GRA.L Regulatory News (GRA)

1 Jun 2005 07:01

Printing.com plc01 June 2005 TO BE RELEASED 7.00AM 1 June 2005 PRINTING.COM PLC ("Printing.com","the Company"or "the Group") Specialist retail chain with 112 outlets (plus 15 pending) across the UK Preliminary Results for year ended 31 March 2005 2005 2004Total Retail Sales £14.44m £10.84m +33.2%Turnover £10.72m £9.33m + 14.9%Profit Before Tax £1.51m £0.94m +60.6%Earnings Per Share - basic 2.74p 1.53p +79.1%Dividend 0.50p Nil N/ACash Reserves £2.86m £0.79m +262.0% * Record turnover, profit before tax and earnings per share* Strong cash position* Maiden dividend of 0.50p* Expansion continues to gather pace o 50% increase in production floor space scheduled o Further increase in printing capacity planned* First 8 weeks of the current financial year in line with budget* Currently opening an outlet every fifth working day* Outlook for the future development of the Group is positive For further information: Printing.com plcTony Rafferty (Chief Executive) 07966 517 336Alan Roberts (Finance Director) 0161 848 5713 Beattie FinancialBrian Coleman-Smith / Jo Clewlow 020 7053 6400 Background note: Printing.com Printing.com offers a broad product range including leaflets, postcards,promotional cards, invitations, letterheads and business cards to consumers andsmall and medium sized companies. Unlike its competitors, Printing.com Stores donot have any printing equipment on location. The Company's printing andancillary equipment is based at the centralised Production Hub with the headoffice in Manchester. All work is produced in full four colour rather than twocolour. Delivery to the customer is usually within three days. The printingsector has traditionally been served by smaller printing companies or other OnDemand Printers and is estimated to be worth some GBP1 billion. Printing.com has four routes to market: Franchise Stores, Bolt-on Franchises,Company owned Stores, and via the Company's website where online design andordering are facilitated. Printing.com outlets Red Hot Media East Lowestoft NR32 1EBGoldengate East Suffolk IP30 9QSDublin Store Ireland Dublin Dublin 2North Dublin Ireland Dublin Dublin 7Central London London Baker Street NW1 6UYStoreHampstead Store London Hampstead NW3 5HSWatford Store London Watford WD17 1RAHarrow Store London Harrow HA7 2QJReading Store London Reading RG1 4QAEaling Store London Ealing W13 8SBOrpington London Orpington BR6 0JYLuton London Luton LU1 2PLExpocentric - London Soho W1V 3AUWardourExpocentric - London Mayfair W1X 3PHDoverLondon & London Chelsea SW10 0XFGeneralFull Colour London Clapham SW17 9SHStorePrint Express London Colindale NW9 5DL0800 Promote London Finchley N3 1TRPrinter Net London Wimbledon SW19 8TYServicesLondon Print London Shaftesbury WC2H 8EBCompamy AvenuePrinthouse London Nottinghill W11 3HT0800 Promote London North Finchley N12 9QGToppers London Stevenage SG1 3HRHarrow Life London Harrow HA1 2EABirmingham Midlands Birmingham B5 4JLStoreOxford Store Midlands Oxford OX2 7HTLeicester Store Midlands Leicester LE1 1LBWolverhampton Midlands Wolverhampton WV1 4BLNottingham Midlands Nottingham NG1 6DQStoreKaleidoscope Midlands Leamington Spa CV31 1BZAlbry Printing Midlands Wallingford OX10 9DACompanyFinal Imaging Midlands Sawtry PE28 5SBDove Signs Midlands Nuneaton CV11 6GXCustard Midlands Northampton NN3 6WLCreativeCre8ive Design Midlands Kenilworth CV8 1JDFor Colour Midlands Newark, NG24 1LE NottinghamSign It Midlands Beeston, NG9 2AY NottinghamOzmedia Print Midlands Barrow Upon Soar LE12 8JHPewter Design Midlands Market Harborough LE16 7DSSt Ives Midlands St Ives PE27 3WSQuickprintArtichoke Midlands Birmingham B18 6NNDesignThe Ideas Room Midlands Leicester LE3 0DLIdeas Taking Midlands Rugby CV21 2SDShapeGraphic Results Midlands Belper DE56 1AYThe Studio Midlands Walsall WS1 1JQHussellworks Midlands Halesowen B63 3HRFirst Image Midlands Coventry CV5 7FWHull Store North Hull HU1 2AG EastNewcastle Store North Newcastle NE1 5EE EastLeeds Store North Leeds LS1 3DL EastMiddlesbrough North Middlesbrough TS1 1LY EastSheffield Store North Sheffield S1 4GF EastColour Box North York YO23 1NADesign EastMultiprint North Normanton WF6 2AF EastPrint House North Bishop Auckland DL14 0LZDirect EastThe Factory North Leeds LS12 2DS EastMaskerade North Sunderland SR2 7PRDesign EastPro-Actif North Darlington DL3 7TDCommunications EastGOWEB North Wakefield WF2 9BL EastCreative Web North Alnwick NE71 6EAdesign UK EastBluprint North Rotheram S60 8LZ EastBlah D Blah North Bangor LL57 1NY WalesManchester North Manchester M3 4BQStore WestThe Hub North Trafford Park M17 1FG WestLiverpool Store North Liverpool L2 2HF WestLancaster Store North Lancaster LA1 1XN WestWarrington North Warrington WA1 1EP WestGranthams - North Preston PR1 2UQPreston WestGranthams - North Blackpool FY1 4PEBlackpool WestPrint Design North Marple SK6 7ADWarehouse WestRAS Limited North Chester CH3 5AG WestSilverback North Isle of Man IM1 2LA WestMailboxes North Stockport SK1 1LE WestPrintel North Widnes WA3 8LG WestER Design & North Alsager CW2 5PRPrint WestImpact North Timperley WA15 7SPAdvertising WestMasterprint North St Helens WA10 1DH WestCopycat North Maghull L31 2HB WestUtopia North Birkenhead CH41 7AB WestAlert 2 Media North Manchester M1 1DZ WestPrint Hub North Bolton BL1 3QJDesign WestSoda North Golbourne WA3 3BU WestJustleigh North Eccles M30 8GH WestBrightspark North Carlisle CA2 5BB WestOpenhouse North Manchester M1 6DE WestBradbury Northern Belfast BT7 1BSGraphics IrelandXpress Creative Northern Newtonabbey BT36 4PU IrelandMooney Media Northern County Down BT32 4QD IrelandEdinburgh Store Scotland Edinburgh EH3 6QYEdinburgh Store Scotland Edinburgh EH3 9LYGlasgow Store Scotland Glasgow G3 8LZColor Co. - Scotland Edinburgh EH2 2PAEdinburghGlasgow Print Scotland North Glasgow G64 1RXHamilton (662c) Scotland Hamilton ML3 7ARHaus of Print South Andover SP11 6RUBrighton South Brighton BN2 8AAAshford Store South Ashford TN24 8UU EastTRS Graphics South Croydon CR2 6EB EastFelix South Rochester ME2 4HZCommunications EastStudio Direct South Chelmsford CM2 6HE EastLussh Creative South Chesterfield S40 2BY EastInprint South Colchester CO1 1PB EastBristol Store South Bristol BS1 3LZ WestPlymouth Store South Plymouth PL4 0AU WestBournemouth South Bournemouth DT1 1HS WestAnneset South Weston-Super-Mare BS23 3DE WestPresto Print South Christchurch BH23 1QD WestMalthouse South Taunton TA1 3EP WestWessex Direct South Minehead TA24 5UB WestPrint Creative South Bath BA1 2JB WestPrinting South South Totnes TQ9 5DWWest WestAustralian Wales Cardiff CF14 3JPWelsh PRINTING.COM PLC ("Printing.com" or "the Company") Specialist retail chain with 112 outlets (plus 15 pending) across the UK Preliminary Results for year ended 31 March 2005 Chairman's Statement Trading Results Once again I am pleased to report that for the year under review the Companymade further significant progress, resulting in a turnover of £10.72m (2004:£9.33m) and a pre tax profit of £1.51m (2004: £0.94m). Earnings per share were2.74p an increase of 79%. Total Retail Sales "TRS" (being the estimated value of invoiced sales throughthe Printing.com network) were £14.44m (2004: £10.84m). The increase in TRSreflects the significant growth in the size of our network with 119 outlets openand pending at the year end (2004: 85). Since the year end the number of outletsopen or pending has increased by 8. Cash I am also pleased to report a strong generation of cash from operationalactivity, especially during the second half, with the result that your Companyclosed the year with cash reserves of £2.86m (2004: £0.79m). Successful Move to AIM Following almost four years on London's Ofex market, August 2004 saw thesuccessful admission of the Company's shares to AIM. Since making this move wehave seen an appreciation in the share price and a significant increase in theliquidity of our shares. Dividend The Company now has distributable reserves and the Board are proposing thepayment of a final dividend of 0.50p per ordinary share on the 5th August 2005to shareholders on the register at the close of business on the 17th June 2005.This reflects the Company's dividend policy as set out in its AIM admissionprospectus. Employees and Franchisees The Company's employees have continued to meet the challenges of working in adynamic and evolving business and, together with the hard work and endeavours ofour Franchisees and their employees, this has underpinned another year ofconsiderable progress. On your behalf we thank them all for their invaluablecontribution in moving your Company forward. British Franchise Association / HSBC Award for Enterprise I am delighted to report that your Company won the British Franchise Association'HSBC Award for Enterprise' at the May annual Franchisor of the Year Awards heldat London's Savoy Hotel. Sponsored by HSBC and the Daily Express, the BFA awardsceremony aims to showcase the UK's strongest and better performing franchisors. Brian Smart, Director General of the British Franchise Association, was quotedas saying "the judges felt Printing.com had taken up the challenge ofenterprise, both in its business and its approach to franchising in a way thatcould not be matched". I believe that in winning this award it can only furtherenhance the Company's brand and market awareness and is further recognition ofour rapid growth and success. Outlook Each year when reporting Printing.com's preliminary results, I have expressed myoptimism regarding the Company's ongoing potential. With three consecutive yearsexhibiting sequential material growth in profitability, the result of a robustand scaleable business model, I believe that my previous optimism has provedwell-founded. We have a strong pipeline of prospective Franchisees and I now believe theCompany is entering its most exciting phase to date. Expansion continues togather pace providing scope for Printing.com to deliver an ongoing increase inshareholder value. George HardieChairman Chief Executive's Statement Looking back, the Company's 14 directly owned stores (opened between 1998 and2001) served as an important phase in refining and proving the format andprovided the platform for future growth via franchising. It is still only alittle over three years since the Company's first Bolt-on Franchise opened andjust over two years since the first Printing.com Store Franchise commencedoperations. Moving forward our expansion plans are centred on a further rapid increase inour network essentially via franchising. Winning the British FranchiseAssociation / HSBC Award for Enterprise is a significant reflection of theprogress and profile that Printing.com now enjoys within the UK franchisecommunity. Network Overview The table below sets out the Printing.com network and illustrates the rapidexpansion during the year under review coupled with an acceleration post theclose of the year. 1st June March March 2005 2005 2004Company owned Stores 9 9 10Franchised Stores*Open and pending 36 33 20under optionBolt-on Franchises** 82 77 55 Total 127 119 85 *Includes Territory Franchises and two 'Boutique' Franchises - see below**Includes four 'Guerrilla' Franchises - see below Territory Franchise Development During the year we completed the process of formally upgrading the earlyadopters of the Printing.com Store Franchise to the new Territory format. Thisgranted each Franchisee a licence not only to operate a Printing.com Store butalso to establish a network of Printing.com Bolt-on Franchises. All 12 of ourStore Franchisees at the time upgraded. Eight Territory Franchises became operational during the year in Reading,Middlesbrough, Warrington, Wolverhampton, Bournemouth, Orpington, North Dublinand Luton. A further 3 Territory Franchises were established, 2 through MBIs ofour Nottingham and Ealing Stores and 1 through an MBO of our Sheffield Store. At the end of the period under review, there were a further 8 'Options' (eachinvolving the payment of a non-refundable deposit of £6,000) taken out overTerritory Franchises. Since the end of the period a further Store has commencedtrading in Brighton. Property is being sought for East Glasgow and negotiationscontinue to progress in respect of premises for the Manchester North, BirminghamEast, Birmingham South West, Coventry, Northampton and Cardiff TerritoryFranchises. We are optimistic that these endeavours will result in a steadystream of openings and that most will indeed be trading by the close of H1. Over the past month an additional 3 Options have been taken out, covering ourExeter, Bradford and Guildford Territory Franchises. The Guildford Option hasbeen taken out by an internal candidate. With an anticipated June launch, thiswould take the number of employees becoming Territory Franchisees to 5. Webelieve that these employee Buy Outs / start-ups not only provide the basis forexcellent sector news flow but also serve to reassure external candidatesconsidering franchise opportunities with Printing.com. New Franchise Format - The Printing.com Boutique Franchise We have developed the Boutique format to meet the demand from prospectivefranchisees seeking a Printing.com outlet. This format can prove suitable where,geographically a Territory Franchise is unavailable or where the Franchisee isseeking a lower level of regulation or does not want to be concerned with themanagement and development and support of Bolt-on Franchises. It also offers alower cost route to a Printing.com Store as the franchise fees charged arelower. We are delighted to report that the first two Boutiques are now under option inSouth Glasgow and Doncaster. It is believed that this format will provide asignificant number of additional outlets and additional revenues as new outletsmature. Bolt-on Franchise Development At the start of the year we had 55 Bolt-on Franchises and by year end this hadrisen to 76. Post the year end we have completed a further 2 agreements. The pipeline of prospective transactions is also very buoyant which leads us tobe optimistic that a further significant wave of Bolt-on Franchise openings isimminent. New Franchise Format - The Guerrilla Franchise We have developed the Guerrilla format to enable fledgling entrepreneurs,without the investment capital required to follow the Territory or Boutiqueschemes, to open a Printing.com outlet. Typically, such a Franchise would be launched from serviced offices or similarlow cost premises. Overheads would also be kept to a minimum, as no additionalstaff would be employed until the franchise became profitable. In certaininstances the Franchisee may be allowed to work for a short period from homeallowing start up costs to be further reduced. The inspiration for this scheme comes directly from my own experience startingthe business that today is Printing.com and that of Peter Gunning (the Company'sOperations Director). In my case the business was started with under £5,000 andoperated from a small rented office. Peter Gunning started 'The Design Foundry'in Edinburgh with a similar level of investment. In the Guerrilla scenario, whilst launching the business with limited capital,the Franchisee would already be working in the sector. We believe that theirexisting technical skills plus their contacts in the local business communitywill compensate for the lack of capital. To facilitate this development the Company has developed a finance option inconjunction with the Royal Bank of Scotland. Essentially £500,000 is being madeavailable by RBS, in tranches of circa £10,000 to £15,000, to financeinitiatives of this nature. Whilst Printing.com provides certain guarantees (in addition to the Franchisee'sown personal guarantee) to RBS in respect of this financing, the Board believethat this initiative makes sound commercial sense and that the risk is mitigatedas: (i) a significant proportion of the investment is paid immediately to Printing.com (in respect of licence and support fees);(ii) the risk will be spread across a high number of low value 'investments'. Towards the close of the year, the first Franchise of this format opened andpost the year end a further 3 agreements have been completed. The profile of atypical 'Guerrilla' Franchisee is reflected by our recent Carlisle opening. TheFranchisee, aged 26, was previously working as an Account Executive / GraphicDesigner with a rival local company. This Guerrilla Franchise required anoverall investment of less than £20,000 reflecting the dramatically lower set upcosts of this format. We anticipate that Guerrilla Franchisees may progress from office space toretail premises, thereby essentially becoming a Boutique Franchise and fromthere, in some cases, to purchasing a Territory Franchise. We believe this new format enables us to tap into the wealth of young talent inthe industry at large and facilitate entrepreneurialism that may otherwise bestifled through lack of access to capital. We also anticipate this additionalroute to market will further increase our rate of growth. The Agency Following a restructuring of The Agency, its divisional Managing Director hasnow left the Company. As we have indicated in the past it is our objective totransfer this division to franchised ownership. Under the new structure theAgency is now producing stable revenues operating as three independent teams, italso means that buy-outs or buy-ins can be progressed on a team by team basis.We are currently in discussion with a number of internal candidates. The Production Hub and Infrastructure We have previously indicated that the capacity of our national Hub, measured interms of TRS, was in the range of £20-25 million. We now believe that thecapacity is nearer to the higher end of this range reflecting our improvedefficiency. Additional Printing Capacity At this juncture we believe it is prudent to expand the Manchester Hub beforeseeking an additional Hub in the south of England. At present we have twoprinting presses operating in parallel, a third is now being ordered. Theadditional press is in essence a 'double decker' meaning that both sides of thepaper can be printed simultaneously thereby providing savings in labour, speedof delivery and floor space. The new press will provide capacity similar to thatof the two existing presses combined, increasing overall TRS press capacity to£45-£50 million. The press reflects an investment of circa £1.8 million and weanticipate it will be commissioned during April 2006. Upgrade to logistics The available production floor space is scheduled to be increased by 50% withthe installation of a mezzanine level. The mezzanine will house additional printfinishing plant that we expect to bring online as turnover increases. Theadditional infrastructure will also feature improvements to internal logisticswith the objective of significantly reducing manual handling and packing. Flyerlink Pro A further significant development during the year under review was the launch ofFlyerlink Pro, a new generation of the Company's software. Flyerlink is theconduit that connects our outlets with the Hub and is now in a format that canbe readily scaled. International Expansion In essence we opened our Dublin Store 2 years ago to test the Company's systemsworking with multiple currencies. The advent of Flyerlink Pro together with theincreasingly proven nature of the Printing.com model, encourages us thatinternational development can now be explored. It is anticipated that such expansion would be via joint ventures or masterfranchise arrangements and executed via such a mechanism that would not put ourcore UK and Ireland operations at risk. Current Trading The first two trading periods (four week) of the current financial year have nowbeen completed. Overall trading has proved in line with the Company's internalbudget. Outlook In terms of the rate at which new Franchisees are being attracted toPrinting.com we are at present experiencing our fastest ever growth. Significantexpansion has been achieved of late with the network now having 127 outlets'operational and pending'. This current growth rate represents an additionalunit every fifth working day. In addition to new outlets opening, additional revenues should be generated asour recently opened outlets develop quickly and our more established outletsmature. Given present growth rates, and the premise that every new outlet should yieldan additional positive contribution from day one, we remain optimistic that theoutlook for the future development of the Group is positive and the prospect ofcontinued growth in shareholder value good. Anthony RaffertyChief Executive Finance Director's Statement Total Retail Sales (TRS) TRS is a key metric, being the retail price paid by the client irrespective ofwhether the transaction took place through a Company owned or a franchisedoutlet. The importance of this measure is that it gives the clearest indicationof the growth in the network. With TRS increasing by 33.2% to £14.44m (2004:£10.84m) the underlying development of the Printing.com network is clearlyillustrated. At this level we would estimate that Printing.com still accountsfor less than 2% of the available market. Turnover The statement of turnover masks the underlying growth in the Printing.comnetwork. Network growth is essentially derived from our Franchise initiatives:with such transactions our turnover is limited to the 'wholesale' value of theorders. In addition three Stores, previously under direct ownership, have nowbeen franchised with the retail component of the respective orders given over tothe franchisee. Overall turnover increased by 15% from £9.33m to £10.72m.Company Store sales and sales to Franchisees increased by 26% from £7.39m to£9.32m for the year. Company turnover was held back by sales at The Agency whichfell to £1.40m from £1.94m. Gross Profit The Company's simple definition of Gross Profit is sales less direct materials(including the cost of distribution, when made direct to customers). Gross Profit increased from £7.10m to £7.83m. Overall it reduced from 76.1% to73% of turnover as more sales moved through the franchise channels where theretail margin is passed over to Franchisees who, of course, incur thecorresponding retail overheads. Pre-Tax Profit The Company recorded a pre tax profit of £1.51m (an increase of £0.57m). Thisrepresented 14% of Company turnover and 10.4% of TRS. In the previous year thepre tax profit of £0.94m represented 10% of turnover and 8.7% of TRS. We believethe significant increase in pre tax profitability, in both absolute terms and onthese key metrics, validates our franchised centred strategy. Staff costs increased in real terms by 13% but fell as a percentage of turnoverfrom 32.1% to 30.3%. Other major costs for the year were Depreciation £0.73m(2004: £0.70m) and Operating Lease costs (plant & property) £0.41m (2004:£0.38m). Those overheads directly related to Company owned retail operations, includingpayroll and depreciation, reduced from £2.94m to £2.26m or 31.5% of turnoverdown to 21.1%. This was essentially due to Stores previously owned by theCompany becoming franchised units. The strong operational cash flow and the placing on the AIM flotation increasedcash balances. All bank loans were cleared and coupled with reducing leasefinance costs net interest charges decreased to £0.12m from £0.25m. Taxation The tax charge for the current year is £0.35m or 23% (2004: £0.35m or 36.8%) ofPBT. The lower charge this year is due to certain gains qualifying for rolloverrelief. Earnings per share (EPS) Basic EPS improved by 79% to 2.74p, the weighted average number of shares usedwas 42,208,789. Fully diluted EPS improved by 86% to 2.66p. The year closed with44,289,716 ordinary shares in issue. Cash Flow At the year end the Company had cash balances of £2.86m (2004: £0.79m). Operational cash flow surged ahead to £2.43m (2004: £1.54m). The operatingprofit of £1.63m and depreciation & amortisation charge of £0.73m were offset byan increase in stock of £0.04m, an increase in debtors of £0.49m andsupplemented by an increase in creditors of £0.59m. Trade debtor balances at theyear end represented 36 days as they did in 2004. Capital Expenditure The total expenditure for the year was £0.5m (2004: £1.6m). This was made up of:- a) software development and computing £0.25m;b) production equipment £0.11m;c) purchase of the Oxford Store and certain limited Store refurbishments £0.14m. Share Capital and Share Options Options over 1,592,243 shares were exercised during the year, being:- a) employees options, 175,563;b) Haltcrown Limited options 1,408,680; (option granted at the time of the Company's OFEX IPO)c) Franchisee options 8,000. In July 2004 Territory Franchisees were granted options over 1,400,000 sharessubject to their achieving performance targets and there being a sustainedincrease in the share price. Employee EMI options totalling 3,190,000 wereissued in August 2004, as with the Territory Franchise options each employee hasperformance targets to achieve and there has to be a sustained increase in shareprice for the options to become exercisable. During the year 105,000 employee and 106,000 Franchise options lapsed. Flotation on AIM The Company moved its share quotation from Ofex to AIM on the 11th August 2004at the same time placing 3,833,333 ordinary Shares of 1p for a consideration of30p per share. The placing raised £0.86m net of costs. Alan Q. RobertsFinance Director Unaudited consolidated profit and loss account for the year ended 31 March 2005 Notes 2005 2004 £(000) £(000) TURNOVER 1 10,717 9,328Changes in stocks of finished goods 35 (6) -------------- -------------- 10,752 9,322 Other operating income - 10 -------------- -------------- 10,752 9,332 Raw materials and consumables 2,924 2,231 -------------- -------------- 7,828 7,101 Staff costs 3,243 2,859 Depreciation and amortisation 728 698 Other operating charges 2,225 2,351 -------------- -------------- OPERATING PROFIT 1,632 1,193 Investment income 67 10 Interest payable and similar charges (191) (263) -------------- -------------- PROFIT ON ORDINARY ACTIVITIES BEFORETAXATION 1,508 940 Taxation 2 (350) (346) ------------- -------------- PROFIT ON ORDINARY ACTIVITIES AFTERTAXATION 1,158 594Dividends on equity shares (221) - ------------- -------------- RETAINED PROFIT FOR THE YEAR 937 594 ------------- -------------- Earnings per ordinary share - basic 5 2.74p 1.53pEarnings per ordinary share - fullydiluted 5 2.66p 1.43pDividend per ordinary share 4 0.50p - The result is based on the Group's continuing operations. No separate statement of Total Recognised Gains and Losses has been presented asall such gains and losses have been dealt with in the profit and loss account. Unaudited group balance sheet as at 31 March 2005 2005 2004 £(000) £(000) FIXED ASSETSIntangible assets 65 54Tangible assets 3,637 3,901 ------------ ------------ 3,702 3,955 ------------ ------------ CURRENT ASSETSStocks 108 73Debtors 2,150 1,715Cash at bank and in hand 2,864 789 ------------ ------------ 5,122 2,577 CREDITORS: Amounts falling due (3,006) (2,317)within one year ------------ ------------NET CURRENT ASSETS 2,116 260 ----------- ------------ TOTAL ASSETS LESS CURRENT 5,818 4,215LIABILITIES CREDITORS: Amounts falling due aftermore than one year (904) (1,497) PROVISION FOR LIABILITIES AND CHARGES (312) - ----------- ------------ 4,602 2,718 CAPITAL AND RESERVESCalled up share capital 443 389Share premium 3,769 2,876Merger reserve 211 211Other reserve 1 1Profit and loss account 178 (759) ------------ ------------ 4,602 2,718 Unaudited group cash flow statement for the year ended 31 March 2005 Notes 2005 2004 £(000) £(000) Cash flow from operating activities 3a 2,425 1,537Returns on investments and servicingof finance 3b (124) (253) Capital expenditure 3b (425) (629) Taxation 12 (12) ------------ ------------CASH INFLOW BEFORE FINANCING 1,888 643 Financing 3b 187 (722) ----------- ------------INCREASE/(DECREASE) IN CASH IN YEAR 2,075 (79) ----------- ------------ RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN DEBT Increase/(decrease) in cash in the 3c 2,075 (79)yearCash outflow from decrease in net debtfinancing 3c 760 723 ----------- -----------Change in net debt resulting from cash 2,835 644flowsNew finance leases (51) (897) ----------- -----------MOVEMENT IN NET DEBT IN THE YEAR 2,784 (253) NET DEBT AT 1 APRIL 2004 3c (1,346) (1,093) ----------- -----------NET FUNDS /(DEBT) at 31 MARCH 2005 3c 1,438 (1,346) =========== =========== 1 TURNOVER The principal components of turnover are the design and production of publicityand marketing material, and franchise fee income. All of the turnover is in onecontinuing business segment being the development of the Printing.com Franchiseand originates in the United Kingdom and Republic of Ireland. The directorsbelieve that full compliance with SSAP25 'Segmental Reporting' would beseriously prejudicial to the interests of the Group as it would requiredisclosure of commercially sensitive information. An analysis of turnover by geographical segment is given below: 2005 2004 £(000) £(000)United Kingdom 10,445 9,201Republic of Ireland 272 127 -------- --------- 10,717 9,328 ======== ========= 2 TAXATION 2005 2004 £(000) £(000)Corporation tax at 30% (2003: 19%) - -Overprovision in prior year (12) (10) ---------- -----------Total current tax (12) (10) ---------- -----------Deferred tax:Origination and reversal of timingdifferences 362 356 ---------- -----------Tax on profit on ordinary activities 350 346 ========== ===========Factors affecting the tax charge forthe yearProfit on ordinary activities beforetaxation 1,508 940 ========== ===========Profit on ordinary activities beforetaxation multiplied by standard rateof UK corporation tax of 30.00% (2004:30.00%) 452 282 Effects of:Non deductible expenses 30 47Income not taxable (92) -Capital allowances in excess of (51) (85)depreciationOther tax adjustments 4 (44)Losses utilised (343) (200)Prior year adjustment (12) (10) ------------- ------------ (464) (292) ------------- ------------Current tax credit (12) (10) ============= ============ 3 CASHFLOWS a Reconciliation of operating profit to net cash inflow from operatingactivities 2005 2004 £(000) £(000)Operating profit 1,632 1,193Amortisation 32 15Depreciation 695 683(Increase)/decrease in stocks (35) 6Increase in debtors (485) (621)Increase in creditors 586 272Loss/(profit) on sale of fixed assets - (11) ------------ --------------- 2,425 1,537 ============ =============== b Analysis of Cash Flows For Headings Netted Off in the Cash Flow Statement 2005 2004 £(000) £(000)RETURNS ON INVESTMENTS AND SERVICING OF FINANCEInterest received 67 10Interest paid (4) (14)Interest element of finance lease rentalpayments (187) (249) ------------ ------------Net cash outflow from returns oninvestments and servicing of finance (124) (253) ============ ============CAPITAL EXPENDITUREPurchase of intangible assets (44) (41)Purchase of tangible assets (406) (667)Sale of tangible assets 25 79 ------------ ------------Net cash outflow from capital expenditure (425) (629) ============ ============ FINANCINGIssue of ordinary share capital 1,232 1Issue costs (286) -Repayment of bank loan (167) (113)Capital element of hire purchase (592) (610)contracts ------------ ------------Net cash inflow/(outflow) from financing 187 (722) ============ ============ At Cash flow Other At 1 April 2004 £(000) cash 31 March £(000) changes 2005 £(000) £(000)c Analysis of net (debt)/fundsNet cashCash at bankand in hand 789 2,075 - 2,864 ----------- ----------- ----------- --------- 789 2,075 - 2,864 Debt:Finance leases (1,967) 592 (51) (1,426)Bank loan duewithin 1 year (110) 110 - -Bank loan dueafter 1 year (58) 58 - - ----------- ------------ ----------- ----------- (2,135) 760 (51) (1,426) ----------- ------------ ----------- -----------Net(debt)/funds (1,346) 2,835 (51) 1,438 =========== ============ =========== =========== 4 DIVIDENDSThe Directors propose payment of a maiden dividend of 0.50p per ordinary share(2004 Nil). 5 EARNINGS PER SHARE The calculations of earnings per share are based on the following profits andnumbers of shares. 2005 2004 £(000) £(000)Profit for the financial year 1,158 594 ======= ====== Weighted average number of shares 2005 2004 No. of No. of shares sharesFor basic earnings per share 42,208,789 38,849,906Exercise of share options 1,301,237 2,540,303 -------------- ------------For diluted earnings per share 43,510,026 41,390,209 =========== =========== 6 BASIS OF THE PRELIMINARY ANNOUNCEMENT The preliminary financial statements for the twelve months ended 31 March 2005were approved by the Board of Directors on 31 May 2005. The results areunaudited. The figures for the year ended 31 March 2005 do not constitute fullaccounts within the meaning of Section 240 of the Companies Act 1985. Thefigures for the year ended 31 March 2004 are audited. The preliminaryannouncement is prepared on the same basis as set out the previous year'sstatutory accounts. Those accounts, upon which the auditors issued anunqualified opinion, have been delivered to the Registrar of Companies. This information is provided by RNS The company news service from the London Stock Exchange