TIDMDNO
RNS Number : 8354Z
Domino Printing Sciences PLC
16 December 2014
16 December 2014
2014 Results Preliminary Statement for the year ended 31 October
2014
2014 2013 Change
Revenue GBP350.2m GBP335.7m +4%
Underlying profit before taxation
(note 9) GBP57.6m GBP53.0m +9%
Profit before taxation GBP56.5m GBP17.7m +219%
Research and development expenditure
(note 9) GBP18.2m GBP19.5m -7%
Net cash inflow from operating activities
before taxation GBP65.8m GBP54.9m +20%
Basic earnings per share (note 2) 39.79p 5.22p +663%
Underlying earnings per share (note
2) 40.01p 35.30p +13%
Dividends per share (declared - note
5) 22.74p 21.66p +5%
Highlights
q Sales growth of 9 per cent before the impact of movements in
exchange rates
q Further progress in full-colour digital label press sales
q Investment of GBP18.2 million in research and development,
continuing to fuel the new product pipeline
q Underlying pre-tax profit growth of 9 per cent
q Strong operating cash flows; net cash of GBP40.1 million at
year end
q Dividend increased by 5 per cent
Peter Byrom, Chairman, commented "The Group has made good progress
in growing sales, profits and cash during the year while continuing
to develop new products and investing in further expanding our
digital printing business. Underlying pre-tax profits increased
by 9 per cent to GBP57.6 million and net cash inflow from operating
activities before tax was GBP65.8 million. The Board has declared
an increase in the annual dividend of 5 per cent.
"Our business in Europe reported double-digit sales growth in
local terms, benefiting from more buoyant markets in the early
part of the year. We also reported good growth in the Americas
and Asia. Market conditions have been changeable with a more
cautious attitude returning among customers in many markets over
the second half of our year.
"We are pleased with the success of our latest i-Tech product
range, which provides customers with class-leading performance,
while our research and development teams are busy working on
further product innovations. The aftermarket business continues
to grow in line with our expectations.
"Our latest full-colour digital label press has been well received
by customers and we are seeing increasing adoption of digital
printing technology among label converters. Activity levels among
our sales teams, and the increase in sales of N-Series digital
label presses this year, give us confidence in the potential
for continued growth.
"The Group has had a good year and delivered results in line
with our expectations. We continue to invest in research and
development and in growing the capability and capacity of our
digital printing business. However, we remain cautious about
2015. As announced in our Interim Statement, the investments
we are making, coupled with uncertain market conditions, mean
we expect results in 2015 to be at a broadly similar level to
this year.
"Our strong products and our investments in developing our capabilities
mean we remain optimistic about the Group's longer-term prospects."
Issued on behalf of Domino Printing Sciences plc by Smithfield
Consultants Limited - Will Swan
T +44 (0)20 7360 4900
Enquiries:
Peter Byrom Nigel Bond Andrew Herbert
Chairman Chief Executive Chief Financial Officer
Officer
T+44 (0)20 7360 4900 until 12.00 / T+44 (0)1954 781888 after
14.30
Cautionary statement
This Preliminary Statement in its entirety has been prepared
solely to provide additional information to shareholders. It
contains statements that are forward looking. These statements are
made by the Directors in good faith based on the information
available to them up to the time of approval. Such statements
should be treated with caution due to the inherent uncertainties
and risks associated with forward looking information.
Our business
The Group operates across global markets, providing
manufacturers and printers with the ability to code, mark or print
data, information or graphical images on to their products or
packaging at high speed, typically in-line in the manufacturing or
printing process.
We design, manufacture and sell a wide range of printing
equipment and associated consumables and support services that
encompass ink jet, thermal and laser technologies. Our products are
capable of printing on a broad spectrum of materials and substrates
and offer full variability for personalisation, customisation or
unique identification of products.
Demand for our products and services is created through
legislation and mandate, typically meeting the need to inform
consumers, and through providing manufacturers and printers with an
economic means of decorating, identifying, tracing, protecting or
authenticating their products for commercial or regulatory
purposes.
In 2014, our revenue split by location of customer was 23 per
cent in the Americas, 43 per cent in Europe and 34 per cent in
Asia/Rest of World. We have an installed base well in excess of
200,000 printers operating worldwide.
Typical customers are manufacturers, multinational, regional and
national companies, spread across a wide range of market sectors.
We also supply printers of labels, mail and other web based
materials to meet their short run and variable printing needs.
Food, beverage, pharmaceutical and commercial printing are the
largest segments; combined they represent approximately 67 per cent
of total sales. Our breadth of industry coverage and lack of
reliance on any one or small group of customers provides a natural
hedge against sector specific market risk.
Chairman's Statement
The Group has made good progress in growing sales, profits and
cash during the year while continuing to develop new products and
investing in further expanding our digital printing business.
Our business in Europe reported double-digit sales growth in
local terms, benefiting from more buoyant markets in the early part
of the year. We also reported good growth in the Americas and Asia.
Market conditions have been changeable and we have seen a more
cautious attitude among customers in many markets over the second
half of our year.
We are pleased with the success of our latest i-Tech product
range, which provides customers with class-leading performance,
while our research and development teams are busy working on
further product innovations. The aftermarket business continues to
grow in line with our expectations.
Our latest full-colour digital label press has been well
received by customers and we are seeing increasing adoption of
digital printing technology among label converters. Activity levels
among our sales teams, and the increase in sales of N-Series
digital label presses this year, give us confidence in the
potential for continued growth.
Over the last year, we have committed capital to a number of
expansion projects. We commissioned our new factory in India,
purchased land and started ground-work on a new factory in the UK,
which will primarily serve the European and American markets, and
approved the building of a new factory in China to meet our
expansion plans in Asia. We have provided new and expanded
demonstration and laboratory facilities for our digital printing
business.
Good progress has been made against our sustainability agenda
and we were pleased that our determination to reduce our
environmental impact was recognised with a fourth consecutive
rating improvement from the Carbon Disclosure Project. We also
remain a member of the FTSE4Good index.
Earlier in the year, Philip Ruffles, who was a Non-Executive
Director, and Garry Havens, an Executive Director, both stepped
down from the Board. I thank them for their contribution to the
Group over many years. In November, we announced the appointment of
two new Board members, Sucheta Govil and Rachel Hurst. Sucheta
joins us as a Non-Executive Director and has a background of senior
roles in marketing and significant experience in Asia. Rachel is
the Executive Director responsible for Group operations, including
manufacturing, product marketing and engineering.
The Group's global workforce is more than 2,300 strong. I would
like to thank them, our distribution partners, and our suppliers
for their contribution to our continuing success.
Our balance sheet remains robust and our cash generation
increased our year-end net cash position to GBP40.1 million. The
Board is proposing a final dividend of 14.76 pence, making a total
of 22.74 pence for the year as a whole, an increase of 5 per
cent.
The Group has had a good year and delivered results in line with
our expectations. We continue to invest in research and development
and in growing the capability and capacity of our digital printing
business. However, we remain cautious about 2015. As announced in
our Interim Statement, the investments we are making, coupled with
uncertain market conditions, mean we expect results in 2015 to be
at a broadly similar level to this year.
Our strong product range and our investments in developing our
capabilities mean we remain optimistic about the Group's
longer-term prospects.
Peter Byrom
Chairman
Chief Executive Officer's Overview
In 2014, we balanced progress in sales performance with
investments to sustain longer-term growth, while delivering profit
improvement. We increased underlying pre-tax profit (see note 9) by
9 per cent and at the same time continued to invest in core
business capacity and in enhancing and growing our digital printing
business.
Market conditions varied as the year developed but they
generally improved in most regions of the world, compared with the
last two years. The year started well, with a wave of confidence in
Europe as economic growth rates improved and the Eurozone crisis
ended. Uncertainty about the Chinese economy receded and prospects
for the broader Asian and North American markets were positive.
Against that backdrop, our order intake in the early months of
the year was good, continuing the momentum from the final quarter
of 2013. We saw growing customer confidence, culminating in a
number of large project opportunities and successes for our sales
teams. We reported sales growth at constant currency of 11 per cent
in our interim results, with our strongest performance being in
Europe.
However, as we entered our second half year, economic news was
less positive in both Europe and parts of Asia. The deteriorating
political situation in the Middle East and the tensions in Ukraine
also affected customer confidence. Summer in the northern
hemisphere once again proved a strong period for aftermarket sales
but the return of general uncertainty slowed the intake of orders
for new equipment. Sales growth in the second half year was 7 per
cent before the impact of movements in exchange rates.
Our core coding and marking business had a good year, with a
number of large project wins for new equipment, successes in our
key focus sectors of food, beverage, pharmaceuticals and tobacco,
and another year of strong aftermarket sales. I have been pleased
with the performance of our European businesses, where revenue
growth is well ahead of recent years, and with the USA and Canada,
where we have maintained prior-year progress. In Asia, all
subsidiaries delivered strong growth although weakness in the
Chinese economy in the second half of the year held back sales. In
our interim results, we reported increased price pressures in China
and other developing markets, and the potential for further
deterioration in margins if prices continued to fall. However,
pricing was relatively stable during the second half year.
Aftermarket revenues remain the largest proportion of Group
sales and during 2014 we had a special focus on improving
aftermarket retention rates, across all products and businesses.
Our 'win-back' programme was successful, improving an already
impressive retention rate and increasing sales as a result.
We made good progress in the digital printing business, where we
have focused on growing sales of full-colour digital ink jet
printing presses into the label sector. There are clear drivers for
transitioning to digital printing technology in this sector and
while the rate of change is difficult to predict, the opportunity
is attracting attention from both customers and competitors. We
recognised revenue on 19 N-Series digital presses in the year and
received orders or commitments for a number more that we will
realise during 2015.
Full-colour printing is a new venture for the Group and while
the applications and customer groups are adjacent to those for
coding and marking, we have faced a considerable learning curve as
we establish capability and capacity in the very demanding field of
colour management. We are progressing well in that regard and in
particular with the print quality and performance of our products,
which is a testament to the hard work of many of our people as we
develop our knowledge and skills. Feedback from customers has been
very positive, confirming the economic gains and ultimate benefits
to brand owners of using digital ink jet in their label printing
business. The installed base of digital presses is growing and as
our customers bring them up to full utilisation, we expect to see
substantial growth in the fluids business.
We had a successful year of new product introductions in 2014.
Early in the year, we launched enhancements to our continuous ink
jet, laser and thermal ink jet printer ranges, both in hardware and
fluids. We complemented this with a portfolio of product launches
in the spring, to coincide with the important InterPack exhibition
in Dusseldorf, Germany. Finally, in September we launched the N610i
seven-colour digital label press at LabelExpo in Chicago, and were
pleased to make immediate sales at the show.
We have continued to invest in production capacity and opened
our new factory in India this year. Further investment is planned,
with work on a new factory in China commencing during 2015. We are
taking preliminary steps towards constructing a new factory and
warehouse facility in the UK, on a site we have acquired next to
our Group headquarters. We also made progress towards our goal of
business excellence, making organisational changes to sharpen our
focus on key process simplification and further improve customer
service.
There have been a number of changes in the management team
around the Group in 2014. We filled the role of General Manager in
three of our largest businesses, China, India and the USA, through
internal promotions. We also added a considerable number of people
to our digital printing organisation, with many coming from the
industry, helping to rapidly advance our skills and knowledge. At
the end of the year, we were pleased to announce the promotion of
Rachel Hurst, our Group Operations Director, to the Domino Printing
Sciences plc Board. Rachel will now take full operational
responsibility for our manufacturing, engineering, product
management and marketing functions, and will lead the next stages
of our business excellence programme.
There is no shortage of opportunity for our business to grow.
The overall sales performance this year, in both the core business
and new digital press products, gives me confidence in our ability
to deliver medium-term sales increases at or above global GDP
growth. As we look forward to 2015 and beyond, it is clear the
digital printing business has great potential but requires
significant investment. While I expect to see sales progression in
2015, progress in profit will be held back as we plan to invest
further in research and development and in the broader sales and
support organisation, helping to fuel future growth.
Nigel Bond
Chief Executive Officer
Financial review
Trading results
Sales in 2014 were GBP350.2 million, reflecting year on year
growth of 4 per cent. Acquisitions had no impact but exchange rate
movements reduced reported results and had a substantial effect on
sales growth, which was 9 per cent at constant exchange rates.
GBPm 2014 2013 Growth 2014 at Growth
2013 rates
------------- ------ ------ ------- ------------ -------
Equipment 152.0 143.2 6% 158.1 10%
------------- ------ ------ ------- ------------ -------
Aftermarket 198.2 192.5 3% 206.3 7%
------------- ------ ------ ------- ------------ -------
Total 350.2 335.7 4% 364.4 9%
------------- ------ ------ ------- ------------ -------
Equipment revenue represented 43 per cent of Group sales and
grew by 10 per cent in local terms. We recognised 19 N-Series
digital label presses in revenue during the year, compared with
nine in 2013. These machines command a considerably higher price
than the coding and marking product range, and contributed GBP7
million to revenues compared with GBP3 million in 2013. This
accounted for one fifth of the total 10 per cent growth in
equipment sales.
Consumable revenues, including fluids, increased by 7 per cent
on prior year in local terms. Spares and service revenues also grew
by 7 per cent.
The gross margin rate was 48.1 per cent, in line with 2013. The
sales mix, coupled with reduced margins on equipment sales, in
particular in developing markets in the first half year, reduced
the gross margin rate by nearly 1 percentage point. This was offset
by the benefit to gross margin rate from the different impacts on
revenue and cost of sales from movements in foreign exchange.
Selling and distribution costs and administrative expenses were
GBP93.2 million, an increase of 4 per cent on the prior year
(before exceptional costs). We have increased our investment in
sales and support resources in the digital printing business and
have seen a general increase in payroll costs, as a result of
bonuses earned in the year.
Investment in research and development was GBP18.2 million
(2013: GBP19.5 million; before exceptional costs). This reduction
reflects timing differences in project spend which we expect to
reverse during 2015.
Operating profit before exceptional costs, reassessment of
contingent consideration and the amortisation of acquired
intangible assets was GBP57.0 million, up 8 per cent (2013: GBP52.7
million).
Other non-trading items
Provision for contingent consideration associated with
acquisitions made in prior years has been reduced by GBP2.1
million. Provisions are based on our latest view of the likely
outcome, taking into account the specific terms of earn-out
arrangements. Amortisation of acquired intangible assets was GBP3.1
million (2013: GBP3.3 million).
Interest and financing costs
The Group remained in a net cash position throughout the year
and managed its cash resources through a combination of interest
bearing deposits and short-term debt facilities. Investment income
was GBP1.2 million (2013: GBP1.1 million) and interest costs were
GBP0.7 million (2013: GBP0.8 million).
Profit before tax
The Group reports both statutory and underlying measures of
performance (see note 9). Profit before tax was GBP56.5 million
(2013: GBP17.7 million). Underlying profit before tax increased by
9 per cent to GBP57.6 million (2013: GBP53.0 million). Underlying
profit before tax is stated before exceptional items, amortisation
of acquired intangible assets, adjustments to provisions for
contingent consideration arising on acquisitions and non-cash
interest charges derived from the accounting for discounted
contingent consideration arising on acquisitions.
Statutory measures:
2014 2013 2012 2011 2010
--------------------------- -------- -------- -------- -------- --------
Sales GBPm 350.2 335.7 312.1 314.1 300.0
--------------------------- -------- -------- -------- -------- --------
Profit before tax GBPm 56.5 17.7 53.9 57.4 52.1
--------------------------- -------- -------- -------- -------- --------
Earnings GBPm 44.6 5.8 40.7 40.8 37.2
--------------------------- -------- -------- -------- -------- --------
Shares in issue (average
'000) 112,367 111,839 111,207 110,756 109,835
--------------------------- -------- -------- -------- -------- --------
Shares in issue (year-end
'000) 112,551 112,196 111,431 111,054 110,281
--------------------------- -------- -------- -------- -------- --------
Basic earnings per
share (p) 39.79 5.22 36.90 37.20 34.25
--------------------------- -------- -------- -------- -------- --------
Dividends paid per
share (p) 22.04 20.99 19.41 16.72 13.93
--------------------------- -------- -------- -------- -------- --------
Net assets per share
(p) 188.6 176.8 190.7 174.0 155.1
--------------------------- -------- -------- -------- -------- --------
Underlying measures:
2014 2013 2012 2011 2010
------------------------ ------ ------ ------ ------ ------
EBITA GBPm 57.0 52.7 53.5 59.4 54.5
------------------------ ------ ------ ------ ------ ------
Return on sales % 16.3 15.7 17.2 18.9 18.2
------------------------ ------ ------ ------ ------ ------
Investment in R&D GBPm 18.2 19.5 16.7 15.3 15.6
------------------------ ------ ------ ------ ------ ------
Profit before tax GBPm 57.6 53.0 53.7 59.5 54.7
------------------------ ------ ------ ------ ------ ------
Basic earnings per
share (p) 40.01 35.30 36.02 38.66 36.05
------------------------ ------ ------ ------ ------ ------
Net cash inflow from
operating activities
before tax GBPm 65.8 54.9 56.4 51.1 59.7
------------------------ ------ ------ ------ ------ ------
Taxation
The tax charge of GBP11.9 million reflects a one-off benefit of
GBP1.4 million from the movement in deferred tax, as a result of
changes to the withholding tax rate on dividends paid from the
Group's Chinese subsidiaries. The underlying effective tax rate,
excluding this and other prior year adjustments, was 25.1 per cent
(2013: 25.7 per cent). The Group benefited from reductions in the
UK corporation tax rate during the year.
Earnings per share
Basic earnings per share were 39.79 pence (2013: 5.22 pence).
Underlying earnings per share were 40.01 pence (2013: 35.30 pence).
Fully diluted earnings per share were 39.46 pence (2013: 5.18
pence), on a weighted average number of shares in issue of
113,065,499.
Dividends
The Board is recommending a final dividend of 14.76 pence which
when added to the interim dividend of 7.98 pence gives a total
dividend for the year of 22.74 pence per share. The dividend is
covered 1.8 times by underlying earnings per share. The value of
dividends paid during the year represented 47 per cent of net cash
inflow from operating activities (2013: 55 per cent).
Cash
Net cash inflow from operating activities before taxation was
GBP65.8 million (2013: GBP54.9 million). The net favourable working
capital movement, after the impact of exchange rates, was GBP0.7
million. Inventories increased in line with production volumes.
Trade debtors, excluding the impact of exchange rate movements,
increased in line with sales. These movements were more than offset
by the increase in creditors, which included the impact of accrued
bonus payments.
We invested GBP12.5 million (2013: GBP9.1 million) in fixed
assets in the year, including GBP2.3 million to buy land in
preparation for building additional factory space in Cambridge, UK.
The Group balance sheet reflects an investment in printers that are
subject to lease arrangements with customers. These are treated as
fixed assets and amortised over their useful lives. Additions of
GBP2.1 million of these assets were made during the year,
increasing our gross investment to GBP10 million. The net book
value at 31 October 2014 was GBP4.6 million, an increase of GBP1.3
million in the year.
Other cash outflows included contingent consideration on
acquisitions made in prior years (GBP0.7 million), tax (GBP13.4
million) and the purchase of shares for the UK based share
incentive plan (GBP0.1 million). We repaid short-term bank loans of
GBP33.3 million in the year.
Gross cash at the year end was GBP40.5 million. Net cash, after
taking into account a small loan on property in South Korea, was
GBP40.1 million.
Net assets
Net assets at the year end totalled GBP212.2 million (2013:
GBP198.4 million).
Treasury
The Group is exposed to interest rate movements and to changes
in the value of sterling relative to a number of foreign
currencies. Our policy is to manage these exposures in a way that
provides certainty on a transaction basis in the short term, while
guarding against any speculation. We place surplus cash on
short-term deposit with approved banks, with limits on the amount
of exposure to any individual bank. Bank debt is primarily
short-term, with drawdown renewed as required. This has proven to
be cost effective and has enabled us to take advantage of higher
deposit rates in some jurisdictions.
The Group has a GBP50 million revolving credit facility with the
Royal Bank of Scotland, which is committed until 30 November 2016.
This is adequate to meet our expected working capital
requirements.
We make sales and receive income in a range of currencies. We
manage transactional exposure where possible by using simple
forward contracts, which means selling or buying currency based on
our expected net cash inflows or outflows on a rolling three or
12-month basis. Our main exposures are to the US dollar and the
euro, both of which we sell forward, aiming to cover 90 per cent of
our exposure over a rolling 12-month period. During the year, the
Chinese government continued to support the internationalisation of
the renminbi (Chinese Yuan). We have started using renminbi
contracts on a rolling three-month basis and expect to extend this
towards a full 12 months, as we gain experience in that market.
Other material exposures include the Indian rupee. We currently
have no plans to take a forward position in this currency.
Forward contracts maturing during the year reduced net sterling
receipts by GBP0.3 million, when compared with the prevailing rate
in the prior year. Contracts in place covering expected cash flows
in 2015 will realise net losses of GBP1.1 million, when compared
with 2014 rates.
We do not hedge translation effects on reported profits in the
income statement. In 2014, the impact of exchange rate movements on
translation of overseas profits and short-term balances held by
Group subsidiaries in non-functional currencies reduced reported
profits by GBP0.2 million. Similarly, we do not hedge Group
investments denominated in foreign currencies in the balance sheet.
In 2014, this resulted in a decrease in reserves of GBP8.3
million.
Going concern
The Group's business activities together with its financial
position and factors likely to affect its future development and
performance are described throughout the Strategic Report. The
Group has considerable financial resources together with a broad
spread of customers across different geographic areas and
industries. As a consequence, the Directors believe that the Group
is well placed to manage its business risks successfully. The
Directors have also considered the Group's forecasts and
projections, as well as the principal risks and uncertainties to
which the Group is exposed. 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. Accordingly, they continue to adopt the going
concern basis in preparing the annual report and accounts.
Condensed Consolidated Income Statement
For the year ended 31 October 2014
2014 2013 2013 2013
Before exceptional items Exceptional items (Note 10) Total
----------------------------------- ---- --------- ------------------------ --------------------------- ---------
Note GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ---- --------- ------------------------ --------------------------- ---------
Continuing operations
Revenue 3 350,181 335,673 - 335,673
Cost of sales (181,846) (174,210) (210) (174,420)
----------------------------------- ---- --------- ------------------------ --------------------------- ---------
Gross profit 168,335 161,463 (210) 161,253
----------------------------------- ---- --------- ------------------------ --------------------------- ---------
Selling, general and administrative
expenses (93,154) (89,255) (33,368) (122,623)
(excluding amortisation of acquired
intangibles and reassessment of
contingent consideration)
Research and development expenses (18,158) (19,499) (370) (19,869)
----------------------------------- ---- --------- ------------------------ --------------------------- ---------
(111,312) (108,754) (33,738) (142,492)
----------------------------------- ---- --------- ------------------------ --------------------------- ---------
Operating profit before
amortisation of acquired
intangibles and reassessment of
contingent
consideration 57,023 52,709 (33,948) 18,761
Reassessment of contingent
consideration 2,071 1,943 - 1,943
Amortisation of acquired
intangibles (3,060) (3,321) - (3,321)
----------------------------------- ---- --------- ------------------------ --------------------------- ---------
Operating profit 56,034 51,331 (33,948) 17,383
Investment income 1,233 1,117 - 1,117
Finance costs (739) (827) - (827)
Profit before taxation 3 56,528 51,621 (33,948) 17,673
Taxation 4 (11,913) (12,873) 1,028 (11,845)
----------------------------------- ---- --------- ------------------------ --------------------------- ---------
Profit for the year 44,615 38,748 (32,920) 5,828
----------------------------------- ---- --------- ------------------------ --------------------------- ---------
Attributable to:
----------------------------------- ---- --------- ------------------------ --------------------------- ---------
Equity shareholders of the Company 44,615 5,822
Non-controlling interest - 6
----------------------------------- ---- --------- ------------------------ --------------------------- ---------
44,615 5,828
----------------------------------- ---- --------- ------------------------ --------------------------- ---------
Basic earnings per share (pence) 2 39.79p 5.22p
Diluted earnings per share (pence) 2 39.46p 5.18p
Condensed Consolidated Statement of Comprehensive Income
For the year ended 31 October 2014
2014 2013
GBP'000 GBP'000
-------------------------------------------------- ------- -------
Profit for the year 44,615 5,828
Items that may be reclassified subsequently
to profit or loss:
Currency translation differences on foreign
currency net investments (8,344) 2,783
Foreign exchange adjustment on available
for sale investment - 990
Foreign exchange adjustment on available
for sale investment recycled to profit or
loss - (1,742)
(Losses)/gains on cash flow hedges arising
during the period (376) 183
Reclassification adjustments for gains on
cash flow hedges included in profit (183) (176)
Tax relating to components of other comprehensive
income 284 (82)
Total comprehensive income and expense in
the year 35,996 7,784
-------------------------------------------------- ------- -------
Attributable to:
Equity shareholders of the Company 35,996 7,778
Non-controlling interest - 6
35,996 7,784
-------------------------------------------------- ------- -------
Condensed Consolidated Balance Sheet
As at 31 October 2014
2014 2013
GBP'000 GBP'000
------------------------------------------- -------- ---------
Non-current assets
Goodwill 85,851 89,342
Other intangible assets 14,443 18,228
Property, plant and equipment 34,417 29,239
Investment in associates 376 356
Deferred tax assets 7,960 7,199
------------------------------------------- -------- ---------
143,047 144,364
------------------------------------------- -------- ---------
Current assets
Inventories 42,713 39,809
Trade and other receivables 75,399 71,865
Cash and cash equivalents 40,505 59,373
Derivative financial instruments 346 392
158,963 171,439
Total assets 302,010 315,803
------------------------------------------- -------- ---------
Current liabilities
Bank loans and overdrafts (226) (33,458)
Trade and other payables (76,875) (64,986)
Derivative financial instruments (722) (209)
------------------------------------------- -------- ---------
(77,823) (98,653)
------------------------------------------- -------- ---------
Net current assets 81,140 72,786
------------------------------------------- -------- ---------
Non-current liabilities
Deferred tax liabilities (7,368) (9,913)
Bank loans (178) (406)
Other payables (4,410) (8,479)
------------------------------------------- -------- ---------
(11,956) (18,798)
Total liabilities (89,779) (117,451)
Net assets 212,231 198,352
------------------------------------------- -------- ---------
Equity share capital 5,627 5,610
Reserves
Own shares (831) (1,123)
Share premium account 40,697 39,732
Capital redemption reserve 908 908
Revaluation reserve 1,359 1,367
Taxation reserve 1,149 942
Exchange reserve 4,347 13,250
Retained earnings 158,975 137,626
------------------------------------------- -------- ---------
Total reserves 206,604 192,702
------------------------------------------- -------- ---------
Equity attributable to shareholders of the
Company 212,231 198,312
Non-controlling interest - 40
------------------------------------------- -------- ---------
Total equity 212,231 198,352
------------------------------------------- -------- ---------
Condensed Consolidated Statement of Changes in Equity
Investment Called-up Share Capital Non-controlling
in own share premium redemption Revaluation Taxation Exchange Retained interest Total
shares capital account reserve reserve reserve reserve earnings Total equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------- ----------- ---------- -------- ----------- ------------- ---------- ---------- ---------- --------- ---------------- ---------
At 1 November
2013 (1,123) 5,610 39,732 908 1,367 942 13,250 137,626 198,312 40 198,352
Profit for
the period - - - - - - - 44,615 44,615 - 44,615
Other
comprehensive
income for
the period* - - - - - 284 (8,903) - (8,619) - (8,619)
--------------- ----------- ---------- -------- ----------- ------------- ---------- ---------- ---------- --------- ---------------- ---------
Total
comprehensive
income for
the period - - - - - 284 (8,903) 44,615 35,996 - 35,996
Shares issued
during the
period - 17 965 - - - - - 982 - 982
Own shares
acquired (76) - - - - - - - (76) - (76)
Shares awarded
to share
scheme
participants 285 - - - - - - (224) 61 - 61
Withdrawal
of SIP
matching
shares 83 - - - - - - - 83 - 83
Credit to
equity in
respect
of
share-based
compensation
charges - - - - - - - 1,660 1,660 - 1,660
Tax on items
taken to
equity - - - - 5 (77) - - (72) - (72)
Dividends
(note 5) - - - - - - - (24,755) (24,755) - (24,755)
Acquisition
of remaining
interest
in Domino
Coding
Automation - - - - - - - 40 40 (40) -
Transfer
of amount
equivalent
to additional
depreciation
on revalued
assets - - - - (13) - - 13 - - -
At 31 October
2014 (831) 5,627 40,697 908 1,359 1,149 4,347 158,975 212,231 - 212,231
--------------- ----------- ---------- -------- ----------- ------------- ---------- ---------- ---------- --------- ---------------- ---------
* Exchange differences recognised in other comprehensive income
consist of a charge of GBP8,344,000 relating to translation
differences (2013: credit of GBP2,031,000) and a charge of
GBP559,000 relating to cash flow hedges (2013: credit of
GBP7,000).
Condensed Consolidated Cash Flow Statement
For the year ended 31 October 2014
2014 2013
Note GBP'000 GBP'000
------------------------------------------------ ---- ---------- --------
Net cash inflow from operating activities 7 52,401 42,976
Investing activities
Interest received 1,233 1,117
Interest paid (703) (784)
Proceeds on disposal of property, plant
and equipment 79 301
Purchase of property, plant and equipment (11,750) (9,021)
Purchase of intangible assets (872) (378)
Payment of contingent acquisition consideration (734) (155)
Proceeds on disposal of intangible
assets - 1
Net cash used in investing activities (12,747) (8,919)
------------------------------------------------ ---- ---------- --------
Financing activities
Dividends paid (24,755) (23,468)
Repayment of borrowings (33,289) (353)
Repayment of obligations under finance
leases (3) (12)
Own shares purchased (76) (911)
Exercise of share options in respect
of own shares 61 103
Issue of equity share capital 982 2,307
------------------------------------------------ ---- ---------- --------
Net cash used in financing activities (57,080) (22,334)
------------------------------------------------ ---- ---------- --------
Effects of foreign exchange on cash
balances (1,442) 59
------------------------------------------------ ---- ---------- --------
Net (decrease)/increase in cash and
cash equivalents (18,868) 11,782
------------------------------------------------ ---- ---------- --------
Cash and cash equivalents at the beginning
of the year 59,373 47,591
------------------------------------------------ ---- ---------- --------
Cash and cash equivalents at the end
of the year 40,505 59,373
------------------------------------------------ ---- ---------- --------
Comprising:
Cash and cash equivalents 40,505 59,373
40,505 59,373
------------------------------------------------ ---- ---------- --------
Notes
1. Accounting policies
The results for the year ended 31 October 2014 have been
prepared in accordance with the recognition and measurement
criteria of International Accounting Standards and International
Financial Reporting Standards (collectively 'IFRS') as adopted by
the European Union at 31 October 2014 and the financial information
contained herein is presented on a consistent basis with the IFRS
accounting policies of Domino Printing Sciences plc.
Standards and interpretations that have become effective in the
current financial year, or have been early adopted where allowed,
but have had no material impact on the financial statements
include:
-- IFRS 1 (amended 2012) Government Loans with a Below-Market Rate of Interest
-- IFRS 7 (amended 2011) Offsetting of Assets and Liabilities
-- IFRS 13 Fair Value Measurement
-- IAS 19 (amended 2011) Post-Employment Benefits and Termination Benefits
-- IAS 27 (amended 2011) Separate Financial Statements
-- IAS 28 Investments in Associates and Joint Ventures
-- IAS 36 (amended 2013) Recoverable Amount Disclosures for Non-Financial Assets
-- IFRIC 20 Stripping Costs in the Production Phase of a Surface
Mine
-- Annual Improvements to IFRSs.
General information
The financial statements for the year ended 31 October 2014 were
approved by the Directors on 15 December 2014. The financial
information contained in this statement does not constitute
statutory accounts within the meaning of section 434 of the
Companies Act 2006. Statutory accounts for the year ended 31
October 2013 are available on Domino's website at
www.domino-printing.com and have been filed with the Registrar of
Companies. Those for the year ended 31 October 2014 will be
delivered following the Company's Annual General Meeting. The
auditor's reports on both accounts for the year ended 31 October
2014 and 31 October 2013 were unqualified, did not draw attention
to any matters by way of emphasis and did not contain statements
under section 498(2) or (3) of the Companies Act 2006 or equivalent
preceding legislation.
Whilst the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement criteria of IFRSs, this announcement does not
itself contain sufficient information to comply with IFRSs. This
preliminary announcement has been prepared under the same
accounting policies as the statutory accounts for the year ended 31
October 2014.
2. Earnings per share
Basic earnings per share is calculated by dividing the profit
for the year by the weighted average number of shares in issue
during the year (112,366,531) less the weighted average shares in
the Company purchased by the Company's Employee Benefit Trust
(153,719) less the weighted average shares issued to the Company's
QUEST scheme (35,867) less the weighted average number of shares
held to satisfy the Group's Share Incentive Plan (36,258). The
weighted average number of shares used is 112,140,687 (2013:
111,586,441).
The weighted average number of shares used in the diluted
earnings per share calculation is the figure used in the basic
earnings per share calculation adjusted by 924,812, being the
number of shares deemed to be issued for no consideration if all
share options had been exercised. The weighted average number of
shares used is 113,065,499 (2013: 112,446,606). The earnings used
in the diluted earnings per share calculation is the profit on
ordinary activities attributable to shareholders.
The Group presents an alternative measure of earnings per share
before the post-tax effects of:
-- amortisation of intangible assets arising on business
combinations (2014: GBP2.3 million; 2013: GBP2.6 million);
-- the non-cash interest charge on discounted contingent
consideration (2014: GBP0.1 million; 2013: GBP0.1 million);
-- the non-cash credit arising on reassessment of acquisition
related contingent consideration (2014: GBP2.1 million; 2013:
GBP1.9 million); and
-- exceptional costs arising on impairment of goodwill,
acquisition intangibles and available for sale investments,
business restructuring and redundancies (2014: GBPnil; 2013:
GBP32.9 million).
The effect of the above items on basic earnings per share is
presented below:
2014 2013
-------------------------------------------- ------ ------
Basic earnings per share (pence) 39.79 5.22
Effect of acquired intangibles amortisation
(pence) 2.04 2.28
Effect of reassessment of contingent
consideration (pence) (1.85) (1.74)
Effect of exceptional costs (pence) - 29.50
Effect of interest charge on discounted
contingent consideration (pence) 0.03 0.04
--------------------------------------------- ------ ------
Underlying earnings per share (pence) 40.01 35.30
--------------------------------------------- ------ ------
Diluted earnings per share (pence) 39.46 5.18
--------------------------------------------- ------ ------
Underlying diluted earnings per
share (pence) 39.68 35.03
--------------------------------------------- ------ ------
3. Segmental reporting
2014 2013
GBP'000 GBP'000
-----------------------------------------
Revenue by location of subsidiary
Europe 190,640 179,327
Americas 71,003 71,539
Rest of World 88,538 84,807
350,181 335,673
----------------------------------------- -------- --------
Revenue by location of customer
Europe 150,038 137,625
Americas 80,515 83,090
Rest of World 119,628 114,958
------------------------------------------ -------- --------
350,181 335,673
----------------------------------------- -------- --------
Segment result by location of subsidiary
Europe 59,578 26,683
Americas 4,812 2,917
Rest of World 11,080 13,460
Eliminations (1,278) (5,808)
------------------------------------------ -------- --------
74,192 37,252
Central research and development (18,158) (19,869)
Operating profit 56,034 17,383
Add back: amortisation of acquired
intangibles 3,060 3,321
Add back: exceptional items (note
10) - 33,948
Less: reassessment of contingent
consideration (2,071) (1,943)
Investment income 1,233 1,117
Finance costs excluding accounting
for discounted contingent consideration (703) (784)
------------------------------------------ -------- --------
Underlying profit before taxation 57,553 53,042
Amortisation of acquired intangibles (3,060) (3,321)
Exceptional items (note 10) - (33,948)
Reassessment of contingent consideration 2,071 1,943
Interest charge on discounted contingent
consideration (36) (43)
Profit before taxation 56,528 17,673
------------------------------------------ -------- --------
The Group operates in three geographic segments: Europe, The
Americas and Rest of World.
4. Taxation
Tax for the period is charged at a composite tax rate of 21.1
per cent (2013: 67.0 per cent). The underlying rate (excluding the
impact of the non-taxable gain of GBP2.1 million arising on the
reassessment of acquisition related contingent consideration, a
one-off GBP1.4 million credit to the deferred tax charge as a
result of changes to the withholding tax rate on dividends paid
from the Group's Chinese subsidiaries, and other prior year
adjustments) is 25.1 per cent (2013: 25.7 per cent, excluding the
impact of the GBP30.3 million non-deductible impairment of the
Group's investment in TEN Media and the non-taxable gain of GBP1.9
million arising on the reassessment of acquisition related
contingent consideration).
5. Dividends
2014 2013
GBP'000 GBP'000
-------------------------------------
Amounts recognised as distributions
in the year:
Final dividend for the year ended
31 October 2013 of 14.06 pence per
share (2012: 13.39 pence) 15,788 14,966
Interim paid of 7.98 pence per share
(2013: 7.60 pence) 8,967 8,502
------------------------------------- ------- -------
24,755 23,468
------------------------------------- ------- -------
Dividends distributed in the year amount to 22.04 pence per
share (2013: 20.99 pence). The Directors recommend a final dividend
of 14.76 pence per share bringing the total dividends declared for
the year to 22.74 pence per share (2013: 21.66 pence). The final
dividend will be paid on 10 April 2015, subject to approval at the
Annual General Meeting, to those shareholders appearing on the
Register at close of business on 6 March 2015. The final dividend
has not been included as a liability at 31 October 2014.
6. Share capital
During the year a total of 355,225 new ordinary shares of 5
pence each were issued under the Company's Executive Option and
SAYE schemes for GBP982,000.
7. Net cash inflow from operating activities
2014 2013
GBP'000 GBP'000
------------------------------------------- -------- --------
Operating profit 56,034 17,383
Depreciation of property, plant and
equipment 5,745 5,874
Amortisation of intangible assets
acquired through
business combination 3,060 3,321
Amortisation of other intangible
assets 802 1,058
Share-based compensation charges/(credits) 1,660 (211)
Increase in inventories* (4,473) (1,386)
Increase in receivables* (7,868) (7,249)
Increase in payables* 15,152 7,956
Reassessment of contingent consideration (2,071) (1,943)
Decrease in restructuring and redundancy
provisions (2,118) -
Impairment of available for sale
investment - 30,283
Non-cash write down of intangible
assets - 143
Other non-cash items (169) (289)
Net cash inflow from operating activities
before taxation 65,754 54,940
Tax paid (13,353) (11,964)
-------------------------------------------- -------- --------
Net cash inflow from operating activities 52,401 42,976
-------------------------------------------- -------- --------
* Excluding the impact of foreign exchange movements
8. Related party transactions
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this statement. Transactions between the Group and its
associates are immaterial and are not disclosed in this
statement.
9. Underlying profit before taxation
Underlying profit before taxation is calculated as follows:
2014 2013
GBP'000 GBP'000
-------------------------------------------- ------- -------
Operating profit 56,034 17,383
Amortisation of acquired intangibles 3,060 3,321
Reassessment of contingent consideration (2,071) (1,943)
Exceptional costs - 33,948
Underlying operating profit 57,023 52,709
Investment income 1,233 1,117
Finance costs excluding accounting
for discounted
contingent consideration (2014: GBP36,000;
2013: GBP43,000) (703) (784)
Underlying profit before tax 57,553 53,042
--------------------------------------------- ------- -------
10. Exceptional items
The Group has incurred exceptional costs in the year of GBPnil
(2013: GBP33,948,000).
2014 2013
GBP'000 GBP'000
----------------------------------------- ------- ---------
Impairment of available for sale
investment - 32,025
Foreign exchange adjustment on available
for sale investment recycled to profit
or loss - (1,742)
Redundancy and restructuring costs - 3,665
- 33,948
----------------------------------------- ------- ---------
In the year ended 31 October 2013, the Group wrote down the
carrying value of its investment in TEN Media LLC to GBPnil (an
impairment of GBP32,025,000). The cumulative foreign exchange gain
of GBP1,742,000 in respect of this investment was recycled from the
exchange reserve to profit or loss and included within exceptional
items.
The restructuring of the Group's North American, UK and European
operations led to exceptional costs of GBP3,665,000 in the year
ended 31 October 2013. These organisational changes were made to
improve efficiency and to re-direct investment towards areas of
greater opportunity.
In the year ended 31 October 2013, the total exceptional costs
of GBP33,948,000 were split in the Income Statement between cost of
sales (GBP210,000), selling, general and administrative expenses
(GBP33,368,000) and research and development expenses
(GBP370,000).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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