14,286 (1,305) 113,556
------------------------------ -------- -------- -------- --------- ------------ ---------
Segment result before
exceptional items 3,223 679 705 1,363 - 5,970
Exceptional items (1,406) - - - - (1,406)
------------------------------ -------- -------- -------- --------- ------------ ---------
Segment result 1,817 679 705 1,363 - 4,564
------------------------------ -------- -------- -------- --------- ------------ ---------
Central administration
costs (636)
Net finance expenses (2,195)
Income tax (470)
------------------------------ -------- -------- -------- --------- ------------ ---------
Profit from continuing
operations
for the six months ended
30 September 2013 1,263
------------------------------ -------- -------- -------- --------- ------------ ---------
Balances at 30 September
2013
Continuing operations
------------------------------ -------- -------- -------- --------- ------------ ---------
Segment assets 134,248 24,703 25,921 13,691 3,020 201,583
------------------------------ -------- -------- -------- --------- ------------ ---------
Segment liabilities (75,054) (21,032) (41,555) (7,248) (1,064) (145,953)
------------------------------ -------- -------- -------- --------- ------------ ---------
Capital expenditure
- property, plant and
equipment 1,470 198 392 87 - 2,147
- intangible 24 9 72 - - 105
Depreciation 1,810 394 333 112 - 2,649
Amortisation 84 27 22 43 - 176
------------------------------ -------- -------- -------- --------- ------------ ---------
UK and Asia Europe USA Australia Eliminations Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------------------- ----------- -------- -------- --------- ------------ ---------
Six months ended 30 September 2012
Continuing operations
Revenue - external 63,527 11,122 27,322 13,236 - 115,207
- inter-segment 968 143 - - (1,111) -
------------------------------------------------- ----------- -------- -------- --------- ------------ ---------
Total segment revenue 64,495 11,265 27,322 13,236 (1,111) 115,207
------------------------------------------------- ----------- -------- -------- --------- ------------ ---------
Segment result before exceptional items 3,277 488 1,519 826 - 6,110
Exceptional items - - - (750) - (750)
------------------------------------------------- ----------- -------- -------- --------- ------------ ---------
Segment result 3,277 488 1,519 76 - 5,360
------------------------------------------------- ----------- -------- -------- --------- ------------ ---------
Central administration costs (898)
Net finance expenses (1,929)
Income tax (630)
------------------------------------------------- ----------- -------- -------- --------- ------------ ---------
Profit from continuing operations for the six
months ended 30 September 2012 1,903
Balances at 30 September 2012
------------------------------------------------- ----------- -------- -------- --------- ------------ ---------
Continuing operations
------------------------------------------------- ----------- -------- -------- --------- ------------ ---------
Segment assets 137,888 23,891 23,225 12,559 2,765 200,328
------------------------------------------------- ----------- -------- -------- --------- ------------ ---------
Segment liabilities (80,031) (21,370) (40,100) (6,520) 814 (147,207)
------------------------------------------------- ----------- -------- -------- --------- ------------ ---------
Capital expenditure
- property, plant and equipment 405 91 159 684 - 1,339
- intangible 49 8 19 12 - 88
Depreciation 1,079 403 342 90 - 1,914
Amortisation 228 28 18 44 - 318
------------------------------------------------- ----------- -------- -------- --------- ------------ ---------
UK and Asia Europe USA Australia Eliminations Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------------------------------- ----------- -------- -------- --------- ------------ --------
Year ended 31 March 2013
Continuing operations
Revenue - external 118,765 28,499 50,104 27,843 - 225,211
- inter-segment 1,433 143 - - (1,576) -
-------------------------------------------------- ----------- -------- -------- --------- ------------ --------
Total segment revenue 120,198 28,642 50,104 27,843 (1,576) 225,211
-------------------------------------------------- ----------- -------- -------- --------- ------------ --------
Segment result before exceptional items 3,974 1,151 3,796 2,431 - 11,352
Exceptional items (1,084) - (64) (455) - (1,603)
-------------------------------------------------- ----------- -------- -------- --------- ------------ --------
Segment result 2,890 1,151 3,732 1,976 - 9,749
-------------------------------------------------- ----------- -------- -------- --------- ------------ --------
Central administration costs (606)
Net finance expenses (3,466)
Income tax (1,601)
-------------------------------------------------- ----------- -------- -------- --------- ------------ --------
Profit from continuing operations for the year
ended 31 March 2013 4,076
-------------------------------------------------- ----------- -------- -------- --------- ------------ --------
Balances at 31 March 2013
Continuing operations
-------------------------------------------------- ----------- -------- -------- --------- ------------ --------
Segment assets 100,336 17,605 11,170 9,852 3,775 142,738
-------------------------------------------------- ----------- -------- -------- --------- ------------ --------
Segment liabilities (41,297) (14,025) (27,286) (3,129) (429) (86,166)
-------------------------------------------------- ----------- -------- -------- --------- ------------ --------
Capital expenditure
- property, plant and equipment 795 153 230 706 - 1,884
- intangible 159 11 40 32 - 242
Depreciation 2,237 716 644 210 - 3,807
Amortisation 310 57 39 88 - 494
-------------------------------------------------- ----------- -------- -------- --------- ------------ --------
3 Exceptional items
Six months Six months 12 months
ended ended ended
30 Sep 30 Sep 31 Mar
2013 2012 2013
GBP000 GBP000 GBP000
------------------------------------------------ ----------- ----------- ----------
Restructuring of operational activities
Efficiency programmes in the UK (note a) 1,406 - 195
Accelerated amortisation of bank fees (note b) 403 - -
Bad debt provision (note c) - 750 455
China factory disruption (note d) - - 953
------------------------------------------------ ----------- ----------- ----------
Total restructuring costs 1,809 750 1,603
Income tax credit (416) (224) (289)
------------------------------------------------ ----------- ----------- ----------
1,393 526 1,314
------------------------------------------------ ----------- ----------- ----------
(a) Costs associated with major upgrade to manufacturing
facilities in Wales and restructuring of UK operations.
(b) Accelerated amortisation of bank arrangement fees as a
result of renegotiating banking facilities to fund the investment
in Wales.
(c) Bad debt arising from a major customer entering
administration.
(d) Cost associated with disruption caused by a strike in the
China factory.
4 Cash, loans and borrowing
Six months Six months 12 months
ended ended ended
30 Sep 30 Sep 31 Mar
2013 2012 2013
GBP000 GBP000 GBP000
------------------------------------------------------- ----------- ----------- ----------
Secured bank loan (short term) (5,242) (4,685) (4,763)
Secured bank loan (long term) (27,321) (29,340) (29,775)
Asset backed loans (35,925) (30,860) (7,683)
Revolving credit facilities (13,272) (17,839) (658)
Loan arrangement fees 299 671 553
------------------------------------------------------- ----------- ----------- ----------
Total loans (81,461) (82,053) (42,326)
Cash and bank deposits 1,275 3,403 2,301
Bank overdraft (3,019) (5,820) (336)
------------------------------------------------------- ----------- ----------- ----------
Cash and cash equivalents per cash flow statement (1,744) (2,417) 1,965
------------------------------------------------------- ----------- ----------- ----------
Finance leases (1,639) (89) (1,777)
------------------------------------------------------- ----------- ----------- ----------
Net debt used in the Chief Executive Officer's review (84,844) (84,559) (42,138)
------------------------------------------------------- ----------- ----------- ----------
5 Taxation
Six months Six months 12 months
Ended ended ended
30 Sep 30 Sep 31 Mar
2013 2012 2013
GBP000 GBP000 GBP000
------------------------------------------------------------ ----------- ----------- ----------
Current tax expenses
Current income tax charge 467 149 998
Deferred tax expense
Relating to original and reversal of temporary differences 3 481 603
------------------------------------------------------------ ----------- ----------- ----------
Total tax in income statement 470 630 1,601
------------------------------------------------------------ ----------- ----------- ----------
Taxation for the six months ended 30 September 2013 is based on
the effective rate of taxation, which is estimated to apply in each
country for the year ended 31 March 2014.
6 Earnings per share
As at 30 Sep 2013 As at 30 Sep 2012 As at 31 Mar 2013
-------------------- -------------------- --------------------
Diluted Basic Diluted Basic Diluted Basic
---------------------------------------------------- ---------- -------- ---------- -------- ---------- --------
Adjusted earnings per share excluding exceptional
items 3.7p 3.8p 3.7p 3.9p 7.8p 8.1p
Loss per share on exceptional items (2.4p) (2.4p) (0.5p) (0.5p) (2.0p) (2.1p)
---------------------------------------------------- ---------- -------- ---------- -------- ---------- --------
Earnings per share from continuing operations 1.3p 1.4p 3.2p 3.4p 5.8p 6.0p
---------------------------------------------------- ---------- -------- ---------- -------- ---------- --------
Earnings per share 1.3p 1.4p 3.2p 3.4p 5.8p 6.0p
---------------------------------------------------- ---------- -------- ---------- -------- ---------- --------
The basic earnings per share is based on the profit attributable
to equity holders of the Parent Company of GBP792,000 (2012:
GBP1,874,000) and the weighted average number of ordinary shares in
issue of 57,215,000 (2012: 55,799,000) calculated as follows:
As at As at As at
Weighted average number of shares in thousands of shares 30 Sep 2013 30 Sep 2012 31 Mar 2013
---------------------------------------------------------- ------------ ------------ ------------
Issued ordinary shares at 1 April 56,768 55,007 55,007
Shares issued in respect of exercising of share options 447 792 1,238
---------------------------------------------------------- ------------ ------------ ------------
Weighted average number of shares at end of the period 57,215 55,799 56,245
---------------------------------------------------------- ------------ ------------ ------------
Total number of options, over 5p ordinary shares, in issue at 30
September 2013 was 2,128,685.
Adjusted basic earnings per share excludes exceptional items
charged of GBP1,809,000 (2012: GBP375,000) along with the tax
relief attributable to those items of GBP416,000 (2012:
GBP112,000). This gives an adjusted profit of GBP2,185,000 (2012:
GBP2,137,000).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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