TIDMFOUR
RNS Number : 4753V
4imprint Group PLC
10 August 2022
10 August 2022
4imprint Group plc
Half year results for the 26 weeks ended 2 July 2022
(unaudited)
4imprint Group plc (the "Group"), a direct marketer of
promotional products, today announces its half year results for the
26 weeks ended 2 July 2022.
Half year Half year
2022 2021
Financial Overview $m $m Change
----------- ----------
Revenue 515.54 326.81 +58%
Operating profit 43.98 3.60 +1,122%
Profit before tax 43.91 3.37 +1,203%
Cash 67.10 52.80 +27%
------------------------------------- ----------- ---------- ---------------
Basic EPS (cents) 118.90 9.12 +1,204%
Interim dividend per share (cents) 40.00 15.00 +167%
Interim dividend per share (pence) 33.01 10.83 +205%
------------------------------------- ----------- ---------- ---------------
The results for the half year and prior half year are
unaudited.
Operational Overview
* Customer demand at record levels:
-- 886,000 total orders processed in H1 2022 (H1 2021: 616,000;
H1 2019: 778,000)
-- 146,000 new customers acquired in H1 2022 (H1 2021: 113,000;
H1 2019: 147,000)
-- July 2022 demand activity has remained encouraging
* Marketing efficiency led by increasing proportion of
brand awareness producing market share gains and
strengthening the business for the future
* Success in attracting and retaining team members in
difficult labour markets
* Supply chain challenges being addressed in
partnership with tier 1 suppliers
* Interim dividend of 40.00c per share declared (2021:
15.00c) reflects performance in the first half of the
year and the Group's strong financial position
Paul Moody, Chairman said:
"The Board remains very confident in the Group's strategy, the
strength and resilience of its business model and its competitive
position. This confidence is expressed in our expectation of
reaching our long-held revenue target of $1bn during the 2022
financial year.
At the same time, the Board is cognisant of continuing
uncertainty in the form of geo-political and broad economic factors
that could potentially slow down the Group's performance during the
remainder of 2022.
Trading momentum in the first few weeks of the second half of
2022 has remained encouraging. "
For further information, please contact:
4imprint Group plc MHP Communications
Tel. + 44 (0) 20 3709 9680 Tel. + 44 (0) 20 3128 8794
hq@4imprint.co.uk 4imprint@mhpc.com
Kevin Lyons-Tarr, Chief Executive
Officer
David Seekings, Chief Financial
Officer Katie Hunt
Chairman ' s Statement
Performance summary
The Group has delivered a remarkable financial performance in
the first half of 2022.
Group revenue in the first half of 2022 was $515.54m, an
increase of $188.73m, or 58% over the same period in 2021. Profit
before tax for the period was $43.91m (2021: $3.37m), resulting in
basic earnings per share of 118.90c (2021: 9.12c). The business
model remains very cash-generative, leaving the Group with a net
cash balance at the half year of $67.10m (3 July 2021:
$52.80m).
The strong trading momentum driving these results was described
in our market updates of 6 May 2022 and 19 July 2022. Measured
against the 2019 comparative, (the most recent 'normal' year),
order counts at the half year were up 14%. Average order values
also increased by 14%, resulting in overall demand revenue for the
period at 30% above the 2019 comparative.
Strategic progress
The progress made in the first half of 2022 directly reflects
both the clarity of our strategic direction and our unwavering
commitment to 'doing the right thing' by taking a long-term view of
the business throughout the pandemic-affected years of 2020 and
2021. In particular:
-- We remain fully committed to our people, whose hard work and
dedication has allowed us to produce such impressive results; they
are at the heart of the 4imprint culture.
-- We continue to develop and invest in a brand component to our
marketing engine. This strategic initiative was launched in 2018,
before the pandemic, and has given us the flexibility we
anticipated to make a positive impact on the efficiency of our
marketing.
Dividend
The Group is very well financed. In consequence, the Board has
declared an interim dividend of 40.00c per share, an increase of
167% over the prior year. The well-established Group balance sheet
funding and capital allocation guidelines will continue to shape
decisions on future dividend payments to Shareholders.
Outlook
The Board remains very confident in the Group's strategy, the
strength and resilience of its business model and its competitive
position. This confidence is expressed in our expectation of
reaching our long-held revenue target of $1bn during the 2022
financial year.
At the same time, the Board is cognisant of continuing
uncertainty in the form of geo-political and broad economic factors
that could potentially slow down the Group's performance during the
remainder of 2022.
Trading momentum in the first few weeks of the second half of
2022 has remained encouraging.
Paul Moody
Chairman
10 August 2022
Operating and Financial Review
Operating Review
Half
year Half year
2022 2021
Revenue $m $m
----------------------------- ------- ----------
North America 505.86 321.70
UK & Ireland 9.68 5.11
----------------------------- ------- ----------
Total 515.54 326.81
----------------------------- ------- ----------
Half
year Half year
2022 2021
Operating profit $m $m
----------------------------- ------- ----------
Direct Marketing operations 46.29 5.69
Head Office costs (2.31) (2.09)
----------------------------- ------- ----------
Total 43.98 3.60
----------------------------- ------- ----------
The results for the half year and prior half year are
unaudited.
Performance overview
The first half of 2022 produced outstanding financial
results.
In total, 886,000 orders were processed in the first half of
2022. This represents an increase of 44% against 616,000 in 2021,
and an increase of 14% compared to 778,000 in 2019. Importantly, we
have continued to attract new customers at an encouraging rate; in
the first half of 2022 we acquired 146,000 new customers, a 29%
increase over the 113,000 acquired over the same period in
2021.
These markedly improved demand numbers translated into
significant gains in year-on-year financial performance. Group
revenue for the 2022 half year was $515.54m (2021: $326.81m), an
increase of 58%. Operating profit for the period was $43.98m,
compared to $3.60m in the first half of 2021.
The 4imprint direct marketing business model remains very cash
generative, with free cash flow of $33.65m in the period (2021:
$13.04m), contributing to a cash balance at the 2022 half year of
$67.10m (3 July 2021: $52.80m).
We are in no doubt that the strength of the Group's financial
performance in the first half of 2022 is a direct result of our
strategic commitment to maintain the financial resource to keep
investing in the business even during an economic downturn. We are
secure in the knowledge that this continued investment, primarily
in people and marketing, lays the foundation for the significant
market share opportunity ahead.
Operational highlights
Progress has been made in the following operational areas in the
period.
-- People. Our people are a crucial element in our success. This
was readily apparent in the context of the very strong demand seen
in the first half of 2022. The willingness of our team members
across the entire business to go above and beyond to deliver
outstanding customer service in the face of a rapid increase in
demand and a challenging supply chain is indicative of 4imprint's
culture and values. Despite an extremely tight labour market, we
have been able to attract the necessary talent to service the
increasing demand that we are seeing. To further strengthen this
ability to attract and retain great people we have invested in
remuneration and benefit initiatives and will continue to do so in
the second half of the year. In addition, with input from our team
we have continued with the development of a permanent 'hybrid'
working environment for our office-based team members. As well as
improving the resilience of the business, this reduces our need for
future office space without sacrificing our ability to provide a
remarkable customer experience.
-- Marketing. We have always understood the importance of
staying in front of our customers during an economic downturn. The
pandemic years of 2020 and 2021 were no exception. The strategic
evolution of our marketing mix in 2018 to include and increasingly
invest in a new brand awareness programme was accelerated during
this time. We used the improved flexibility this new mix offers to
take full advantage of the immediate market share opportunity at
the same time as strengthening the business for the long-term. This
approach has clearly been successful in the first half of 2022 as
an essential driver of our revenue per marketing dollar KPI in the
period of $8.19, a 50% increase over prior year (2021: $5.46).
-- Supply. As anticipated, the first half of 2022 saw sometimes
acute pressure due to challenges around global logistics, inventory
availability and production capacity to keep up with demand. The
deep relationships that we have with our key tier 1 suppliers again
proved to be invaluable in dealing with these supply chain issues.
In addition, we experienced significant inflationary pressure on
cost of product in the period. Whilst we have implemented carefully
considered price increases to help address these increasing costs,
we continue to approach pricing thoughtfully so as to remain very
well positioned in the market, supporting the strong customer
acquisition and retention numbers described above.
-- Screen-printing. In April 2022 we completed the purchase of
the business and assets of a small, nearby apparel screen-printing
business that had been a long-standing and valued supplier. Our
intention is to use the assets and, more importantly, the expertise
acquired to scale up our apparel decorating capacity in support of
the continued growth of this category. In terms of strategic
direction, the parallel is the substantial in-house embroidery
operation that we have built from small beginnings over the last
several years.
-- Solar array project. We are pleased to report good progress
in our carbon reduction initiatives. Our $2m solar array project at
the Oshkosh Distribution Center recently produced its first power
and is expected to be fully operational by the end of August 2022.
This project will help reduce the amount of carbon offsets required
to retain our CarbonNeutral (R) certification.
Summary
The financial performance of the Group in the first half of 2022
provides firm validation that our strategy remains fully relevant.
The opportunities in the markets in which we operate are attractive
and we see strong potential for further market share gains.
Financial Review
Half
year Half year
2022 2021
$m $m
----------------------- -------- ----------
Operating profit 43.98 3.60
Net finance cost (0.07) (0.23)
Profit before tax 43.91 3.37
Taxation (10.54) (0.81)
------------------------- -------- ----------
Profit for the period 33.37 2.56
------------------------- -------- ----------
The results for the half year and prior half year are
unaudited.
The Group's operating result in the period, summarising expense
by function, was as follows:
Half year Half year
2022 2021
$m $m
----------------------------------------------------- ---------- ----------
Revenue 515.54 326.81
----------------------------------------------------- ---------- ----------
Gross profit 147.94 95.61
Marketing costs (62.94) (59.89)
Selling costs (18.05) (15.43)
Administration and central costs (22.33) (16.19)
Share option related charges (0.46) (0.33)
Defined benefit pension scheme administration costs (0.18) (0.17)
----------------------------------------------------- ---------- ----------
Operating profit 43.98 3.60
----------------------------------------------------- ---------- ----------
Revision to the definition of underlying profit measures
In previous half year results announcements, defined benefit
pension charges were not included in the definition of underlying
operating profit. These charges have now become relatively stable
and are not material, therefore they are now included in
underlying, which is defined as before exceptional items. There are
no exceptional items in the half year 2022 or half year 2021, so
the term underlying is not used in relation to any measurements of
profit in these 2022 half year results.
Operating result
The momentum built in the second half of 2021 has continued into
the first six months of 2022. Strong demand activity resulted in
both total order counts and average order values at the half year
up 14% over the first half of 2019 (the most recent 'normal' year),
leading to revenue for the period increasing to $515.54m (H1 2021:
$326.81m; H1 2019: $405.06m).
The gross profit percentage has stabilised at 28.7% (H1 2021:
29.3%), despite the high inflationary environment. A considered
approach to selling price adjustments has helped to offset supplier
cost increases. Other factors affecting gross margin percentage
include continuing strength in average order values and increases
in other directly variable costs such as transportation.
Marketing costs reduced to 12.2% of revenue in the period,
compared to 18.3% of revenue in the first half of 2021. The
improved productivity of our marketing programme, driven by the
shift towards the brand component and efficiencies in search engine
marketing yields, has resulted in our revenue per marketing dollar
KPI in the period rising to $8.19, a 50% increase over prior year
(2021: $5.46).
Selling, administration, and central costs together have
increased 27.7% year-on-year. This reflects additional investment
in team members, particularly in customer service and at our
operational facilities to support elevated demand activity, and
higher incentive compensation accruals and revenue reserves in line
with trading performance.
These factors, when combined together, demonstrate the financial
leverage in the business model, thereby delivering a material
uplift in operating profit to $43.98m for the period (H1 2021:
$3.60m).
Foreign exchange
The primary US dollar exchange rates relevant to the Group's
results were as follows:
Half year 2022 Half year 2021 Full year 2021
Period Average Period Average Period end Average
end end
---------- ------- -------- ------- -------- ----------- --------
Sterling 1.20 1.30 1.38 1.39 1.35 1.38
Canadian
dollars 0.77 0.79 0.81 0.80 0.79 0.80
---------- ------- -------- ------- -------- ----------- --------
The Group reports in US dollars, its primary trading currency.
It also transacts business in Canadian dollars, Sterling and Euros.
Sterling/US dollar is the exchange rate most likely to impact the
Group's financial performance.
The primary foreign exchange considerations relevant to the
Group's operations are as follows:
-- Translational risk in the income statement remains low with
the majority of the Group's revenue arising in US dollars, the
Group's reporting currency. The net impact on the 2022 half year
income statement from trading currency movements was not material
to the Group's results.
-- Most of the constituent elements of the Group balance sheet
are US dollar-based. Exceptions are the Sterling-based defined
benefit pension asset and UK cash balance, which produced exchange
losses of $0.12m and $1.05m respectively in the first half of
2022.
-- The Group generates cash mostly in US dollars, but its
primary applications of post-tax cash are Shareholder dividends,
pension contributions and some Head Office costs, all of which are
paid in Sterling. As such, the Group's cash position is sensitive
to Sterling/US dollar exchange movements. To the extent that
Sterling weakens against the US dollar, more funds are available in
payment currency to fund these cash outflows.
Share option charges
A total of $0.46m (H1 2021: $0.33m) was charged in the period in
respect of IFRS 2 'Share-based Payments'. This was made up of two
elements: (i) executive awards under the 2015 Incentive Plan, now
replaced by the Deferred Bonus Plan ("DBP"); and (ii) charges in
respect of the 2019 UK SAYE Scheme and the 2021 US Employee Stock
Purchase Plan.
Current options and awards outstanding are 13,833 share options
under the UK SAYE scheme, 91,838 share options under the 2021 US
Employee Stock Purchase Plan, and 29,633 share awards under the
2015 Incentive Plan.
Net finance cost
Net finance cost in the period was $0.07m (H1 2021: $0.23m).
This comprises lease interest charges under IFRS 16, the net
finance income/cost on the defined benefit pension plan assets and
liabilities, and interest earned on cash deposits.
The net finance cost has reduced year-on-year due to improving
yields on cash deposits, particularly in the US where interest
rates have steadily increased during the period, and net interest
on the defined benefit pension plan becoming positive as the Plan
has moved into a net asset position on an IAS 19 basis.
Taxation
The tax charge for the half year was $10.54m (H1 2021: $0.81m),
giving an effective tax rate of 24% (H1 2021: 24%). The tax charge
relates principally to taxation payable on profits earned in North
America.
Earnings per share
Basic earnings per share was 118.90c (H1 2021: 9.12c). This
reflects the strong financial results in the period, a consistent
effective tax rate, and a weighted average number of shares in
issue similar to prior year.
Dividends
Dividends are determined in US dollars and paid in Sterling,
converted at the exchange rate on the date that the dividend is
declared.
The Board has declared an interim dividend per share of 40.00c,
(2021: 15.00c), an increase of 167%. In Sterling, the interim
dividend per share will be 33.01p (2021: 10.83p). The dividend will
be paid on 16 September 2022 to Shareholders on the register at the
close of business on 19 August 2022.
Defined benefit pension plan
The Group sponsors a legacy UK defined benefit pension plan (the
"Plan") which has been closed to new members and future accruals
for several years. The Plan has 114 pensioners and 221 deferred
members.
At 2 July 2022, the surplus of the Plan on an IAS 19 basis was
$0.72m, compared to a surplus of $1.97m at 1 January 2022. Gross
Plan assets under IAS 19 were $26.14m, and liabilities were
$25.42m.
The change in the surplus is analysed as follows:
$m
----------------------------------------------------- --------
IAS 19 surplus at 1 January 2022 1.97
Company contributions to the Plan 2.20
Defined benefit pension scheme administration costs (0.18)
Pension finance income 0.03
Re-measurement gain due to changes in assumptions 8.20
Return on scheme assets (excluding interest income) (11.38)
Exchange loss (0.12)
------------------------------------------------------ --------
IAS 19 surplus at 2 July 2022 0.72
------------------------------------------------------ --------
The surplus reduced by $1.25m in the period. This was mainly the
result of a fall in the Plan asset values driven by the high
inflation to 2 July 2022 (the assets are held in gilts, credit
funds and liquidity funds, the value of which move with inflation
and interest rate expectations), partly offset by the increase in
the discount rate used to measure the Plan liabilities.
The Company continues to pay regular monthly contributions into
the Plan as part of a recovery plan agreed by the Company and the
Trustee that aims towards funding on a buyout basis by mid-2024. As
the Plan moves towards becoming 'buyout ready', the Company and the
Trustee continue to assess options on the timing and route to
achieving this objective.
A triennial actuarial valuation of the Plan was completed in
September 2019 and this forms the basis of the 2022 half year IAS
19 valuation set out above. The next triennial Plan valuation is
scheduled for September 2022.
Business combination
On 25 April 2022, the Group acquired the trade and assets of Fox
Graphics Ltd, an unlisted company based in Oshkosh, Wisconsin, that
specialises in screen-printing services. The acquired
screen-printing operations will enable the Group to bring this
capability in-house. With future investment the objective is to
secure the capacity to meet the anticipated growth in demand for
the apparel category.
The acquisition constitutes a business combination as defined in
IFRS 3, as the three elements of a business (input, process,
output) have been identified as having been acquired. Accordingly,
the acquisition has been accounted for using the acquisition
method.
The fair value of the consideration transferred was $1.70m and
the net identifiable assets acquired and liabilities assumed as at
the date of acquisition have been determined at $0.69m. The
resulting goodwill of $1.01m has been recognised on the balance
sheet during the period.
Further information on this acquisition is provided in note 7 to
these interim financial statements.
Cash flow
Net cash was $67.10m at 2 July 2022 (3 July 2021: $52.80m; 1
January 2022: $41.59m).
Cash flow in the period is summarised as follows:
Half year Half year
2022 2021
$m $m
----------------------------------------------------- ---------- ----------
Operating profit 43.98 3.60
Share option related charges 0.44 0.32
Defined benefit pension scheme administration costs 0.18 0.17
Depreciation and amortisation 1.98 1.76
Lease depreciation 0.68 0.67
Change in working capital 4.58 11.32
Capital expenditure (2.44) (0.96)
----------------------------------------------------- ---------- ----------
Underlying operating cash flow 49.40 16.88
Tax and interest (9.25) (1.04)
Consideration for business combination (1.70) -
Defined benefit pension scheme contributions (2.20) (2.07)
Own share transactions (0.97) (0.30)
Capital element of lease payments (0.58) (0.55)
Exchange and other (1.05) 0.12
----------------------------------------------------- ---------- ----------
Free cash flow 33.65 13.04
Dividends to Shareholders (8.14) -
----------------------------------------------------- ---------- ----------
Net cash inflow in the period 25.51 13.04
----------------------------------------------------- ---------- ----------
The Group generated underlying operating cash flow of $49.40m
(H1 2021: $16.88m), a conversion rate of 112% of operating profit.
The net working capital position, whilst remaining elevated, has
improved since the 2021 year end as the open order book has been
closely managed and supply chain issues have started to stabilise.
Capital expenditure includes $1.71m on a solar array at the Oshkosh
Distribution Center which recently produced its first power and is
expected to be fully operational by the end of August 2022.
Free cash flow improved by $20.61m to $33.65m (H1 2021:
$13.04m). This is attributable to the excellent trading performance
during the period and is net of $1.70m of business acquisition
consideration. The 2021 final dividend of $8.14m was paid in May
2022.
Balance sheet and Shareholders' funds
Net assets at 2 July 2022 were $103.79m, compared to $82.97m at
1 January 2022. The balance sheet is summarised as follows:
2 July 1 January
2022 2022
$m $m
-------------------- -------- ----------
Non-current assets 39.51 38.04
Working capital 7.77 12.27
Net cash 67.10 41.59
Lease liabilities (11.62) (12.09)
Pension asset 0.72 1.97
Other assets - net 0.31 1.19
-------------------- -------- ----------
Net assets 103.79 82.97
-------------------- -------- ----------
Shareholders' funds increased by $20.82m since the 2021
year-end. Constituent elements of the change were retained profit
in the period of $33.37m and share option related movements of
$0.44m, net of equity dividends paid to Shareholders of $(8.14)m,
own share transactions of $(0.97)m, the after tax impact of returns
on pension plan assets and re-measurement gains on pension
obligations of $(2.62)m, and currency translation differences of
$(1.26)m.
The Group had a net positive working capital balance of $7.77m
at 2 July 2022 (1 January 2022: $12.27m). This reflects the
build-up of accrued revenue and inventory on orders being processed
and has been impacted by global and local supply chain issues. The
working capital balance has reduced since the year-end as orders
have been completed and the supply of product has stabilised.
Financing and liquidity
Full details of the Board's balance sheet funding guidelines and
capital allocation priorities are set out on page 33 of the 2021
Annual Report. The Board retains the same guidelines in both
areas.
The primary aim of these guidelines is to provide operational
and financial flexibility through economic cycles, to be able to
invest in opportunities as they arise, and to meet commitments to
Shareholders through dividend payments and to the defined benefit
pension plan through regular contributions.
The Group has a $20.0m working capital facility with its
principal US bank, JPMorgan Chase, N.A. The facility has a minimum
EBITDA test and standard debt service coverage ratio and debt to
EBITDA covenants. The interest rate is the Secured Overnight
Financing Rate ("SOFR") plus 2.1%, and the facility expires on 31
May 2024. In addition, an overdraft facility of GBP1.0m, with an
interest rate of the Bank of England base rate plus 2.00% (or 2.00%
if higher), is available from the Group's principal UK bank, Lloyds
Bank plc, until 31 December 2022.
The Group had cash balances of $67.10m at the period end and has
no current requirement or plans to raise additional equity or core
debt funding.
Critical accounting policies
Critical accounting policies are those that require significant
judgments or estimates and potentially result in materially
different results under different assumptions or conditions. It is
considered that the Group's only critical accounting policies are
in respect of revenue, leases, and the retirement benefit
asset.
Key sources of estimation uncertainty
Determining the carrying amount of some assets and liabilities
requires estimation of the effects of uncertain future events. The
key sources of estimation uncertainty are considered to be in
relation to the valuation of the defined benefit Plan liabilities
and assets.
Principal risks and uncertainties
The Board has ultimate responsibility for the Group's risk
management process, although responsibility for reviewing specific
risks and controls is delegated to the Audit Committee. The
Executive Directors and operational management teams, co-ordinated
by the Business Risk Management Committee ("BRMC"), are responsible
for the identification and evaluation of risks and the subsequent
implementation of specific risk mitigation activities.
The Group's risk management process identifies, evaluates, and
manages the Group's principal risks and uncertainties. These risks
are identified through a variety of sources, both internal and
external, to ensure that emerging risks are identified and
considered on a timely basis.
The principal risks and uncertainties, including emerging risks,
faced by the Group are set out on pages 36 to 43 of the 2021 Annual
Report, a copy of which is available on the Group's investor
relations website at https://investors.4imprint.com . These
are:
1. Macroeconomic conditions.
2. Markets & competition.
3. Effectiveness of key marketing techniques and brand development.
4. Business facility disruption.
5. Domestic supply and delivery.
6. Failure or interruption of information technology systems and infrastructure.
7. Cyber threats.
8. Supply chain compliance & ethics.
9. Legal, regulatory, and compliance.
10. Climate change.
11. Products and market trends.
Whilst these risks have not changed materially since year-end,
updates to the risk environment in respect of COVID-19, the
availability of labour, and the fulfilment of customer orders are
provided below.
COVID-19 pandemic
Whilst concerns remain with respect to potential new virus
variants, the risk of a negative effect on demand for our products
arising from the pandemic is considered to have receded over the
period. Demand activity for our primary North American business has
fully recovered and is now exceeding pre COVID-19 levels, with
total order counts at the half year 14% ahead of 2019 (the most
recent 'normal' year).
Availability of labour
The labour market in the US remains extremely tight. This is
presenting challenges in hiring production and support staff to
meet the material increase in demand activity. Considerable
resource has been invested to ensure 4imprint remains an employer
of choice. This has included a review of wage levels in light of
the high inflationary environment and strong employment market to
ensure we remain competitive, as well as ensuring that the IT
infrastructure is in place to support the flexible working
practices that are highly valued by our office-based teammates.
Customer order fulfilment
The sustained disruption to global and local supply chains,
challenges in recruiting staff by both 4imprint and our supply
partners, and elevated order levels experienced during the first
half of 2022, have increased the risk of not being able to fulfil
customer orders on a timely basis. The Group's reputation for
excellent service and reliability is a core tenet of our customer
proposition. Recruitment activity has been ongoing throughout the
period, particularly in our Oshkosh Distribution Center and for
customer service staff to help meet demand for apparel orders and
to keep our customers informed and supported through the order
process.
Going concern statement
In adopting the going concern basis for preparing these
condensed consolidated financial statements, the Directors have
carefully considered:
-- The Group's strategy, market position and business model, as
set out in the Strategic Report section on pages 9 to 19 of the
2021 Annual Report.
-- The principal risks and uncertainties facing the Group, as
outlined in the Principal risks and uncertainties section of this
Financial Review.
-- Information contained in this Financial Review concerning the
Group's financial position, cash flows and liquidity position.
-- Regular management reporting and updates from the Executive Directors.
-- Recent detailed financial forecasts and analysis for the period to 30 December 2023.
The strength of the Group's business model and market position,
as evidenced by the financial resilience shown through the COVID-19
pandemic and excellent demand activity in the first half of 2022,
leaves the Group in a very strong financial position. In
consequence, the Board has considerable confidence in the Group's
prospects, whilst remaining conscious of the current geo-political
and broad economic factors that may affect the Group's performance
over the period to 30 December 2023.
Financial position
The Group had net cash of $67.10m at 2 July 2022 (1 January
2022: $41.59m) and maintains a $20.0m working capital facility with
its principal US bank, JPMorgan Chase, N.A., which expires on 31
May 2024, and an overdraft facility of GBP1.0m with its principal
UK bank, Lloyds Bank plc, which is available until 31 December
2022. Based on our forecast, we have no requirement to draw on
either of these facilities.
Financial modelling
We undertake regular forecasting and budgeting exercises which
are reviewed and approved by the Board. On an annual basis, we also
model a distressed scenario based upon severe, but plausible,
downside demand assumptions to support our assessment of
viability.
These forecasts, and our experience from the COVID-19 pandemic
that resulted in sustained diminished corporate demand in a
downsized promotional products market, have demonstrated the
Group's ability to flex its marketing and other costs to mitigate
the impact of severe falls in revenue, whilst still retaining
flexibility to further reduce costs if required.
Combined with a healthy net cash position maintained in
accordance with our balance sheet funding guidelines, the Board
considers the Group to be in a strong position to withstand severe
economic stress and to take market share opportunities as they
arise.
Going concern
Based on the assessment outlined above, the Directors have a
reasonable expectation that the Group will continue to operate and
to meet its liabilities as they fall due over the period to 30
December 2023. On this basis, the Directors continue to adopt the
going concern basis in preparing these condensed consolidated
financial statements.
Kevin Lyons-Tarr David Seekings
Chief Executive Officer Chief Financial Officer
10 August 2022
Condensed Consolidated Income Statement (unaudited)
For the 26 weeks ended 2 July 2022
Half Half Full
year year year
2022 2021 2021
Note $'000 $'000 $'000
--------------------------------- ------ ---------- ---------- ----------
Revenue 6 515,536 326,808 787,322
Operating expenses (471,553) (323,213) (756,676)
--------------------------------- ------ ---------- ---------- ----------
Operating profit 6 43,983 3,595 30,646
Finance income 108 15 33
Finance costs (205) (228) (435)
Pension finance income/(charge) 27 (15) (15)
--------------------------------- ------ ---------- ---------- ----------
Net finance cost (70) (228) (417)
Profit before tax 43,913 3,367 30,229
Taxation 8 (10,539) (808) (7,643)
--------------------------------- ------ ---------- ---------- ----------
Profit for the period 33,374 2,559 22,586
--------------------------------- ------ ---------- ---------- ----------
Cents Cents Cents
--------------------------------- ------ ---------- ---------- ----------
Earnings per share
Basic 9 118.90 9.12 80.46
Diluted 9 118.67 9.09 80.26
--------------------------------- ------ ---------- ---------- ----------
Condensed Consolidated Statement of Comprehensive Income
(unaudited)
For the 26 weeks ended 2 July 2022
Half Half Full
year year year
2022 2021 2021
$'000 $'000 $'000
--------------------------------------------------- --------- -------- --------
Profit for the period 33,374 2,559 22,586
---------------------------------------------------- --------- -------- --------
Other comprehensive (expense)/income
Items that may be reclassified subsequently
to the income statement:
Currency translation differences (1,269) 137 (97)
Items that will not be reclassified subsequently
to the income statement:
Return on pension scheme assets (excluding
interest income) (11,381) (3,440) (1,391)
Re-measurement gains on post-employment
obligations 8,201 2,664 2,506
Tax relating to components of other comprehensive
(expense)/income 560 147 (1,411)
Total other comprehensive expense net
of tax (3,889) (492) (393)
---------------------------------------------------- --------- -------- --------
Total comprehensive income for the period 29,485 2,067 22,193
---------------------------------------------------- --------- -------- --------
Condensed Consolidated Balance Sheet (unaudited)
At 2 July 2022
At At At
2 July 3 July 1 Jan
2022 2021 2022
Note $'000 $'000 $'000
------------------------------- ----- --------- --------- ---------
Non-current assets
Property, plant and equipment 25,765 24,063 24,667
Intangible assets 1,002 1,078 1,045
Right-of-use assets 11,153 12,395 11,725
Goodwill 7 1,010 - -
Deferred tax assets 579 3,857 600
Retirement benefit asset 11 717 - 1,974
------------------------------- ----- --------- ---------
40,226 41,393 40,011
------------------------------- ----- --------- --------- ---------
Current assets
Inventories 22,726 12,646 20,559
Trade and other receivables 82,030 48,652 63,589
Current tax debtor 1,331 2,449 2,034
Cash and cash equivalents 67,096 52,802 41,589
------------------------------- ----- --------- --------- ---------
173,183 116,549 127,771
------------------------------- ----- --------- --------- ---------
Current liabilities
Lease liabilities 12 (1,246) (1,133) (1,150)
Trade and other payables (96,981) (74,110) (71,877)
(98,227) (75,243) (73,027)
------------------------------- ----- --------- ---------
Net current assets 74,956 41,306 54,744
------------------------------- ----- --------- --------- ---------
Non-current liabilities
Lease liabilities 12 (10,370) (11,519) (10,939)
Retirement benefit obligation 11 - (2,244) -
Deferred tax liabilities (1,022) (1,478) (850)
(11,392) (15,241) (11,789)
------------------------------- ----- --------- --------- ---------
Net assets 103,790 67,458 82,966
------------------------------- ----- --------- --------- ---------
Shareholders' equity
Share capital 18,842 18,842 18,842
Share premium reserve 68,451 68,451 68,451
Other reserves 4,751 6,254 6,020
Retained earnings 11,746 (26,089) (10,347)
------------------------------- ----- --------- --------- ---------
Total Shareholders' equity 103,790 67,458 82,966
------------------------------- ----- --------- --------- ---------
Condensed Consolidated Statement of Changes in Shareholders'
Equity (unaudited)
For the 26 weeks ended 2 July 2022
Retained earnings
--------------------
Share
Share premium Other Own Profit Total
capital reserve reserves shares and loss equity
$'000 $'000 $'000 $'000 $'000 $'000
-------------------------------------- --------- --------- ---------- -------- ---------- --------
Balance at 3 January 2021 18,842 68,451 6,117 (581) (27,458) 65,371
--------------------------------------
Profit for the period 2,559 2,559
Other comprehensive income/(expense) 137 (629) (492)
-------------------------------------- --------- --------- ---------- -------- ---------- --------
Total comprehensive income 137 1,930 2,067
-------------------------------------- --------- --------- ---------- -------- ---------- --------
Own shares utilised 572 (572) -
Own shares purchased (301) (301)
Share-based payment charge 321 321
At 3 July 2021 18,842 68,451 6,254 (310) (25,779) 67,458
-------------------------------------- --------- --------- ---------- -------- ---------- --------
Profit for the period 20,027 20,027
Other comprehensive (expense)/income (234) 333 99
Total comprehensive income (234) 20,360 20,126
-------------------------------------- --------- --------- ---------- -------- ---------- --------
Own shares utilised 1 (1) -
Own shares purchased (542) (542)
Share-based payment charge 281 281
Deferred tax relating to
share options 5 5
Deferred tax relating to
losses attributable to share
options (228) (228)
Dividends (4,134) (4,134)
At 1 January 2022 18,842 68,451 6,020 (851) (9,496) 82,966
--------- --------- ---------- -------- ---------- --------
Profit for the period 33,374 33,374
Other comprehensive expense (1,269) (2,620) (3,889)
-------------------------------------- --------- --------- ---------- -------- ---------- --------
Total comprehensive income (1,269) 30,754 29,485
-------------------------------------- --------- --------- ---------- -------- ---------- --------
Own shares utilised 825 (825) -
Own shares purchased (980) (980)
Proceeds from options exercised 12 12
Share-based payment charge 442 442
Dividends (8,135) (8,135)
Balance at 2 July 2022 18,842 68,451 4,751 (1,006) 12,752 103,790
-------------------------------------- --------- --------- ---------- -------- ---------- --------
Condensed Consolidated Cash Flow Statement (unaudited)
For the 26 weeks ended 2 July 2022
Half Half Full
year year year
2022 2021 2021
Note $'000 $'000 $'000
---------------------------------------------- ----- -------- ------- --------
Cash flows from operating activities
Cash generated from operations 13 49,639 15,770 18,257
Tax paid (9,151) (820) (6,414)
Finance income received 108 15 33
Finance costs paid (35) (42) (65)
Lease interest (176) (193) (377)
---------------------------------------------- ----- -------- ------- --------
Net cash generated from operating activities 40,385 14,730 11,434
---------------------------------------------- ----- -------- ------- --------
Cash flows from investing activities
Purchases of property, plant and equipment (2,263) (769) (3,083)
Purchases of intangible assets (179) (194) (382)
Proceeds from sale of property, plant
and equipment 3 - -
Consideration for business combination 7 (1,700) - -
--------
Net cash used in investing activities (4,139) (963) (3,465)
---------------------------------------------- ----- -------- -------
Cash flows from financing activities
Capital element of lease payments (584) (554) (1,117)
Proceeds from share options exercised 12 - -
Purchases of own shares (980) (301) (843)
Dividends paid to Shareholders 10 (8,135) - (4,134)
---------------------------------------------- ----- -------- ------- --------
Net cash used in financing activities (9,687) (855) (6,094)
---------------------------------------------- ----- -------- ------- --------
Net movement in cash and cash equivalents 26,559 12,912 1,875
Cash and cash equivalents at beginning
of the period 41,589 39,766 39,766
Exchange (losses)/gains on cash and
cash equivalents (1,052) 124 (52)
---------------------------------------------- ----- -------- ------- --------
Cash and cash equivalents at end of
the period 67,096 52,802 41,589
---------------------------------------------- ----- -------- ------- --------
Notes to the Interim Financial Statements
1 General information
4imprint Group plc is a public limited company incorporated in
England and Wales, domiciled in the UK and listed on the London
Stock Exchange. Its registered office is 25 Southampton Buildings,
London, WC2A 1AL.
These interim condensed consolidated financial statements, which
were authorised for issue in accordance with a resolution of the
Directors on 9 August 2022, do not comprise statutory accounts
within the meaning of Section 434 of the Companies Act 2006.
Statutory accounts for the period ended 1 January 2022 were
approved by the Board of Directors on 15 March 2022 and delivered
to the Registrar of Companies. The report of the auditors on those
accounts was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under Section 498 of
the Companies Act 2006.
The financial information contained in this report has neither
been audited nor reviewed by the auditors, pursuant to Auditing
Practices Board guidance on Review of Interim Financial
Information.
2 Basis of preparation
These interim condensed consolidated financial statements for
the 26 weeks ended 2 July 2022 have been prepared, in US dollars,
in accordance with the Disclosure and Transparency Rules of the
Financial Conduct Authority and IAS 34 'Interim Financial
Reporting', as adopted by the United Kingdom, and should be read in
conjunction with the Group's financial statements for the period
ended 1 January 2022, which were prepared in accordance with
UK-adopted International Accounting Standards.
As outlined in the Going concern section of the Financial
Review, the Directors consider it appropriate to continue to adopt
the going concern basis in preparing these interim condensed
consolidated financial statements.
The tax charge for the interim period is accrued based on the
best estimate of the tax charge for the full financial year.
3 Accounting policies
The accounting policies applied in these interim condensed
consolidated financial statements are consistent with those
followed in the preparation of the Group's annual consolidated
financial statements for the period ended 1 January 2022, as
described in those annual financial statements, except for a new
accounting policy adopted for goodwill as detailed below. New
accounting standards applicable for the first time in this
reporting period have no impact on the Group's results or balance
sheet.
Goodwill
Goodwill represents the excess of the fair value of the
consideration of an acquisition over the fair value attributed to
the net assets acquired (including contingent liabilities).
Goodwill is not amortised but is reviewed annually for
impairment.
4 Use of assumptions and estimates
The preparation of the interim financial statements requires
management to make judgments, estimates and assumptions that affect
the application of policies and reported amounts of assets and
liabilities, income and expenses. The estimates and associated
assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstances,
the results of which form the basis of making estimates about
carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these
estimates.
There have been no changes in the critical accounting judgments
and key sources of estimation uncertainty since the 2021 year-end,
other than the assumptions and sensitivities on the recalculation
of the defined benefit pension obligations as shown in note 11.
5 Financial risk management
The Group's activities expose it to a variety of financial
risks: currency risk; credit risk; liquidity risk; and capital
risk. These interim condensed consolidated financial statements do
not include all financial risk management information and
disclosures required in the annual financial statements; they
should be read in conjunction with the Group's annual consolidated
financial statements for the period ended 1 January 2022. There
have been no changes in any financial risk management policies
since that date.
6 Segmental analysis
The chief operating decision maker has been identified as the
Board of Directors and the segmental analysis is presented based on
the Group's internal reporting to the Board.
At 2 July 2022, the Group had two operating segments, North
America and UK & Ireland. The costs of the Head Office are
reported separately to the Board, but this is not an operating
segment.
Half Half Full
year year year
2021 2021
2022 $'000 $'000
Revenue $'000
--------------------- -------- -------- --------
North America 505,864 321,698 773,710
UK & Ireland 9,672 5,110 13,612
--------------------- -------- -------- --------
Total Group revenue 515,536 326,808 787,322
--------------------- -------- -------- --------
Half Half Full
year 2022 year year
2021 2021
Profit $'000 $'000 $000
--------------------------------------------------- ----------- -------- --------
North America 46,420 6,654 36,006
UK & Ireland (132) (968) (1,464)
--------------------------------------------------- ----------- -------- --------
Operating profit from Direct Marketing operations 46,288 5,686 34,542
Head Office costs (2,305) (2,091) (3,896)
--------------------------------------------------- ----------- -------- --------
Operating profit 43,983 3,595 30,646
Net finance cost (70) (228) (417)
--------------------------------------------------- ----------- -------- --------
Profit before tax 43,913 3,367 30,229
--------------------------------------------------- ----------- -------- --------
Other segmental information
Assets Liabilities
---------------------------- --------------------------------
2 July 3 July 1 Jan 2 July 3 July 1 Jan
2022 2021 2021
$'000 $'000 2022 2022 $'000 2022
$'000 $'000 $'000
--------------- -------- -------- -------- ---------- --------- ---------
North America 140,731 98,152 120,284 (105,346) (84,645) (81,674)
UK & Ireland 3,948 2,752 3,017 (3,798) (3,156) (2,618)
Head Office 68,730 57,038 44,481 (475) (2,683) (524)
--------------- -------- -------- -------- ---------- --------- ---------
213,409 157,942 167,782 (109,619) (90,484) (84,816)
--------------- -------- -------- -------- ---------- --------- ---------
Head Office assets include cash and cash equivalents, deferred
tax assets and retirement benefit assets. Head Office liabilities
at 3 July 2021 include retirement benefit obligations.
7 Business combinations
Acquisition of screen-printing business
On 25 April 2022, the Group acquired the trade and assets of Fox
Graphics Ltd, an unlisted company based in Oshkosh, Wisconsin, that
specialises in screen-printing services. The acquired
screen-printing operations will enable the Group to bring this
capability in-house. With future investment the objective is to
secure the capacity to meet the anticipated growth in demand for
the apparel category.
The acquisition constitutes a business combination as defined in
IFRS 3, as the three elements of a business (input, process,
output) have been identified as having been acquired. Accordingly,
the acquisition has been accounted for using the acquisition
method.
The fair values of the identifiable assets acquired and
liabilities assumed as at the date of acquisition were:
Fair value recognised
on acquisition
$'000
--------------------------------------------- ----------------------
Assets
Property, plant and equipment 690
Right-of-use assets 111
801
--------------------------------------------- ----------------------
Liabilities
Lease liabilities (111)
(111)
--------------------------------------------- ----------------------
Total identifiable net assets at fair value 690
--------------------------------------------- ----------------------
Goodwill arising on acquisition 1,010
--------------------------------------------- ----------------------
Purchase consideration transferred 1,700
--------------------------------------------- ----------------------
Analysis of cash flows on acquisition:
Cash paid 1,700
--------------------------------------------- ----------------------
Net cash flow on acquisition 1,700
--------------------------------------------- ----------------------
In addition to the purchase consideration transferred, a
potential further $560,000 is payable in annual instalments over
the five year period following closing, subject to certain
conditions being satisfied, including the continued employment of
the selling shareholder with the Group. These contingent payments
constitute remuneration for future services and will be expensed to
profit and loss as services are rendered; $20,000 has been
recognised at the 2022 half year in operating expenses in the
income statement and trade and other payables in the balance
sheet.
Reconciliation of the carrying amount of goodwill at the
beginning and end of the reporting period is presented below:
Goodwill
$'000
------------------------------------------------- ---------
Cost
At 2 January 2022 -
Acquisition of screen-printing trade and assets 1,010
------------------------------------------------- ---------
At 2 July 2022 1,010
------------------------------------------------- ---------
The Group did not acquire any receivables as part of the
business combination.
The acquired business generated revenues and net income of
approximately $2.0m and $0.4m respectively for the twelve months
ended 31 December 2021. The Group was the principal customer of the
acquired business, contributing approximately $1.7m of the total
$2.0m of revenue and approximately $0.3m of the total $0.4m net
income.
The impact on the Group's financial statements, both from the
date of acquisition and as if the acquisition had taken place at
the beginning of the period, are not material as demonstrated by
the full year results of Fox Graphics Ltd noted above. As most of
the revenue of the acquired business was contributed by the Group,
these transactions will be eliminated upon consolidation from the
date of acquisition as intra-group trading and thus only external
sales will impact Group revenue (based on 2021 results, this would
be expected to add circa $0.3m to revenue for a full year). The
Group will benefit from lower product costs associated with
integrating the production operations of Fox Graphics Ltd; based on
2021 results and without any new investment by the Group, the
acquisition would be expected to add circa $0.4m to the Group's
profit before tax for a full year.
The goodwill recognised is primarily attributable to the
specialised operational knowledge acquired and benefits of bringing
the activities of the screen-printing business in-house to secure
capacity and support the growing demand for decorated garments from
our customers. The total amount of goodwill that is expected to be
deductible for tax purposes is $1,010,000.
Total acquisition-related transaction costs of $17,000 will be
expensed in 2022; $13,000 is included in operating expenses in the
income statement for the 26 weeks ended 2 July 2022 and is part of
operating cash flows in the cash flow statement; the remaining
$4,000 of costs will be expensed in the second half of the
financial year.
8 Taxation
The taxation rate was 24%, based on the estimated rate for the
full year (H1 2021: 24%; FY 2021: 25%). Tax paid in the period was
$9.15m (H1 2021: $0.82m; FY 2021: $6.41m).
The deferred tax assets/liabilities at 2 July 2022 have been
calculated at a tax rate of 19% in respect of deferred tax items
that are expected to reverse before 1 April 2023 (H1 2021: 19%; FY
2021: 19%) and 25% in respect of deferred tax items expected to
reverse after 1 April 2023 (H1 2021: 25%; FY 2021: 25%) for UK
deferred tax items, and 25% (H1 2021: 25%; FY 2021: 25%) in respect
of US deferred tax items.
9 Earnings per share
Basic and diluted
The basic and diluted earnings per share are calculated based on
the following data:
Half Half Full
year year year
2022 2021 2021
$'000 $'000 $'000
------------------ ------- ------ -------
Profit after tax 33,374 2,559 22,586
------------------ ------- ------ -------
Half Half Full
year year year
2022 2021 2021
Number Number Number
000's 000's 000's
------------------------------------------- ------- ------- -------
Basic weighted average number of shares 28,070 28,072 28,072
Adjustment for employee share options 53 65 68
------------------------------------------- ------- ------- -------
Diluted weighted average number of shares 28,123 28,137 28,140
------------------------------------------- ------- ------- -------
Cents Cents Cents
------------------------------------------- ------- ------- -------
Basic earnings per share 118.90 9.12 80.46
------------------------------------------- ------- ------- -------
Diluted earnings per share 118.67 9.09 80.26
------------------------------------------- ------- ------- -------
The basic weighted average number of shares excludes shares held
in the 4imprint Group plc employee benefit trust. The effect of
this is to reduce the average by 15,931 (H1 2021: 13,340; FY 2021:
13,888).
10 Dividends Half Half Full
year year year
2022 2021 2021
$'000 $'000 $'000
---------------------------------- ------ ------ ------
Dividends paid in the period 8,135 - 4,134
---------------------------------- ------ ------ ------
Cents Cents Cents
---------------------------------- ------ ------ ------
Dividends per share
declared - Interim 40.00 15.00 15.00
- Final - - 30.00
--------------------------------- ------ ------ ------
The interim dividend for 2022 of 40.00c per ordinary share
(interim 2021: 15.00c; final 2021: 30.00c) will be paid on 16
September 2022 to Shareholders on the register at the close of
business on 19 August 2022.
11 Employee pension schemes
The Group operates defined contribution pension schemes for its
UK and US employees. The regular contributions are charged to the
income statement as they are incurred.
The Group also sponsors a UK defined benefit pension scheme
which is closed to new members and future accrual. The funds of the
scheme are held in trust, administered by a corporate Trustee, and
are independent of the Group's finances.
The last full actuarial valuation was carried out by a qualified
independent actuary as at 30 September 2019 and this has been
updated on an approximate basis to 2 July 2022 in accordance with
IAS 19. There have been no changes in the valuation methodology
adopted for this period's disclosures compared to previous periods'
disclosures.
The principal assumptions applied by the actuaries at 2 July
2022 were:
Half Half Full
year year year
2022 2021 2021
----------------------------------------- ------ ------ ------
Rate of increase in pensions in payment 3.10% 3.10% 3.25%
Rate of increase in deferred pensions 2.60% 2.60% 2.75%
Discount rate 3.55% 1.80% 1.80%
Inflation assumption - RPI 3.20% 3.20% 3.35%
Inflation assumption - CPI 2.60% 2.60% 2.75%
----------------------------------------- ------ ------ ------
The mortality assumptions adopted at 2 July 2022 imply the
following life expectancies at age 65:
Half Half Full
year year year
2022 2021 2021
Years Years Years
Male currently aged 45 22.3 22.4 22.3
Female currently aged 45 24.3 24.2 24.2
Male currently aged 65 21.3 21.3 21.3
Female currently aged 65 23.1 23.1 23.0
-------------------------- ------- ------- -------
The movement on the net retirement benefit asset, and the value
of the gross scheme assets and liabilities, are shown in the
Financial Review.
The sensitivities on key actuarial assumptions at the end of the
period were:
Change in defined benefit
Change in assumption obligation
------------------- ----------------------------- --------------------------
Discount rate Decrease of 0.50% +8.00%
Rate of inflation Increase of 0.50% +3.30%
Increase in life expectancy
Rate of mortality of one year +3.70%
------------------- ----------------------------- --------------------------
12 Leases
The Group leases office and industrial space in facilities in
Oshkosh. The additions during the period relate to a sub-lease for
real estate entered as part of the acquisition of the
screen-printing business (see note 7 for further information). The
movement in lease liabilities in the period is shown below:
2 July 3 July 1 Jan
2022 2021 2022
$'000 $'000 $'000
----------------------------------------------- ------------ ------- --------
At start of period 12,089 13,206 13,206
Additions 111 - -
Interest charge 176 193 377
Lease interest payments - operating cash flow (176) (193) (377)
Lease capital payments - financing cash flow (584) (554) (1,117)
At end of period 11,616 12,652 12,089
----------------------------------------------- ------------ ------- --------
13 Cash generated from operations
Half Half Full
year year year
2022 2021 2021
$'000 $'000 $'000
--------------------------------------------------- --------- --------- ---------
Profit before tax 43,913 3,367 30,229
Adjustments for:
Depreciation of property, plant and equipment 1,757 1,547 3,237
Amortisation of intangible assets 216 216 437
Amortisation of right-of-use assets 683 672 1,340
Loss on disposal of property, plant and equipment 3 - -
Share option charges 442 321 602
Net finance cost 70 228 417
Defined benefit pension administration charge 175 172 340
Contributions to defined benefit pension scheme (2,202) (2,069) (4,589)
Changes in working capital:
Increase in inventories (2,167) (1,375) (9,288)
Increase in trade and other receivables (18,587) (11,778) (26,831)
Increase in trade and other payables 25,336 24,469 22,363
Cash generated from operations 49,639 15,770 18,257
--------------------------------------------------- --------- --------- ---------
14 Capital commitments
The Group had capital commitments contracted but not provided
for in these financial statements of $4.1m in relation to
embroidery machines and screen-printing equipment (3 July 2021:
$1.49m; 1 January 2022: $nil).
15 Related party transactions
Transactions and balances between the Company and its
subsidiaries have been eliminated on consolidation. The Group did
not participate in any related party transactions with parties
outside of the Group.
16 Alternative performance measures
An Alternative Performance Measure ("APM") is a financial
measure of historical or future financial performance, financial
position, or cash flows, other than a financial measure defined or
specified within IFRS.
The Group uses APMs to supplement standard IFRS measures to
provide users with information on underlying trends and additional
financial measures, which the Group considers will aid users'
understanding of the business.
Definitions of the Group's APMs can be found on page 134 of the
2021 Annual Report.
Reconciliations of the free cash flow and underlying operating
cash flow APMs to their closest IFRS measures are provided
below:
Half
Half year
year 2022 2021
$m $m
------------------------------------------------ ----------- ------
Net movement in cash and cash equivalents 26.56 12.91
Add back: Dividends paid to Shareholders 8.14 -
Less: Exchange (losses)/gains on cash and cash
equivalents (1.05) 0.13
------------------------------------------------ ----------- ------
Free cash flow 33.65 13.04
------------------------------------------------ ----------- ------
Half
Half year
year 2022 2021
$m $m
---------------------------------------------------- ----------- -------
Cash generated from operations 49.64 15.77
Add back: Contributions to defined benefit pension
scheme 2.20 2.07
Less: Purchases of property, plant and equipment
and intangible assets (2.44) (0.96)
Underlying operating cash flow 49.40 16.88
---------------------------------------------------- ----------- -------
Statement of Directors' Responsibilities
The Directors confirm that, to the best of their knowledge,
these interim condensed consolidated financial statements have been
prepared in accordance with IAS 34 as adopted by the United Kingdom
and that the interim management report includes a fair review of
the information required by DTR 4.2.7 and 4.2.8, namely:
-- An indication of the important events that have occurred
during the first half of the year and their impact on the interim
condensed consolidated financial statements, and a description of
the principal risks and uncertainties for the remaining six months
of the financial year; and
-- Material related party transactions in the first half of the
year and any material changes in the related party transactions
described in the last annual report.
The Directors of 4imprint Group plc are as listed in the Group's
Annual Report and Accounts 2021.
By order of the Board
Kevin Lyons-Tarr David Seekings
Chief Executive Chief Financial
Officer Officer
10 August 2022
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END
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