TIDMIGR
RNS Number : 9781L
International Greetings PLC
09 August 2011
9 August 2011
International Greetings PLC
Preliminary Results for the year ended 31 March 2011
International Greetings PLC ('International Greetings' or 'the
Group'), one of the world's leading designers, innovators and
manufacturers of gift wrap, crackers, cards, stationery and
accessories, announces its Preliminary Results for the year ended
31 March 2011.
Financial highlights
-- Sales up 9% to GBP217 million from continuing operations.
-- Operating profit before exceptional items up 25% to GBP8.1 million.
-- Profit before exceptional items and tax up 47% to GBP5.2 million.
-- Profit before tax from continuing operations up 76% to GBP4.3 million.
-- Profit for the year of GBP4.9 million (2010: GBP0.7 million).
-- Earnings per share at 7.5p (2010: 0.1p).
-- Debt down 9% to GBP44.4 million (2010: GBP48.8 million).
-- Cash generated from operations of GBP10.7 million (2010: GBP27.5
million).
-- Equity attributable to shareholders up 13% to GBP48.1 million.
-- Principal bank now given 5 year loan of GBP30 million plus new US bank
funding up to $25 million.
Operational highlights
-- Successful launch of Everyday single cards with six major retailers
across the globe.
-- Record breaking production levels achieved - 1.5 million metres a day
of gift wrap reached in Hoomark and 1 million of crackers a day reached
in our China factory.
-- Prompt and effective action taken to mitigate cost inflation.
-- Significant expansion of internet based activities providing services
to customers
Paul Fineman, CEO commented:
"It has been another good year of progress and we are delighted
to have grown both sales and profit whilst continuing to reduce
debt. We have also restructured our funding to strengthen our
balance sheet.
"Our continued focus on providing great value, innovative
products and excellent standards of service to our global customer
base means that we remain well placed to meet challenging market
conditions.
"We continue to address further methods for improving efficiency
and have created a solid platform for continued profitable growth.
We are confident that the Group is now in a good shape to exploit
further opportunities in the market."
For further information, please contact:
International Greetings plc
Paul Fineman, Chief Executive Tel: 01707 630617
Sheryl Tye, Finance Director
Arden Partners plc Tel: 020 7398 1632
Richard Day
Steve Douglas
Jamie Cameron
Financial Dynamics Tel: 020 7831 3113
Jonathan Brill
Caroline Stewart
Chairman's statement
Continued progress and profits growth
Last year I was able to report that the actions taken over the
recent past were bearing fruit and that the Group had both returned
to profit and further reduced its indebtedness. I am pleased to say
that upward trend has continued this year, resulting in further
profit growth and strengthening of our balance sheet.
This has been achieved at a time when the Group has faced stiff
competition in the market place and has had to cope with
inflationary pressures on raw material and transport costs.
Revenues for the year ended 31 March 2011 were up 9.4% to
GBP216.9 million (2010 restated: GBP198.2 million). Profit before
tax and exceptional items was up 47% to GBP5.2 million (2010:
GBP3.5 million). Taking into account exceptional items of GBP0.9
million (2010 restated: GBP1.1 million), tax credits of GBP0.7
million (2010 restated: GBP0.0 million), and a loss from
discontinued operations of GBP0.1 million (2010 restated: GBP1.8
million), profit for the year was GBP4.9 million (2010: GBP0.7
million). The basic earnings per share was 7.5p (2010: 0.1p).
We made further progress during the year in bringing down the
level of debt on our balance sheet. Net debt was reduced by 9.1%,
and as at 31 March 2011 was GBP44.4 million (2010: GBP48.8
million), whilst the equity attributable to our shareholders grew
13% to GBP48.1 million (2010: GBP42.6 million).
The Board is not recommending the payment of a dividend but will
keep this policy under review. Our focus continues to be on debt
reduction.
During the year we concentrated on three things. Firstly we have
improved the range and quality of our products and services. As a
result we have not only retained the business of key customers but
also gained important new ones with whom we hope to develop a
long-term relationship. Secondly, we have harnessed the
collaborative energies of our global business to maximise
cross-selling opportunities and to better target areas for
investment. The third area is cost control. Each year our
management is charged with the task of improving our margins, not
only by controlling the cost of raw materials but also improving
our productivity across the business. Good progress has been made
and further improvements are expected during the current financial
year.
Our strategy remains unaltered, namely to concentrate on
profitable organic growth.
In May I announced that I shall be retiring from the Board at
the Annual General Meeting. I became a Director in 2004 and
subsequently was appointed Chairman in 2006. I am impressed by the
quality of people and products we now have. It is an exciting
business that, following the actions taken by the Group over the
past few years, is in good shape to exploit future opportunities in
the market place.
I should like to thank all my colleagues for their hard work and
for the help they have given me during my time as Chairman. As
announced in May, John Charlton, who was appointed a Non-Executive
Director in 2010, will succeed me as Chairman. I wish John and the
team every success. I am confident that the progress we have made
in the recent past will continue under his leadership of the
Board.
Charles Uwakaneme, one of our Executive Directors, will also be
retiring at the Annual General Meeting. Charles has worked with the
Group for many years and latterly has played a pivotal role in
reorganising and strengthening our business in the UK and on the
continent of Europe for which we are very grateful. I am pleased to
say that he has agreed to continue working with us as a consultant
on a part-time basis.
Finally I should like to thank our shareholders, bankers,
customers, suppliers, and of course our staff for their loyalty and
continuing support of our business.
Keith James
Chairman
Business review
Operational review
Following the restructuring of the past few years, we are a
leaner, fitter business and I am delighted to report that this has
contributed to another good year of progress for the Group.
Since returning the business to profit last year, we have
continued to focus on increasing sales and profitability,
generating cash and reducing our debt. We have also invested in the
business to ensure we have a solid platform in place to continue to
deliver on our growth strategy.
Geographical highlights
UK and Asia
The UK businesses accounted for 54% (2010: 55%) of the Group's
revenue for the year, seeing an increase in sales of 8%. We were
pleased with our performance in the UK, in which market conditions
remained challenging during the year.
The main growth areas were increased volumes of gift wrap,
everyday greetings cards and licenced stationery. This was the
first full year the Group produced single greetings cards, and we
were delighted to supply everyday greetings cards to two of the
UK's leading multiple grocery chains during the year. We also saw
strong sales of Christmas crackers, supported by record breaking
production from our factory in China, which enabled us to take a
greater share of the market. This was against a backdrop of
mitigating strong cost inflation.
The decision was made to focus Asia as a service provider of
manufacturing and procurement operations, whose main customers are
our UK businesses. Both the China factory and the majority of the
Hong Kong procurement operations are now managed by our UK
operational management team, and we have therefore now included
Asia within the reporting of the UK operations, in line with our
internal reporting framework.
Anker and Alligator benefitted from strong sales of licensed
stationery, boosted by the success of Toy Story 3. We integrated
the UK logistical requirements of Scoop into Anker during the year.
Scoop grew its packaging business as the Company developed
innovative packaging for confectionery gifts.
USA
The USA operations accounted for 19% (2010: 20%) of the Group's
revenue for the year and, importantly, it returned to profit for
the first time in four years. Sales were down slightly, as we
focused our activities on profitable product categories and
channels of distribution.
We grew our product offering in the area of School Fundraising
(a market which provides income for schools via sales of consumer
products), following the Group entering this sector last year. We
experienced strong sales in the entry price point value market,
where our market share and customers continued to grow.
Mainland Europe
Europe accounted for 15% (2010: 17%) of the Group's revenue for
the year, and achieved like-for-like sales growth from continued
operations of about 1%. More importantly, all our continuing
European businesses were profitable, with particularly strong
growth in Eastern Europe. The Group exerted considerable focus on
expanding product offering in Europe, increasing in particular our
supply of greetings cards and stationery. As announced last July,
the Board took the difficult decision to close the Eick Pack
counter rolls business in Germany.
Australia
Australia accounted for 12% (2010: 8%) of the Group's revenue
for the year, and grew like-for-like sales by 21% in a buoyant
market. In addition to creating its own commercially successful
products targeted at the market in both Australia and New Zealand,
Artwrap benefitted from increased utilisation of Group products,
design formats and services, and continued to take market share,
winning contracts with large volume retail chains.
New customers and licences
We continue to expand our customer base and licensed products
business. Toy Story 3 was a fantastic performing licence for the
Group, and was one of Disney's most successful franchises. We saw
strong sales in both stationery and gift packaging products.
Our licensed products portfolio launched during the year include
stationery and gift packaging ranges under the "Hello Kitty" and
"Smurfs" licences in Europe and "Me To You" in the UK.
Post year end we were delighted to gain the National Geographic
licence in the US. The brand was voted the "Most Desired Brand in
America" by Forbes. It has the number one selling children's
magazine in the world, and includes the website
nationalgeographickids.com. As of summer 2011, we will supply
branded greetings cards, magnets, stickers, novelty pens and
activity books to retailers across the US, and this remains a
global opportunity.
The use of the internet for providing services to our customers,
and to their consumers, has significantly increased, enabling us to
supply a myriad of information and services to all markets and
territories cost-effectively. We are confident that profitable new
activities will be facilitated through embracing this exciting
technology.
Improving the efficiency of our Group
Across the Group, our challenges included combatting significant
inflation in raw materials, as well as the impact of Chinese labour
and freight costs. We responded well by finding new ways to
engineer cost out of products and add value through design,
innovation and service. In addition, we increased our utilisation
of recycled materials and reduced our wastage. In IG UK we are
seeking to flatten out production peaks and, by analysing the
challenges and working in partnership with our major customers, we
have implemented changes to reduce production costs for the coming
year.
IG UK also successfully integrated its design and product
innovation service into its South Wales operation and repatriated
the former Far East based automated ribbon and bow manufacturing
into Wales. The efficient ribbon and bow manufacturing processes in
Wales combined with the saving in freight from China, especially
applicable to this product category, has helped us to achieve a
year-on-year 100% sales growth.
We successfully implemented new ERP computer systems in both
Artwrap (Australia) and Hoomark (Holland), which have shown
benefits in the level of analysis, warehouse management and
accuracy as well as efficiency in those businesses.
Anchor BV in Holland relocated its Weltec business from Northern
Holland to become fully integrated within the Anchor business.
Our team
We are grateful to our colleagues globally for helping us make
good strides in operating as a leaner business that works and
innovates more cohesively.
On behalf of the Board and all Group colleagues, I would like to
sincerely thank our Chairman, Keith James for his years of service
as a Director and Chairman, and in particular, his excellent
stewardship during the restructuring of the Group and our return to
profit. We also welcome John Charlton to the role of Chairman and
look forward to a continued period of profitable growth.
The business today is one which sees our Group utilising and
sharing resources in an intelligent way, while each business
manages to retain its individuality and focus on the needs of its
customers and markets.
Current trading and outlook
The year to date has started well and we are trading in line
with expectations. Following the return to profit in the US, the
Group is in good shape and, in addition, we have identified further
opportunities to reduce manufacturing costs which we will see
benefits of in the coming years.
While global market conditions remain challenging, we are
confident in our ability to achieve our growth ambitions for the
current year.
Paul Fineman
Chief Executive
Business review
Financial review
Group performance
The Board has continued its focus on cash management and
increasing profit, and hence has further strengthened the financial
position of the business.
Continuing operations
Revenues from continuing operations for the year to 31 March
2011 were up by 9.4% to GBP216.9 million (2010 restated to disclose
discontinued operations: GBP198.2 million). The main growth areas
were in the UK, which grew by 8%, and Australia. Part of the
reported 67% sales growth against prior year in this segment is due
to the Group only including Artwrap PTY as a subsidiary since 1
August 2009. If we had included Artwrap for the full year to March
2010, Group sales would have increased by 6.5%. The effect of US
dollars and euro against sterling reduced revenue this year by
0.4%.
Gross profit margin from continuing operations and before
exceptional items has increased to 17.4% (2010 restated: 17.0%) and
reflects improved margin performance in USA and Europe, mitigated
by a slightly reduced margin in Australia due to the high volume
growth in sales. We have increased the margin despite our continued
efforts to sell older stock and being subject to significant
inflationary pressures from raw materials, sea freight and, in the
Far East, from significant inflation in labour costs and the
strengthening Chinese currency.
Whilst underlying overheads have reduced year-on-year by 2.2%,
the full year inclusion of Artwrap and the effect of currency
exchange gains means that, in total, overheads increased by 6% to
GBP30.7 million (2010 restated: GBP28.9 million).
Operating profit before exceptional items increased by 25% to
GBP8.1 million (2010 restated: GBP6.5 million). After exceptional
items, our operating profit was GBP7.2 million (2010 restated:
GBP5.4 million).
Exceptional items during the year amounted to GBP0.9 million
before tax (2010: GBP1.1 million, excluding discontinued business).
These relate to:
-- restructuring relating mainly to redundancy of senior personnel from
the Group centre and Anker businesses; and
-- impairment of the value of a US property acquired when a senior employee
returned to the UK.
Finance expenses in the year remained at GBP2.9 million (2010
restated: GBP2.9 million) reflecting the overall debt reduction
throughout the period, which mitigated the increased bank fees and
margins.
Profit before exceptional items, and tax was up 47% to GBP5.2
million (2010 restated: GBP3.5 million).
Profit before tax from continuing operations was up 76% to
GBP4.3 million (2010 restated: GBP2.4 million).
Discontinued operations
As disclosed last year, in July 2010 the Board took the
difficult decision to close the Eick Pack business. The results of
Eick Pack are now shown as a discontinued business, and the
comparatives have been adjusted accordingly. Details are shown in
note 7.
Taxation
The continued profits of the Group this year have enabled tax
losses from previous years to be used both against profits for this
year and provided against foreseeable profits in the future. In
addition, a change in the US tax regulations has allowed losses to
be carried back for three years, giving rise to a tax repayment
during the year. With our European businesses now all under one
Dutch holding company, IG Europe BV, we have this year also been
able to secure tax repayments from losses carried back.
These have given an effective tax credit of 16% (2010 restated:
2% credit). The main segment able to use the brought forward losses
is the UK. There are still GBP5.8 million of losses not recognised
as an asset in the US and the UK.
Profit for the year
We are pleased to report that profit for the year was up to
GBP4.9 million (2010: GBP0.7 million).
Earnings per share and dividends
The basic earnings per share was 7.5p (2010: 0.1p). The basic
earnings per share from continuing operations was 7.7p (2010
restated: 3.6p). After removing the effect of exceptional items and
discontinued business, the adjusted earnings per share increases to
8.9p (2010 restated: 4.4p).
No dividend was paid during the year (2010: GBPNil) and the
Board does not propose a final dividend for the year. Our core
focus continues to be on growing the profitability of the business
and reducing bank debt. Dividends will be recommended as soon as
the Board considers it appropriate.
Balance sheet and cashflow
Net debt at 31 March 2011 reduced by 9.1% to GBP44.4 million
(2010: GBP48.8 million) (see note 11).
Our year end net debt includes amounts denominated in US dollars
of $21.4 million (2010: $18.9 million), and in euros of EUR14.9
million (2010: EUR18.1 million). The year end exchange rates were
$1.61 (2010: $1.51), and EUR1.13 (2010: EUR1.12). Using the 2010
exchange rates our net debt at 31 March 2011 would have been
GBP45.4 million, a reduction of 7.1% from 2010 (2010: 27.0% from
2009).
We have continued to focus attention on reducing our outstanding
debtors, both to maximise cash but also to reduce our credit risk.
Trade debtors fell from GBP17.6 million to GBP17.4 million (1%),
despite the 9% increase in sales. The effect of currency
translation on this reduction is minimal. Days' sales outstanding
fell from 59 to 52 days.
Stock levels rose by 2% from GBP44.9 million to GBP45.6 million
reflecting the success in obtaining some firm customer orders to
begin factory production for the coming season ahead of the
traditional summer peak, which should in turn enable more efficient
use of resources in the coming year. Older stock (measured as over
15 months since last purchase) has continued to fall by 25%, so the
mix of stock is now far more current.
Group cash generated from operations was GBP10.7 million (2010:
GBP27.5 million). In the previous year we had been very successful
in reducing stock and debtors to their current levels which had
generated nearly GBP20 million cash.
There was no cash paid out in the year in respect of deferred
consideration for acquisitions (2010: GBP0.8 million), and the
final liability for deferred consideration for Glitterwrap was
settled in September 2010 by issuing 1.5 million shares.
The Group has again maintained capital expenditure at a low
level being GBP2.7 million for the year (2010: GBP1.8 million). It
realised GBP0.1 million (2010: GBP0.3 million) from asset sales in
the year. The Group also invested GBP0.7 million to purchase a
property in the US to honour a guarantee given five years ago on
behalf of a former CEO of the US business. It is intended to sell
this property as soon as practicable. In the coming year it is
intended to invest in new state of the art printing machinery in
Europe which will further improve efficiency. In addition our
planned relocation and re-organisation of our operations in China
will further enhance our competitive portfolio of products and
services.
Equity attributable to shareholders has increased from GBP42.6
million to GBP48.1 million
Risks and key performance indicators
We are focusing on reducing debt, reducing overheads and
improving profits to regain our financial strength. On reducing
debt, we are managing both working capital and our investments in
fixed assets. All of these have been discussed above. Operationally
we are increasing the spread of our revenue base across:
-- different territories - where turnover to UK destinations has remained
at 41% (see note 2);
-- different products - gift wrap turnover has fallen from 37% of revenue
to 36% (see note 2);
-- more even-phasing across the year - despite our success in growing
new product areas such as every day single cards, which grew by 15%
this year, growth in sales of crackers and gift wrap meant a reversal
of our desired trend for a more even business, hence everyday products
now represent 47% of revenue, down from 50% last year; and
-- brands - we have raised the profile of IG brands and licenced products
with sales in this category increasing by 3.1%, but the growth in
customer own brand gift wrap and crackers increased more, reversing the
trend overall, to represent 52% of our revenue from 55% last year.
Treasury operations
The Board is delighted to announce that in July 2011 the
principal bank of the Group has agreed to restructure its
facilities as follows:
-- two term loans, totalling GBP30 million, split between US dollars and
sterling, and repayable over five years, with a GBP15.2 million
repayment on the fifth anniversary. The interest on these loans is at an
average rate of 4.2% over LIBOR;
-- a two year asset backed loan facility secured on the stock and debtors
of the two largest UK businesses;
-- a one year rolling revolving multi-currency credit facility of up to
GBP33 million, and
-- a one year rolling multi-currency overdraft facility of up to GBP5
million.
In addition, we are delighted to announce that a US bank has now
agreed to provide a three year asset backed loan facility of up to
$25 million, at a rate of 2.5% over US LIBOR.
These new facilities significantly change the balance between
short term and longer term liabilities. The net current liabilities
of GBP4.2 million would have been presented as net current assets
of GBP25.8 million.
The covenants attached to these new facilities include:
-- debt service, being the ratio of cash flow available to finance costs
on a rolling twelve month basis;
-- interest cover, being the ratio of earnings before interest,
depreciation and amortisation to interest on a rolling twelve month
basis;
-- leverage being the ratio of debt to earnings before interest,
depreciation and amortisation on a rolling twelve month basis;
-- covenants, in the individual businesses which have asset backed loans,
of earnings before interest, depreciation and amortisation rolling
twelve month basis compared with the forecast, and the dilution of
credit notes as a percentage of invoices issued.
Sheryl Tye
Finance Director
Consolidated income statement
year ended 31 March 2011
2010
restated 2010
2011 Before 2011 Before restated 2010
exceptional Exceptional 2011 exceptional Exceptional restated
items items (note Total items items (note Total
Note GBP000 6) GBP000 GBP000 GBP000 6) GBP000 GBP000
-------------------- ------------ ------------ ---------- ------------ ------------ ----------
Continuing operations
Revenue 2 216,857 - 216,857 198,246 - 198,246
Cost of sales (179,108) (27) (179,135) (164,530) 333 (164,197)
---------------- ---------------- ------------ ---------- ------------ ------------ ----------
Gross profit 37,749 (27) 37,722 33,716 333 34,049
17.4% 17.4% 17.0% 17.2%
Selling
expenses (12,698) (401) (13,099) (12,039) (160) (12,199)
Administration
expenses (18,021) (472) (18,493) (16,859) (2,181) (19,040)
Other operating
income 3 1,019 - 1,019 1,643 - 1,643
Disposal of
subsidiary - - - - 907 907
Profit on sales
of property,
plant and
equipment 33 - 33 26 - 26
---------------- ---------------- ------------ ---------- ------------ ------------ ----------
Operating
profit/(loss) 8,082 (900) 7,182 6,487 (1,101) 5,386
Finance
expenses 4 (2,917) - (2,917) (2,930) - (2,930)
Share of loss
from associates
(net of tax) - - - (39) - (39)
---------------- ---------------- ------------ ---------- ------------ ------------ ----------
Profit/(loss)
before tax 5,165 (900) 4,265 3,518 (1,101) 2,417
Income tax
credit/(charge) 5 426 267 693 (649) 693 44
---------------- ------------ ------------ ---------- ------------ ------------ ----------
Profit/(loss)
from continuing
operations 5,591 (633) 4,958 2,869 (408) 2,461
Discontinued operations
Loss from
discontinued
operations (net
of tax) 7 (100) - (100) (494) (1,263) (1,757)
---------------- ------------ ------------ ---------- ------------ ------------ ----------
Profit/(loss)
for the year 5,491 (633) 4,858 2,375 (1,671) 704
---------------- ---------------- ------------ ---------- ------------ ------------ ----------
Attributable to:
Owners of the
Parent Company 4,010 55
Non-controlling
interests 848 649
---------------- ------------------------------------------ --------------------------------------
Diluted Basic Diluted Basic
-------------------------------------------------- ------- -------- -------
Earnings per ordinary share 13
Earnings per share 6.9p 7.5p 0.1p 0.1p
Continuing operations 7.1p 7.7p 3.3p 3.6p
Discontinued operations (0.2)p (0.2)p (3.2)p (3.5)p
Adjusted earnings per share excluding 8.2p 8.9p 4.0p 4.4p
exceptional items and discontinued
operations
----------------------------------------- ------- ------- -------- -------
Consolidated statement of comprehensive income
year ended 31 March 2011
2010
2011 restated
GBP000 GBP000
----------------------------------------------------------------- ----------
Profit for the year 4,858 704
Other comprehensive income:
Recycling translation reserves on closure of subsidiary (97) (907)
Exchange difference on translation of foreign operations 529 1,654
Net loss on cash flow hedges (net of tax) (124) -
Other comprehensive income for period, net of tax 308 747
Total comprehensive income for the period, net of tax 5,166 1,451
Attributable to:
Owners of the Parent Company 4,300 265
Non-controlling interests 866 1,186
--------------------------------------------------------- ------ ----------
5,166 1,451
----------------------------------------------------------------- ----------
Consolidated statement of changes in equity
year ended 31 March 2011
Share
premium
and
capital Non-
Share redemption Merger Hedging Translation Retained Shareholder controlling
capital reserve reserves reserves reserve earnings equity interest Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ ----------- --------- --------- ------------ --------- ------------ ------------ -------
At 1 April
2009 2,425 4,346 14,885 - 152 18,934 40,742 - 40,742
Profit for
the year - - - - - 55 55 649 704
Other
comprehensive
income - - - - 210 - 210 537 747
---------------- ------ ----------- --------- --------- ------------ --------- ------------ ------------ -------
Total
comprehensive
income for the
year - - - - 210 55 265 1,186 1,451
Equity-settled
share-based
payment - - - - - 82 82 - 82
Shares issued 182 - 1,331 - - - 1,513 - 1,513
Options
exercised 1 - - - - - 1 - 1
Acquisition
in the year - - - - - - - 2,168 2,168
---------------- ------ ----------- --------- --------- ------------ --------- ------------ ------------ -------
At 31 March
2010 2,608 4,346 16,216 - 362 19,071 42,603 3,354 45,957
Profit for
the year - - - - - 4,010 4,010 848 4,858
Other
comprehensive
income - - - (124) 414 - 290 18 308
---------------- ------ ----------- --------- --------- ------------ --------- ------------ ------------ -------
Total
comprehensive
income for the
year - - - (124) 414 4,010 4,300 866 5,166
Equity-settled
share-based
payment - - - - - 109 109 - 109
Shares issued 74 - 948 - - - 1,022 - 1,022
Options
exercised 16 40 - - - - 56 - 56
---------------- ------ ----------- --------- --------- ------------ --------- ------------ ------------ -------
At 31 March
2011 2,698 4,386 17,164 (124) 776 23,190 48,090 4,220 52,310
---------------- ------ ----------- --------- --------- ------------ --------- ------------ ------------ -------
Merger reserve
The merger reserve comprises premium on shares issued in
relation to business combinations. This year, and last year, the
additions are in relation to the final deferred consideration for
the Glitterwrap business.
Capital redemption reserve
The capital redemption reserve comprises amounts transferred
from retained earnings in relation to the redemption of preference
shares. For ease of presentation the amount of GBP1.34 million
relating to the capital redemption reserve has been included within
the column of share premium and capital redemption reserve, in the
balances at both the beginning and end of each year, with no
movements.
Hedging reserve
The hedging reserve comprises the effective portion of the
cumulative net change in the fair value of cash flow hedging
instruments related to hedged transactions that have not yet
occurred.
Translation reserve
The translation reserve comprises all foreign currency
differences arising from the translation of the financial
statements of foreign operations.
Shareholders' equity
Shareholders' equity represents total equity attributable to
owners of the Parent Company.
Consolidated balance sheet
as at 31 March 2011
As at As at
31 March 31 March
2011 2010
Note GBP000 GBP000
-------------------------------------------------- ---------- ----------
Non-current assets
Property, plant and equipment 8 31,518 34,199
Intangible assets 9 33,385 33,139
Deferred tax assets 10 4,616 3,501
--------------------------------------------- --- ---------- ----------
Total non-current assets 69,519 70,839
--------------------------------------------- --- ---------- ----------
Current assets
Inventory 45,582 44,911
Assets classified as held for sale 497 -
Trade and other receivables 21,494 21,421
Cash and cash equivalents 11 1,885 2,045
--------------------------------------------- --- ---------- ----------
Total current assets 69,458 68,377
--------------------------------------------- --- ---------- ----------
Total assets 138,977 139,216
--------------------------------------------- --- ---------- ----------
Equity
Share capital 2,698 2,608
Share premium 3,046 3,006
Reserves 19,156 17,918
Retained earnings 23,190 19,071
--------------------------------------------- --- ---------- ----------
Equity attributable to owners of the Parent
Company 48,090 42,603
--------------------------------------------- --- ---------- ----------
Non-controlling interests 4,220 3,354
--------------------------------------------- --- ---------- ----------
Total equity 52,310 45,957
--------------------------------------------- --- ---------- ----------
Non-current liabilities
Loans and borrowings 12 8,377 9,397
Deferred income 2,429 2,979
Provisions 1,847 1,722
Other financial liabilities 375 253
--------------------------------------------- --- ---------- ----------
Total non-current liabilities 13,028 14,351
--------------------------------------------- --- ---------- ----------
Current liabilities
Bank overdraft 11 3,620 3,038
Loans and borrowings 12 34,312 38,455
Deferred income 550 821
Provisions - 467
Income tax payable 162 26
Trade and other payables 25,353 21,422
Other financial liabilities 9,642 14,679
--------------------------------------------- --- ---------- ----------
Total current liabilities 73,639 78,908
--------------------------------------------- --- ---------- ----------
Total liabilities 86,667 93,259
--------------------------------------------- --- ---------- ----------
Total equity and liabilities 138,977 139,216
--------------------------------------------- --- ---------- ----------
These financial statements were approved by the Board of
Directors on 9 August 2011 and were signed on its behalf by:
P Fineman S Tye Company number
Director Director 1401155
Consolidated cash flow statement
year ended 31 March 2011
2010
2011 restated
Note GBP000 GBP000
-------------------------------------------------------- -------- ----------
Cash flows from operating activities
Profit for the year 4,858 704
Adjustments for:
Depreciation 8 4,108 4,543
Impairment of tangible fixed assets 8 - 1,094
Amortisation of intangible assets 9 331 287
Finance expenses - continuing operations 4 2,917 2,930
Finance expenses - discontinued operations 7 26 94
Share of loss from associates - 39
Recycling of translation reserves on closure
of subsidiary (97) (907)
Income tax credit - continuing operations 5 (693) (44)
Income tax credit - discontinued operations 7 - (135)
Profit on sales of property, plant and equipment (33) (26)
Impairments of assets held for resale 238 -
Equity-settled share-based payment 109 82
--------------------------------------------------- --- -------- ----------
Operating profit after adjustments for non-cash
items 11,764 8,661
Change in trade and other receivables 173 7,288
Change in inventory (303) 13,524
Change in trade and other payables (381) (2,181)
Change in provisions and deferred income (518) 169
--------------------------------------------------- ------------- ----------
Cash generated from operations 10,735 27,461
Tax paid (420) (372)
Interest and similar charges paid (3,226) (3,421)
Acquisition of property for resale (780) -
--------------------------------------------------- --- -------- ----------
Net cash inflow from operating activities 6,309 23,668
--------------------------------------------------- ------------- ----------
Cash flow from investing activities
Proceeds from sale of property plant and equipment 73 306
Acquisition of subsidiary, including overdrafts
acquired - (3,918)
Acquisition of intangible assets 9 (521) (646)
Acquisition of property plant and equipment (1,900) (1,121)
--------------------------------------------------- ------------- ----------
Net cash outflow from investing activities (2,348) (5,379)
--------------------------------------------------- ------------- ----------
Cash flows from financing activities
Proceeds from issue of share capital 56 1
Repayment of borrowings (4,169) (3,064)
Payment of finance lease liabilities (113) (12)
New bank loans raised - 28,732
--------------------------------------------------- ------------- ----------
Net cash (outflow)/inflow from financing
activities (4,226) 25,657
--------------------------------------------------- ------------- ----------
Net increase in cash and cash equivalents (265) 43,946
Cash and cash equivalents at 1 April (993) (45,375)
Effect of exchange rate fluctuations on cash
held (477) 436
--------------------------------------------------- ------------- ----------
Cash and cash equivalents at 31 March 11 (1,735) (993)
--------------------------------------------------- --- -------- ----------
Notes to the preliminary announcement
1 Accounting policies
International Greetings plc is a public limited company,
incorporated and domiciled in England and Wales. The Company's
ordinary shares are listed on AIM.
The Group financial statements consolidate those of the Company
and its subsidiaries (together referred to as the "Group") and
equity account for the Group's interest in associates prior to
gaining control of the former associate during 2009/2010.
The Group financial statements have been prepared and approved
by the Directors in accordance with International Financial
Reporting Standards as adopted by the EU ("Adopted IFRSs").
The accounting policies set out below have, unless otherwise
stated, been applied consistently to all periods presented in these
Group financial statements. Prior year comparatives have been
restated to remove the discontinued operation from continuing
operations (see note 7).
Going concern basis
The financial statements have been prepared on the going concern
basis, notwithstanding the net current liabilities of GBP4.2
million (2010: GBP10.5 million).
As in previous years, the Group has relied primarily on a short
term facility for its working capital needs. In July 2011 the Group
has negotiated with its principal bank more structured borrowings
(split between US Dollars and Sterling) comprising a 5 year loan of
GBP15.2 million with a bullet repayment on the 5th anniversary, a 4
year amortising loan of GBP14.8 million, a one year revolving
multi-currency credit facility of up to GBP33 million and a one
year rolling multi-currency overdraft facility of up to GBP5
million, plus a two year asset backed loan facility secured on the
UK business inventory and debtors.
We have also secured a three year asset backed loan facility of
up to $25 million with a US bank to assist in the funding of the US
business and to mitigate the currency effect on our facility
headroom. Details of the Group's facilities and borrowings in place
at the year end are given in Note 12. Full details of the new
facilities are included in Treasury Operations in the Financial
Review.
The Board has prepared a working capital forecast which shows
that the borrowing requirement of the Group increases steadily from
July 2011 and peaks in September and October 2011 due to the
seasonality of the business, as the sales of wrap and crackers are
mainly for the Christmas market, before then reducing. Over this
period due to production lead times the orders for pre Christmas
delivery have largely been received and therefore the principal
sensitivities considered in the forecasts relate to the exchange
rate between the US dollar and Sterling for both trade and
borrowing requirements. The working capital forecasts show the
Group will operate within its facility limits for the foreseeable
future.
The Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future. Thus, they continue to adopt the going concern
basis of accounting in preparing the financial statements.
Measurement convention
The financial statements are prepared on the historical cost
basis except that financial instruments used for hedging are stated
at their fair value.
Changes in accounting policies
The accounting policies adopted in the preparation of the
financial statements are consistent with those followed in the
preparation of the Group's annual financial statements for the year
ended 31 March 2010, except for the adoption of new Standards and
Interpretations as of 1 April 2010, which did not have impact on
the financial position of the Group.
2 Segmental information
The Group has one material business activity being the design,
innovation and manufacture of gift wrap, crackers, cards,
stationery and gift accessories.
For management purposes the Group is organised into four
geographic business units.
The results below are allocated based on the region in which the
businesses are located; this reflects the Group's management and
internal reporting structure. The decision was made during the last
year to focus Asia as a service provider of manufacturing and
procurement operations, whose main customers are our UK businesses.
Both the China factory and the majority of the Hong Kong
procurement operations are now managed by our UK operational
management team, and we have therefore now included Asia within the
internal reporting of the UK operations, such that UK and Asia
comprise an operating segment. The Chief Operating Decision Maker
is the Board.
Intra-segment pricing is determined on an arm's length basis.
Segment results include items directly attributable to a segment as
well as those that can be allocated on a reasonable basis.
Financial performance of each segment is measured on operating
profit. Interest expense or revenue and tax are managed on a Group
basis and not split between reportable segments.
Segment assets are all non-current and current assets, excluding
deferred tax and income tax receivable. Where cash is shown in one
segment, which nets under the Group's banking facilities, against
overdrafts in other segments, the elimination is shown in the
eliminations column. Similarly inter-segment receivables and
payables are eliminated.
UK and Asia Europe USA Australia Eliminations Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------------- --------- --------- ---------- ------------- ---------
Year ended 31 March 2011
Continuing operations
Revenue -
external 117,806 33,493 39,980 25,578 - 216,857
-
intra-segment 11,895 1,336 - - (13,231) -
---------------------------- --------- --------- --------- ---------- ------------- ---------
Total segment revenue 129,701 34,829 39,980 25,578 (13,231) 216,857
---------------------------- --------- --------- --------- ---------- ------------- ---------
Segment result before
exceptional items and
discontinued operations 2,673 2,107 2,096 2,455 - 9,331
Exceptional items (510) - (238) - - (748)
---------------------------- --------- --------- --------- ---------- ------------- ---------
Segment result from
continuing operations 2,163 2,107 1,858 2,455 - 8,583
Loss from discontinued
operations (see note
f) - (100) - - - (100)
---------------------------- --------- --------- --------- ---------- ------------- ---------
Segment result 2,163 2,007 1,858 2,455 - 8,483
---------------------------- --------- --------- --------- ---------- ------------- ---------
Loss from discontinued
operations 100
Central administration
costs (1,249)
Central administration
exceptional items (152)
Net finance expenses (2,917)
Income tax 693
---------------------------- --------- --------- --------- ---------- ------------- ---------
Profit from continuing
operations for the year
ended 31 March 2011 4,958
---------------------------- --------- --------- --------- ---------- ------------- ---------
Balances at 31 March 2011
Continuing operations
---------------------------------------------------------------------------------------------------
Segment assets 100,853 18,112 6,272 9,438 4,302 138,977
---------------------------- --------- --------- --------- ---------- ------------- ---------
Segment liabilities (41,243) (15,721) (27,245) (2,611) 153 (86,667)
---------------------------- --------- --------- --------- ---------- ------------- ---------
Capital expenditure
- property, plant and
equipment 1,334 297 231 279 - 2,141
- intangible 307 17 16 181 - 521
Depreciation 2,346 821 780 161 - 4,108
Amortisation 161 44 64 62 - 331
Impairment of property, - - 238 - - -
plant and equipment
--------- --------- --------- ---------- ------------- ---------
UK and Asia Europe USA Australia Eliminations Group
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------------- --------- --------- ---------- ------------- ---------
Year ended 31 March 2010 restated
Continuing operations
Revenue -
external 108,993 33,121 40,839 15,293 - 198,246
-
intra-segment 1,805 1,043 50 - (2,898) -
---------------------------- --------- --------- --------- ---------- ------------- ---------
Total segment revenue 110,798 34,164 40,889 15,293 (2,898) 198,246
---------------------------- --------- --------- --------- ---------- ------------- ---------
Segment result before
exceptional items and
discontinued operations 4,486 1,051 415 1,930 - 7,882
Exceptional items (34) (380) 175 - - (239)
---------------------------- --------- --------- --------- ---------- ------------- ---------
Segment result from
continuing operations 4,452 671 590 1,930 - 7,643
Loss from discontinued
operations - (1,757) - - - (1,757)
---------------------------- --------- --------- --------- ---------- ------------- ---------
Segment result 4,452 (1,086) 590 1,930 - 5,886
---------------------------- --------- --------- --------- ---------- ------------- ---------
Loss from discontinued
operations 1,757
Central administration
costs (1,395)
Central administration
exceptional items (862)
Net finance expenses (2,930)
Share of profit of
associates (39)
Income tax 44
---------------------------- --------- --------- --------- ---------- ------------- ---------
Profit from continuing
operations year ended
31 March 2010 2,461
---------------------------- --------- --------- --------- ---------- ------------- ---------
Balances at 31 March 2010
Segment assets from
continuing operations 101,898 24,578 17,416 7,516 (12,354) 139,054
---------------------------- --------- --------- --------- ---------- ------------- ---------
Segment assets from
discontinued operations - 162 - - - 162
---------------------------- --------- --------- --------- ---------- ------------- ---------
Segment assets 101,898 24,740 17,416 7,516 (12,354) 139,216
---------------------------- --------- --------- --------- ---------- ------------- ---------
Segment liabilities (43,612) (23,186) (39,359) (2,121) 15,019 (93,259)
---------------------------- --------- --------- --------- ---------- ------------- ---------
Capital expenditure Central
administration
- property, plant and
equipment 752 283 34 52 - 1,121
- intangible 456 6 8 176 - 646
Depreciation 2,585 1,123 750 85 - 4,543
Amortisation 123 39 125 - - 287
Impairment of fixed
property, plant and
equipment - 767 - - 767
Impairment of fixed
property, plant and
equipment central
administration - - - - - 327
---------------------------- --------- --------- --------- ---------- ------------- ---------
(a) Capital expenditure consists of additions of property, plant
and equipment, intangible assets and goodwill.
(b) No single customer accounts for over 10% of total sales.
(c) The assets and liabilities that have not been allocated to
segments consist of deferred tax assets of GBP4,617,000 (2010:
GBP3,501,000), and income tax payable of GBP162,000 (2010:
GBP26,000). In addition the assets and liabilities have been
grossed up for VAT of GBP315,000 (2010: GBP268,000) to reflect the
net position of the Group.
(d) No operating segment has been aggregated in determining
reportable segments.
(e) Central recharges are included within the result of the
segment that takes the recharge. The balance of the central costs
are not allocated to segments.
(f) The discontinued operation all relates to the Europe
segment. See note 7 for results. The loss includes GBP26,000 (2010:
GBP94,000) of finance expenses and GBPnil (2010: GBP135,000 credit)
in respect of tax.
Geographical information
The Group's information about its segmental assets (non-current
assets excluding deferred tax assets and other financial assets)
and turnover by customer destination and product are detailed
below:
Non-current assets
----------------------------------------------
2011 2010
GBP000 GBP000
-------------------------- -------- --------
UK 39,705 41,241
Asia 1,929 2,377
USA 6,850 7,856
Europe 14,285 14,105
Australia and New Zealand 2,134 1,759
-------------------------- -------- --------
64,903 67,338
------------------------------------ --------
Turnover
-----------------------------------------------
2010 2010
2011 restated 2011 restated
GBP000 GBP000 % %
----------------------------------- ---------- ----- ----------
UK 89,916 81,818 41 41
USA 53,076 53,761 25 27
Europe 43,711 44,051 20 22
Australia and New Zealand 25,578 15,293 12 8
Rest of world 4,576 3,323 2 2
-------------------------- ------- ---------- ----- ----------
216,857 198,246 100 100
----------------------------------- ---------- ----- ----------
Turnover by product
Turnover analysis by product
2010 2010
2011 restated 2011 restated
GBP000 GBP000 % %
-------------------------------- ---------- ----- ----------
Gift wrap 77,991 72,645 36 37
Books and stationery 38,659 34,251 18 17
Greetings cards 23,371 18,148 11 9
Bags and boxes 18,039 15,744 8 8
Crackers 16,843 14,322 8 7
Albums and frames 9,366 10,367 4 5
Other 32,588 32,769 15 17
---------------------- -------- ---------- ----- ----------
Total 216,857 198,246 100 100
---------------------- -------- ---------- ----- ----------
3 Other operating income
2011 2010
GBP000 GBP000
-------------------------------------------------------- --------
Lease premium 271 403
Grant income received 550 550
Sublease rentals credited to the income statement 73 452
Other 125 238
-------------------------------------------------- ---- --------
1,019 1,643
-------------------------------------------------------- --------
4 Finance expenses
2010
2011 restated
GBP000 GBP000
-------------------------------------------------------- ----------
Interest payable on bank loans and overdrafts 2,295 2,132
Other similar charges 751 682
Finance charges in respect of finance leases 4 2
Unwinding of discount on deferred consideration - 83
------------------------------------------------ ------ ----------
Interest payable under the effective interest
method 3,050 2,899
Derivative financial instruments at fair value
through income statement (133) 31
------------------------------------------------ ------ ----------
2,917 2,930
-------------------------------------------------------- ----------
5 Taxation
Recognised in the income statement
2010
2011 restated
GBP000 GBP000
------------------------------------------------------- ----------
Current tax expenses
Current year - UK corporation tax - -
Current year - foreign tax 1,144 569
Adjustments for prior years (see below) (605) (643)
----------------------------------------------- ------ ----------
539 (74)
------------------------------------------------------- ----------
Deferred tax expense
Original and reversal of temporary differences (765) 214
Adjustments in respect of previous periods (467) (184)
----------------------------------------------- ------ ----------
(1,232) 30
------------------------------------------------------- ----------
Total tax in income statement (693) (44)
----------------------------------------------- ------ ----------
Reconciliation of effective tax rate
2010
2011 restated
GBP000 GBP000
---------------------------------------------------------------- ----------
Profit before tax 4,265 2,417
------------------------------------------------------ -------- ----------
Tax using the UK corporation tax rate of 28%
(2010: 28%) 1,194 677
Expenses not deductible for corporation tax
purposes 21 349
Recycle of translation gain on closure of subsidiary (3) (262)
Tax losses on which deferred tax has not been
recognised 633 84
Deferred tax assets in respect of losses previously
unprovided (1,291) -
Non-taxable income (32) (80)
Impact of the tax rate change on deferred tax 159 -
Refund carryback due to change in tax law (427) -
Differences between UK and overseas tax rates 125 15
(Over)/under provided in prior years (1,072) (827)
------------------------------------------------------ -------- ----------
Total tax in income statement (693) (44)
------------------------------------------------------ -------- ----------
Included in the adjustments in respect of prior years above is a
credit for GBP427,000 arising from a change in legislation in the
US enabling the Group to utilise further tax losses carried
back.
6 Exceptional items
Cost
of Selling Admin
sales expenses expenses Total
2011 continuing operations GBP000 GBP000 GBP000 GBP000
---------------------------------- -------- ---------- ---------- --------
Restructuring of operational activities
- redundancies (note a) 27 401 234 662
- impairment of asset for resale
(note b) - - 238 238
Total restructuring costs 27 401 472 900
---------------------------------- -------- ---------- ---------- --------
Income tax credit (267)
---------------------------------- ------------------------------------------
633
------------------------------------------------------------------------------
Cost Profit
of Selling Admin on
2010 continuing operations sales expenses expenses disposal Total
restated GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------------- ------- --------- --------- --------- ------------
Restructuring of operational activities
Impairment of leasehold
improvements and fittings at
Hatfield Head office (note c) - - 327 - 327
- lease provision (note c) - - 1,300 - 1,300
- redundancies (note d) - 160 554 - 714
Recycling of translation reserve
on closure of subsidiary (note
e) - - - (907) (907)
Asia supplier disruption -
insurance proceeds (note f) (333) - - - (333)
---------------------------------- ------- --------- --------- --------- ------------
(333) 160 2,181 (907) 1,101
------------------------------------------- --------- --------- --------- ------------
Income tax charge (693)
---------------------------------- ------------------------------------------------------
408
------------------------------------------------------------------------------------------
(a) The UK Greetings design studio moved down to Wales, senior management
were made redundant within Anker and the Group Centre due to restructuring
within those businesses, and the decision was made to bring the China
Factory under the control of the UK management team, resulting in
a senior manager in Asia being made redundant. These redundancies
have cost GBP662,000.
(b) During the year the Group were called upon to repay the mortgage of
a former senior employee of the US business upon his repatriation
to the UK, according to a guarantee given by the Group about five
years ago. The Group has purchased the property, and is looking to
dispose of it as soon as practicable. It is disclosed on the balance
sheet as an asset held for sale, and has been impaired to its fair
value less costs to sell.
Year ended 31 March 2010
(c) During the year the Group announced its decision to the staff to
relocate its UK Greetings design studio from the Hatfield head office
to the rest of the UK Greetings business based in Wales. With this, and
the previous restructuring, the offices in Hatfield are oversized for
the current remaining staff and activities. An onerous lease provision
was therefore made of GBP1.3 million, of which GBP200,000 was used
during the year to 31 March 2010. The Group has been exploring
opportunities to relocate its head office, and removed many of the
offices that had been built within the warehouse in order to be able to
sublet the property to an incoming tenant. It therefore impaired the
value of these leasehold improvements and fittings being GBP327,000.
(d) During the year the Board took the decision to relocate the operations
of its Weltec business in Holland into the Anchor BV operation, and in
the UK, to relocate its Gift Design business into the Scoop business.
These, and other minor restructuring, incurred costs of GBP714,000
mainly in staff redundancy, and some equipment operational contracts.
(e) In early 2008 the Group closed its Latvian business, which has been
winding down with the final staff leaving and the premises shut during
this year. The Latvian companies were put into administration and,
in accordance with IAS 21, the translation reserves relating to that
business are recycled back through the income statement (GBP907,000).
(f) The Group submitted an insurance claim in relation to the fire at
one of our Asia suppliers in 2008.
7 Discontinued operations
In July 2010, the Board took the difficult decision to close the
Eick Pack counter rolls business in Germany that it bought in 2007.
It made losses since its acquisition, and despite investing extra
management time, and further sales resource, there were
insufficient indicators that a sustained improvement could be
made.
2011 2010
GBP000 GBP000
------------------------------------------------------------- --------
Revenue 390 1,906
Cost of sales (358) (1,823)
----------------------------------------------------- ------ --------
Gross profit 32 83
Selling expenses (17) (120)
Administration expenses (89) (363)
----------------------------------------------------- ------ --------
Operating loss (74) (400)
Finance expenses (26) (94)
----------------------------------------------------- ------ --------
Loss before tax and exceptional items (100) (494)
Income tax - -
----------------------------------------------------- ------ --------
Loss from discontinued operation before exceptional
items (100) (494)
----------------------------------------------------- ------ --------
Exceptional items
Impairment of fixed assets (see below) - (767)
Impairment of stock (see below) - (631)
----------------------------------------------------- ------ --------
Total exceptional items - (1,398)
Tax credit on exceptional items - 135
----------------------------------------------------- ------ --------
Exceptional items after tax - (1,263)
----------------------------------------------------- ------ --------
Loss from discontinued operation (100) (1,757)
----------------------------------------------------- ------ --------
The tax credit is analysed as follows:
On the loss on discontinuance - 135
----------------------------------------------------- ------ --------
- 135
------------------------------------------------------------- --------
As a result of the decision to close its German subsidiary, as
at 31 March 2010 the Group impaired the fixed assets of that
subsidiary, being printing equipment and fittings totalling
GBP767,000 to the Directors' estimate of its fair value on sale
less costs of sale which netted to GBPNil. In addition the Group
reviewed the carrying value of the related inventory and provided
GBP631,000 against these.
8 Property, plant and equipment
Land and buildings
----------------------------------------------
Plant Fixtures
and and Motor
Freehold Leasehold equipment fittings vehicles Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------------- ---------- ---------- --------- --------- -----------
Cost
Balance at 1 April
2009 22,183 7,324 48,092 8,189 876 86,664
Transfer between
categories (see note
below) 371 (371) - - - -
--------------------------- ----- ---------- ---------- --------- --------- -----------
Balance at 1 April
2009 - restated 22,554 6,953 48,092 8,189 876 86,664
Additions 220 - 286 589 26 1,121
Acquisition through
business combinations - - 129 100 68 297
Disposals (392) (31) (624) (639) (234) (1,920)
Transfers between
categories (22) 1,455 1,545 (3,620) 231 (411)
Effect of movements in
foreign exchange (223) (312) (784) (299) 21 (1,597)
-------------------------- ------ ---------- ---------- --------- --------- -----------
Balance at 31 March
2010 - restated 22,137 8,065 48,644 4,320 988 84,154
---------------------- ---------- ---------- ---------- --------- --------- -----------
Balance at 1 April
2010 - restated 22,137 8,065 48,644 4,320 988 84,154
Additions 246 6 991 782 116 2,141
Disposals - (605) (2,643) (2,883) (262) (6,393)
Effect of movements in
foreign exchange (68) (495) (1,097) (196) 11 (1,845)
-------------------------- ------ ---------- ---------- --------- --------- -----------
Balance at 31 March
2011 22,315 6,971 45,895 2,023 853 78,057
---------------------- ---------- ---------- ---------- --------- --------- -----------
Depreciation and impairment
Balance at 1 April
2009 (6,536) (370) (33,220) (6,075) (741) (46,942)
Transfer between
categories (15) 15 - - - -
---------------------- ---------- ---------- ---------- --------- --------- -----------
Balance at 1 April
2009 - restated (6,551) (355) (33,220) (6,075) (741) (46,942)
Depreciation charge for
the year - restated (910) (333) (2,387) (742) (171) (4,543)
Disposals 231 31 540 616 222 1,640
Impairment - (290) (622) (182) - (1,094)
Transfers between
categories 3 (1,389) (1,151) 2,804 (28) 239
Effect of movements in
foreign exchange 25 (15) 509 230 (4) 745
-------------------------- ------ ---------- ---------- --------- --------- -----------
Balance at 31 March
2010 - restated (7,202) (2,351) (36,331) (3,349) (722) (49,955)
---------------------- ---------- ---------- ---------- --------- --------- -----------
Balance at 1 April
2010 - restated (7,202) (2,351) (36,331) (3,349) (722) (49,955)
Depreciation charge
for the year (920) (349) (2,179) (552) (108) (4,108)
Disposals - 605 2,634 2,876 238 6,353
Effect of movements in
foreign exchange (1) 127 866 182 (3) 1,171
-------------------------- ------ ---------- ---------- --------- --------- -----------
Balance at 31 March
2011 (8,123) (1,968) (35,010) (843) (595) (46,539)
---------------------- ---------- ---------- ---------- --------- --------- -----------
Net book value
At 31 March 2011 14,192 5,003 10,885 1,180 258 31,518
---------------------- ---------- ---------- ---------- --------- --------- -----------
At 31 March 2010 -
restated 14,935 5,714 12,313 971 266 34,199
---------------------- ---------- ---------- ---------- --------- --------- -----------
9 Intangible assets
Computer Other
Goodwill software intangibles Total
GBP000 GBP000 GBP000 GBP000
------------------------------------------ --------- ------------ ---------
Cost
Balance at 1 April 2009 38,892 1,839 471 41,202
Acquisitions through business
combinations 1,023 - 18 1,041
Reclassified to/from property,
plant and machinery - 411 - 411
Additions - 646 - 646
Disposals - (65) - (65)
Effect of movements in foreign
exchange 1,043 (13) 5 1,035
-------------------------------- -------- --------- ------------ ---------
Balance at 31 March 2010 40,958 2,818 494 44,270
-------------------------------- -------- --------- ------------ ---------
Balance at 1 April 2010 40,958 2,818 494 44,270
Additions - 521 - 521
Disposals (26) (379) - (405)
Effect of movements in foreign
exchange (347) (44) 1 (390)
-------------------------------- -------- --------- ------------ ---------
Balance at 31 March 2011 40,585 2,916 495 43,996
-------------------------------- -------- --------- ------------ ---------
Amortisation and impairment
Balance at 1 April 2009 (9,373) (1,353) (96) (10,822)
Amortisation for the year - (239) (48) (287)
Reclassified to/from property,
plant and machinery - (239) - (239)
Disposals - 65 - 65
Effect of movements in foreign
exchange 135 17 - 152
-------------------------------- -------- --------- ------------ ---------
Balance at 31 March 2010 (9,238) (1,749) (144) (11,131)
-------------------------------- -------- --------- ------------ ---------
Balance at 1 April 2010 (9,238) (1,749) (144) (11,131)
Amortisation for the year - (283) (48) (331)
Disposals 26 379 - 405
Effect of movements in foreign
exchange 390 57 (1) 446
-------------------------------- -------- --------- ------------ ---------
Balance at 31 March 2011 (8,822) (1,596) (193) (10,611)
-------------------------------- -------- --------- ------------ ---------
Net book value
At 31 March 2010 31,720 1,069 350 33,139
-------------------------------- -------- --------- ------------ ---------
At 31 March 2011 31,763 1,320 302 33,385
-------------------------------- -------- --------- ------------ ---------
The aggregate carrying amounts of goodwill allocated to each
unit are as follows:
2011 2010
GBP000 GBP000
--------------------------------------------------------------------- -------
UK segment
Anker International PLC 16,410 16,410
Alligator Books Ltd 6,445 6,445
Multiple UK units without individually significant goodwill 2,745 2,745
------------------------------------------------------------ ------- -------
Total UK segment 25,600 25,600
------------------------------------------------------------ ------- -------
US segment - -
------------------------------------------------------------ ------- -------
European segment
Hoomark B.V. 3,242 3,227
Multiple European units without individually significant
goodwill 1,600 1,660
------------------------------------------------------------ ------- -------
Total European segment 4,842 4,887
------------------------------------------------------------ ------- -------
Australia segment
Artwrap Pty Ltd 1,321 1,233
------------------------------------------------------------ ------- -------
Total goodwill 31,763 31,720
------------------------------------------------------------ ------- -------
10 Deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the
following:
Assets Liabilities Net
------------------------------------------- --------------- ----------------
2011 2010 2011 2010 2011 2010
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------------- --------- --------- ------- ---------- --------
Property, plant and
equipment (591) (750) 1,155 1,755 564 1,005
Inventories (809) (858) - - (809) (858)
Capital gains
deferred - - 563 606 563 606
Deferred lease
premium (79) (150) - - (79) (150)
Provisions (894) (486) - 4 (894) (482)
Tax loss carried
forward (2,406) (2,250) - - (2,406) (2,250)
Other timing
differences (1,555) (1,503) - 131 (1,555) (1,372)
--------------------- --------- --------- --------- ------- ---------- --------
Net tax
(assets)/liabilities (6,334) (5,997) 1,718 2,496 (4,616) (3,501)
--------------------- --------- --------- --------- ------- ---------- --------
The deferred tax asset in respect of tax losses carried forward
at 31 March 2011 of GBP2,406,000 (2010: GBP2,250,000) is comprised
of UK tax losses of GBP1,982,000 (2010: GBP2,250,000), and US
losses of GBP424,000 (2010: GBPNil). US tax losses carried forward
will become irrecoverable in March 2027. UK tax losses may be
carried forward indefinitely. The deferred tax assets have been
recognised where the Board considers there is sufficient evidence
that taxable profits will be available against which the tax losses
can be utilised. The Board fully expects that all the tax losses
will be recoverable against future profits but given the level of
tax losses brought forward recoverability has been assessed on the
basis of expected profits currently forecast on a prudent basis.
Deferred tax assets in respect of taxable losses that are expected
to be recovered outside this forecast period have not been
recognised. This includes unrecognised deferred tax assets in
respect of UK tax losses in the year of GBPNil (2010: GBP20,000)
and against brought forward UK losses of GBP480,000 (2010:
GBP1,356,000), and in respect of US tax losses in the year of
GBPNil (2010: GBP650,000) and GBP5,336,000 (2010: GBP6,387,000) in
respect of brought forward US tax losses.
11 Cash and cash equivalents/bank overdrafts
2011 2010
GBP000 GBP000
------------------------------------------------------------ --------
Cash and cash equivalents 1,885 2,045
Bank overdrafts (3,620) (3,038)
-------------------------------------------------- -------- --------
Cash and cash equivalents per cash flow statement (1,735) (993)
-------------------------------------------------- -------- --------
Net debt
2011 2010
Note GBP000 GBP000
----------------------------------------- ----- --------- ---------
Cash and cash equivalents 1,885 2,045
Bank loans and overdrafts 12 (46,309) (50,890)
----------------------------------------- ----- --------- ---------
Net debt as used in the Financial Review (44,424) (48,845)
----------------------------------------- ---------------- ---------
12 Loans and borrowings
2011 2010
GBP000 GBP000
-------------------------------------------------------------- -------
Non-current liabilities
Secured bank loans (see overleaf) 8,377 9,397
----------------------------------------------------- ------- -------
Current liabilities
Asset backed loan 4,449 8,760
Revolving credit facilities 28,901 28,625
Current portion of secured bank loans (see overleaf) 962 1,070
----------------------------------------------------- ------- -------
Bank loans and borrowings 34,312 38,455
----------------------------------------------------- ------- -------
The asset backed loans are secured on the inventory and
receivables of the larger business units within the UK and European
business segments.
Terms and debt repayment schedule
2011 2010
Repayment analysis of bank loans and overdrafts GBP000 GBP000
------------------------------------------------ ------- -------
Due within one year:
Bank loans and borrowings (see above) 34,312 38,455
Bank overdrafts (note 11) 3,620 3,038
Due between one and two years:
Secured bank loans 975 1,090
Due between two and five years:
Secured bank loans 2,324 2,481
Due after more than five years:
Secured bank loans 5,078 5,826
------------------------------------------------ ------- -------
46,309 50,890
------------------------------------------------ ------- -------
13 Earnings per share
2011 2010
--------------------------------------------------------- ----------------
Diluted Basic Diluted Basic
--------------------------------------------- ---------- ---------- -------
Adjusted earnings per share
excluding exceptional items and
discontinued operations 8.2p 8.9p 4.0p 4.4p
Loss per share on exceptional
items (1.1)p (1.2)p (0.7)p (0.8)p
---------------------------------- --------- ---------- ---------- -------
Earnings per share from
continuing operations 7.1p 7.7p 3.3p 3.6p
Loss per share on discontinued
operations (0.2)p (0.2)p (3.2)p (3.5)p
---------------------------------- --------- ---------- ---------- -------
Earnings per share 6.9p 7.5p 0.1p 0.1p
---------------------------------- --------- ---------- ---------- -------
The basic earnings per share is based on the profit attributable
to equity holders of the Parent Company of GBP4,010,000 (2010:
GBP55,000) and the weighted average number of ordinary shares in
issue of 53,127,000 (2010: 50,375,000) calculated as follows:
Weighted average number of shares in thousands of
shares 2011 2010
--------------------------------------------------------- ------- -------
Issued ordinary shares at 1 April 52,150 48,498
Shares issued in respect of acquisitions 854 1,876
Shares issued in respect of exercising of share options 123 1
--------------------------------------------------------- ------- -------
Weighted average number of shares at 31 March 53,127 50,375
--------------------------------------------------------- ------- -------
Adjusted basic earnings per share excludes exceptional items
charged of GBP900,000 (2010: GBP1,101,000), the tax relief
attributable to those items of GBP267,000 (2010: GBP693,000) and
the loss on discontinued operations (net of tax) of GBP100,000
(2010: GBP1,757,000), to give adjusted profit of GBP4,743,000 (2010
restated: GBP2,220,000).
Diluted earnings per share
The average number of share options outstanding in the year is
6,157,000 (2010: 6,062,494), at an average exercise price of 16.4p.
No share options are currently exercisable, but the diluted
earnings per share is calculated assuming all these options were
exercised. At 31 March the diluted number of shares was 57,805,000
(2010: 54,663,000).
14 Preliminary information
The financial information in the preliminary statement of
results does not constitute the Group's statutory accounts for the
year ended 31 March 2011, but is derived from those accounts and
the accompanying Directors' report. Statutory accounts for the year
ended 31 March 2011 will be delivered to the Registrar of Companies
following the Company's Annual General Meeting. The auditors have
reported on those accounts; their report was unqualified and did
not contain statements under Section 498 (2) or Section 498 (3) of
the Companies Act 2006. The financial statements, and this
preliminary statement, of the Group for the year ended 31 March
2011 were authorised for issue by the Board of Directors on 29 July
2011 and the balance sheet was signed on behalf of the Board by S.
Tye and P. Fineman.
The statutory accounts have been delivered to the Registrar of
Companies in respect of the year ended 31 March 2010. The report of
the auditors was unqualified and did not contain statements under
Section 237 (2) or (3) of the Companies Act 1985.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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