9 Jun 2008 07:00
FOR RELEASE 7.00AM 9 June 2008
PRINTING.COM PLC
("Printing.com or "the Group")
Specialist retail chain with 261 Outlets opened and pending across the UK and Ireland
Preliminary Results for year ended 31 March 2008
| | 2008 | 2007 | Change |
| | | | |
| Total Retail Sales | £24.58m | £21.28m | +15.5% |
| Turnover | £13.48m | £12.14m | +11.0% |
| Operating Profit | £2.29m | £2.17m | +5.5% |
| EBITDA | £3.67m | £3.20m | +14.7% |
| Profit Before Tax | £2.42m | £2.29m | +5.7% |
| Earnings Per Share - Basic | 3.64p | 3.55p | +2.5% |
| EPS – Fully Diluted | 3.51p | 3.38p | +3.8% |
| Dividend | 3.00p | 2.50p | +20.0% |
| Capital expenditure | £1.26m | £3.87m | - |
| Net Cash | £3.50m | £2.86m | +22.4% |
| Net Funds | £1.08m | £(0.23)m | - |
| Number of Outlets | 249 | 198 | +25.8% |
Sales, profits, earnings per share and dividends at record levels
Cash position strengthens further
Expansion continues with 51 new outlets open in the period
40 overseas outlets under licence
Printing.com France successfully launched
Planning to establish operations in Australia
Network Partner programme launched
Cautiously optimistic about prospects over the current financial year
For further information:
Printing.com plc
Tony Rafferty (Chief Executive) 07966 517 336
Alan Roberts (Finance Director) 0161 848 5713
Cubitt Consulting
Brian Coleman-Smith / Nicola Krafft / James Verstringhe 020 7367 5100
Brewin Dolphin Ltd (Nominated Adviser)
Richard Evans 0845 213 4853
Background note:
Printing.com
Printing.com offers a broad product range including leaflets, booklets, postcards, promotional cards, invitations, letterheads and business cards to consumers and small and medium sized companies. Unlike its competitors, Printing.com's Stores and Franchises do not depend on any printing equipment on location. The Company's printing and ancillary equipment is based at the centralised Production Hub with the head office in Manchester. All work is produced in full four colour rather than two colour. The printing sector has traditionally been served by smaller printing companies or other On Demand Printers and is estimated to be worth some £1 billion.
Printing.com has three routes to market: Franchise Stores, Bolt-on Franchises and Company owned Stores.
A complete list of Printing.com's active Outlets is included at the end of the release.
PRINTING.COM PLC
("Printing.com or "the Group")
Specialist retail chain with 261 Outlets opened and pending across the UK and Ireland
Preliminary Results for year ended 31 March 2008
CHAIRMAN'S STATEMENT
Trading Results
Total Retail Sales ("TRS"), the Company's estimate of the value of Printing.com sales transacted by its Franchisees, increased 15.5% to £24.58m (2007: £21.28m) reflecting the continued momentum in the expansion of Printing.com. Revenue increased 11% to £13.48m (2007: £12.14m).
During the year under review your Company recorded a Profit Before Tax ("PBT") of £2.42m (2007: £2.29m), an increase of 5.7%. The smaller increase in PBT reflects the increased depreciation charge, lease interest and other costs relating to the expansion of the Company's Manchester Hub.
Also, the 2007 figure included 'Other Income' of £0.14m relating to the premium arising from the franchising of several stores. Save for this amount the Company's PBT from its ordinary activity advanced by £0.27m (11.8%).
Cash
I am pleased to report that cash generation has been very strong with net cash balances increasing by 22.4% with the expansion of the UK Hub now completed.
The Company closed the year with cash reserves of £3.50m (2007: £2.86m), after paying dividends of £1.30m (2007: £0.83m) and investing gross £1.26m (2007: £3.87m) in capital equipment and software. Of the capital expenditure total £0.5m (2007:£2.96m) was financed.
Dividends
In line with our aim to follow a progressive dividend policy, your Board is proposing a final dividend of 2p per ordinary share to be paid on 6 August 2008 to shareholders on the register at the close of business on 27 June 2008. Making a total dividend for the year of 3p per ordinary share (2007: 2.5p).
People at Printing.com
Notwithstanding the essential role that the internet plays in the operation of the Printing.com business model, the hard work and endeavours of the people within the Printing.com network lies at the heart of your Company's continued progress and accordingly I thank them for their contribution.
Outlook
Although trading has softened since the year end, revenues are still ahead of the corresponding period for the previous year. Also, the rate at which new Bolt-on Franchises have been granted since March is particularly encouraging.
We are mindful that PBT over the past two years has not advanced as materially as before. Now, with the Hub investment cycle behind us and an abundance of unutilised capacity in the Company's Hub, the need to make immediate capital investment, except for the ongoing development of the Company's Flyerlink software has diminished. Accordingly, if we are able to continue to grow our network revenues, the prospect of a greater flow through to PBT appears greater than over the past two years.
Moving forward, it is anticipated that cash generation will remain strong.
Our Master Licence partners in New Zealand and Iceland continue to make good progress with close to 40 operational outlets across these countries. We believe that this bodes well for future Master Licence development.
We are making good progress in discussions regarding the grant of Master Licences in other territories and remain cautiously optimistic that new licences will be granted over the present financial year.
Having invested heavily in the preparation for entering the French market over the past year, we anticipate that this initiative will breakeven during the present financial year, moving into a positive contribution in the following year.
With a client base in excess of 60,000 we believe that opening up our network, via the Printing.com Network Partner programme, which allows complementary printed services from selected suppliers across our network, will provide a material incremental revenue stream for our Franchisees and your Company.
Whilst we are not immune to the undulations of the economic cycle, we believe there are many initiatives that we can pursue to provide your Company with the realistic prospect of continuing to gain momentum over the coming year. Accordingly, we remain cautiously optimistic about the Company's prospects over the current financial year.
George Hardie
Chairman
9 June 2008
CHIEF EXECUTIVE'S STATEMENT
ESTATE DEVELOPMENT
During the year under review your Company has worked tirelessly to increase outlet numbers throughout the UK and Ireland. Reflecting our determination, we are now pleased to report the addition of 51 new outlets (2007:31), the structure of which is set out in the table below.
| 1 June 2008 | 31 March 2008 | 2 April 2007 | |
| Company Owned Stores | 5 | 4 | 2 |
| Franchise Stores (Open & Pending) | 43 | 44 | 47 |
| Bolt-on Franchises | 213 | 201 | 149 |
|
|
|
| |
| 261 | 249 | 198 | |
|
|
|
|
The acceleration in the expansion of the estate was achieved following the development of new marketing processes to promote the Printing.com Bolt-on Franchise opportunity, with a particular accent on case studies highlighting numerous success stories. The growth is also attributable to the hard work of our Territory Franchisees, in identifying promising local Bolt-on Franchise opportunities.
Prior to the start of the year, our directly owned Store count had dropped to just 2. This is lower than our objective of directly owning a small number of outlets for training and development purposes. Accordingly we repurchased several stores in situations where we believed it was prudent to do so. Moving forward we would anticipate the process of purchasing and re-franchising a small number of outlets to continue on an on-going basis.
Across the UK and Ireland we aspire to expand the network to approximately 400 Printing.com outlets including circa 350 of the Bolt-on Franchise format which we continue to focus on as the most cost effective and efficient way to expand our network and bring increased volume to the Hub. We anticipate making further progress towards this objective over the coming year.
Production Hub and Infrastructure
In last year's annual report we highlighted the increase in capacity of the Manchester Hub from £20-25 million to £40-45 million via the adding of a new press and mezzanine floor coupled with SmartPack, a bespoke sortation system. The year under review saw the bedding-in of this infrastructure, further improving Printing.com's high operational standards and increased operational efficiencies.
Over the coming year, relatively little capital expenditure is anticipated for the Company's Manchester Hub as sufficient capacity still exists for our foreseeable requirements.
During the year, we continued to invest and develop Flyerlink, the Company's proprietary software. Various important functional milestones were achieved, many relating to the Master Licence programme, including the provision of multi-language capability.
Grant of Master Licence Agreements("MLA")
The Printing.com MLA enables Printers in other countries to copy the Printing.com business model without the cost, delay and risk involved in developing the systems and software that underpin operations.
The New Zealand MLA partner, PrintStop, now report that their estate has expanded to circa 40 outlets, with Printing.com's systems being used for every order. The second MLA covering Iceland has commenced operations and aside from a Store in Reykjavik, a small number of Bolt-on Franchises have been granted.
Under the MLA, Printing.com is paid a fee at the outset together with a share of the local licence fees and circa 3% of network sales, on an on-going basis.
We remain in negotiations regarding the grant of MLA's for a number of other territories, at this stage it is too early to say if these will progress to a positive outcome.
Printing.com France
As with Ireland, it is commercially and logistically efficient to ship Printing.com products from the Company's Manchester Hub to France.
Following over 18 months of extensive enquiry and evaluation, Printing.com is now actively engaged in the development of a network of French Bolt-on Franchises. At present as Printing.com enjoys limited brand-awareness in France these Bolt-on licences are granted for a nominal consideration on easy-in, easy-out terms.
During the latter stage of the year under review, we hosted the first training course delivered in French, with 5 Bolt-on Franchises now in operation. Whilst transactional levels from the French business are still at a modest level, we remain encouraged by how well these first French outlets are operating and remain cautiously optimistic of France's potential.
Once established it is our intention to progress a MBO/MBI of the French Printing.com business as we believe that the opportunity will be best developed under French ownership and direction. At such a point, it is anticipated that the business would then operate in a similar manner to other MLA's.
Printing.com Australia
As reported, we intend to establish operations in Australia over the coming months. Unlike our master licence programme, we intend to grant the Australian Franchises directly from an Australian subsidiary. With the logistics of shipping to Australia impractical, an alliance with a suitably equipped Australian commercial printer is presently being sought whereby the provision of the Hub production infrastructure can be outsourced whilst the management of the network and IP remain under direct Company control.
In common with Printing.com France, it is hoped that ultimately an exit will prove possible with the business subsequently operated under an MLA.
Websites by Printing.com
Over the year under review Printing.com's Website initiative resulted in the production of over 500 websites.
Retailing in the range from £200 to £800 the website proposition is positioned between the DIY template websites and the services of a conventional website designer.
Although revenues from this offering for the Company and on a per Franchise basis are still marginal we remain convinced that new media solutions naturally sit alongside the Printing.com offering and intend to invest further in the software development and infrastructure that facilitates this initiative over the coming year.
Network Partner
Across the UK and Ireland Printing.com has an extensive client base, exceeding 60,000 mainly SME's along with local government and corporate departments.
The Network Partner programme opens up the Printing.com network to manufacturers of complementary personalised items such as pens, work apparel, awards and a plethora of other promotional items.
Network Partners must be approved and pay a fee to join the programme with a prescribed formula dictating the revenue split between the partner and the franchisee. Printing.com receives circa 10% of the Network Partner sales.
During the year under review the first Network Partner agreements were granted and to date six have completed the necessary training.
Shortly the new service will be trialled from a small number of Franchises with the roll out planned across the network over the coming months.
Current Trading
Following on from a solid quarter, marking the close of the year under review, trading has softened slightly although it remains materially above the corresponding level for the previous year.
With 90%+ of Printing.com orders being used by the client for promotional purposes we attribute the softer conditions to the general drop in business confidence within the SME community.
To mitigate this effect we will be adding to the potency of our monthly offers and promotional campaigns along with the broadening of our offering via the Network Partner programme. We remain confident that our unique business model places us favourably against our competitors who are also feeling the impact of the softening market conditions.
Encouragingly the Company has enjoyed a buoyant start to the year in terms of the development of the Printing.com estate across the UK and Ireland, with some 14 additional Bolt-on franchises (compared to 7 for the same period last year) having so far been granted.
Tony Rafferty
Chief Executive
9 June 2008
FINANCIAL REVIEW
Total Retail Sales (TRS)
TRS is the Group's key metric, being the estimated retail price paid by the client, and provides the clearest indication of the growth of the network. The ongoing development of Printing.com is clearly illustrated with estimated TRS increasing by 15.5% to £24.58m (2007: £21.28m).
Like For Like TRS
This metric reports on the like for like progress of our Territory Franchisees (or equivalent Group owned operations) that have operated for a minimum of three years. Therefore, the earliest figures that could be reported for a Territory Franchise are its third versus second year. In presenting these figures we believe that it is essential to consider both the performance of the Store within the Territory Franchise and the growth in revenues from its associated Bolt-On Franchises. On this basis like for like growth during the year under review was 16.44% (2007:13.46%) with 29 (2007:20) Territory Franchises (or Group owned equivalents) contributing to this metric.
Accounting Policy Change
Both the parent company financial statements and the Group financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU ("Adopted IFRSs").
Revenue
Overall revenue increased by 11.0% from £12.14m to £13.48m. This was despite the franchising of the Group owned Birmingham & Oxford Stores in 2007 with the resultant loss of the retail premium during 2008. Network growth has principally been driven by the increase in the number of Bolt-on Franchises.
Gross Profit
The Group's simple definition of Gross Profit is revenue less direct materials (including the cost of distribution, when made direct to customers).
Gross Profit increased by 10.7% from £8.14m to £9.01m. In percentage terms it remained relatively constant at 66.9% (2007: 67.1%) of revenue.
EBITDA
At £3.67m (2007: £3.20m) EBITDA improved by 14.7%. TRS and EBITDA increased by £3.30m and £0.47m respectively over the year.
The increase in EBITDA for 2007 included non-recurring revenue relating to the Website initiative of £0.15m. Save for this non-recurring revenue in 2007 the increase in EBITDA is £0.62m or 18.8% of the increase in estimated TRS flowed through to EBITDA. As previously suggested, moving forward, we expect additional TRS, from core UK performance, to increase EBITDA by circa 20%.
Pre-Tax Profit
The Group recorded a pre tax profit of £2.42m (2007: £2.29m) being 18.0% (2007: 18.9%) of Group revenue and 9.8% (2007: 10.8%) of TRS. We believe this sustained level of pre tax profitability, in both absolute terms and on these key metrics, validates our franchise centred strategy.
Staff costs increased in the year to £3.22m (2007:£3.01m) but fell as a percentage of revenue from 24.8% to 23.9%. Franchising Group Stores resulted in savings. The majority of the increase related to the Group's Production Hub with the effect of higher volumes and the payment of premiums for the increase in 7 day 24 hour rotas. The depreciation charge for the year was £1.38m (2007: £1.04m) which rose as last year's additions were depreciated for the full year.
Other Income / Interest Received and Charged
With no Group Stores being franchised during the year Other Income was nil(2007:£0.14m). There were no other items in Group revenue which would be considered unusual or non-recurring.
Interest received of £0.24m (2007:£0.19m) reflects interest on the cash balances held and interest charged to Franchisees on loans to them from Printing.com. Interest paid of £0.19m (2007:£0.21m) primarily on lease finance repayments.
Taxation
In the year the standard rate for tax was 30%. The charge for the current year is £0.79m or 32.6% of PBT (2007: £0.71m or 31.0%).
The effective tax rate was increased due to disallowed expenses, overseas expenses and the fact that share based payments are disallowable for tax purposes.
Earnings Per Share (EPS)
Basic EPS improved to 3.64p (2007:3.55p), the weighted average number of shares used was 44,892,441. Diluted EPS improved to 3.51p (2007:3.38p), the weighted average number of shares used was 46,547,410. The year closed with 44,993,465 ordinary shares in issue, with 200,000 of these held in Treasury by the Group.
Cash Flow
At the year end the Group had cash balances of £3.50m (2007: £2.86m) and Net Funds of £1.08m (Net Debt 2007:£0.23m). Operational cash inflow improved strongly to £4.06m (2007: £2.92m). The most significant cash outflow being dividends paid of £1.30m (2007: £0.83m).
Capital Expenditure
The total expenditure for the year was £1.26m (2007: £3.87m). The major items were Software development and computing infrastructure £0.43m; and Production Hub equipment £0.60m. Equipment in the final phase of the Production Hub upgrade was financed totalling £0.5m (2007:£2.96m).
Share Capital and Share Options
Employees' options over 146,965 shares and Franchisee options over 100,000 shares were exercised during the year. There were no options granted.
Treasury Policies and Financial Risk
Surplus funds are intended to support the Group's short term working capital requirements. These funds are invested through the use of short term deposits and the policy is to maximise returns as well as provide the flexibility required to fund on-going operations. It is not the Group's policy to enter into financial derivatives for speculative or trading purposes.
Interest rate risk, liquidity risk and currency risk
Interest rate risks are limited to the fixed element of finance lease or hire purchase agreements. The Group uses leasing or hire purchase at periods of up to 5 years to finance purchases of some of its assets where it is considered to be a more effective use of funds.
The Group has no overseas assets or liabilities, apart from minor trade related debtors and creditors, and thus any currency movements have no material impact
Alan Q. Roberts
Finance Director
9 June 2008
Group Consolidated Income Statement
for the year ended 31 March 2008
| | Note | | | 2008 | 2007 |
| | | | | £000 | £000 |
| | | | | | |
| Revenue | 3 | | | 13,479 | 12,136 |
| Changes in inventory of finished goods and work in progress | | | | 5 | (20) |
| Raw materials and consumables used | | | | (4,473) | (3,977) |
| | | | | | |
| Gross profit | | | | 9,011 | 8,139 |
| Staff costs | | | | (3,218) | (3,007) |
| Other operating charges | | | | (2,123) | (1,928) |
| Depreciation and amortisation | | | | (1,378) | (1,039) |
| | | | | | |
| Total expenses | | | | (6,719) | (5,974) |
| | | | | | |
| Operating profit | | | | 2,292 | 2,165 |
| Financial income | | | | 316 | 194 |
| Financial expenses | | | | (187) | (207) |
| | | | | | |
| Net financing income/(costs) | | | | 129 | (13) |
| Profit on sale of stores to franchisees | | | | - | 141 |
| | | | | | |
| Profit before taxation | | | | 2,421 | 2,293 |
| Taxation | 4 | | | (789) | (707) |
| | | | | | |
| Profit for the year attributable to equity holders of the Parent | | | | 1,632 | 1,586 |
| | | | | | |
| Basic earnings per share | 5 | | | 3.64p | 3.55p |
| Diluted earnings per share | 5 | | | 3.51p | 3.38p |
The operating profit for the year arises from the Group's continuing operations.
Statement of Changes in Equity
Group - year ended 31 March 2008
| | Share Capital | Share premium | Merger reserve | Retained earnings | Total |
| | | £000 | £000 | £000 | £000 |
| | | | | | |
| Profit for the year | - | - | - | 1,632 | 1,632 |
| | | | | | |
| Total recognised income and (expense) | - | - | - | 1,632 | 1,632 |
| Equity settled share based payments | - | - | - | 71 | 71 |
| Tax on equity settled share based payments | - | - | - | (11) | (11) |
| Own shares acquired | - | - | - | (82) | (82) |
| Shares issued | 3 | 38 | - | - | 41 |
| Dividends paid | - | - | - | (1,300) | (1,300) |
| | | | | | |
| Total movement in shareholders’ funds | 3 | 38 | - | 310 | 351 |
| Opening shareholders’ funds at 3 April 2007 | 447 | 3,833 | 211 | 2,316 | 6,807 |
| | | | | | |
| Closing shareholders’ funds at 31 March 2008 | 450 | 3,871 | 211 | 2,626 | 7,158 |
| | | | | | |
Group - year ended 2 April 2007
| | Share Capital | Share premium | Merger reserve | Retained earnings | Total |
| | | £000 | £000 | £000 | £000 |
| | | | | | |
| Profit for the year | - | - | - | 1,586 | 1,586 |
| | | | | | |
| Total recognised income and (expense) | - | 10 | - | 1,586 | 1,586 |
| Dividends | - | - | - | (828) | (828) |
| Issue of new shares | - | 10 | - | - | 10 |
| Equity settled share based payments | - | - | - | 114 | 114 |
| Tax on equity share based payments | - | - | - | (16) | (16) |
| | | | | | |
| Total movement in shareholders’ funds | - | 10 | - | 856 | 866 |
| Opening shareholders’ funds at 1 April 2006 | 447 | 3,823 | 211 | 1,460 | 5,941 |
| | | | | | |
| Closing shareholders’ funds at 2 April 2007 | 447 | 3,833 | 211 | 2,316 | 6,807 |
| | | | | | |
Group Balance Sheet
At 31 March 2008
| | | Group | |
| | | 2008 | 2007 |
| | | £000 | £000 |
| Non-current assets | | | |
| Property, plant and equipment | | 5,217 | 5,700 |
| Investments in subsidiaries | | - | - |
| Intangible assets | | 1,139 | 921 |
| Deferred tax assets | | 25 | 140 |
| Other receivables | | 470 | 581 |
| | | | |
| Total non-current assets | | 6,851 | 7,342 |
| | | | |
| Current assets | | | |
| Inventories | | 109 | 104 |
| Trade and other receivables | | 3,210 | 3,368 |
| Cash and cash equivalents | | 3,502 | 2,855 |
| | | | |
| Total current assets | | 6,821 | 6,327 |
| | | | |
| Total assets | | 13,672 | 13,669 |
| | | | |
| Current liabilities | | | |
| Other interest-bearing loans and borrowings | | (804) | (918) |
| Trade and other payables | | (1,759) | (1,809) |
| Current tax payable | | (377) | (220) |
| Accruals and deferred income | | (1,094) | (1,013) |
| Other liabilities | | (182) | (229) |
| | | | |
| Total current liabilities | | (4,216) | (4,189) |
| | | | |
| Non-current liabilities | | | |
| Other interest-bearing loans and borrowings | | (1,613) | (2,170) |
| Deferred tax liabilities | | (685) | (503) |
| | | | |
| Total non-current liabilities | | (2,298) | (2,673) |
| | | | |
| Total liabilities | | (6,514) | (6,862) |
| | | | |
| Net assets | | 7,158 | 6,807 |
| | | | |
| Equity attributable to equity holders of the parent | | | |
| Share capital | | 450 | 447 |
| Share premium | | 3,871 | 3,833 |
| Merger reserve | | 211 | 211 |
| Retained earnings | | 2,626 | 2,316 |
| | | | |
| Total equity | | 7,158 | 6,807 |
| | | | |
Group Cash Flow Statements
for year ended 31 March 2008
| | | Group | |
| | | 2008 | 2007 |
| | | £000 | £000 |
| Cash flows from operating activities | | | |
| Profit for the year | | 1,632 | 1,586 |
| Adjustments for: | | | |
| Depreciation, amortisation and impairment | | 1,378 | 1,039 |
| Financial income | | (316) | (194) |
| Financial expense | | 187 | 207 |
| Gain on sale of property, plant and equipment | | - | (22) |
| Equity settled share-based payment expenses | | 71 | 114 |
| Foreign exchange gains | | 75 | - |
| Taxation | | 789 | 707 |
| | | | |
| Operating cash flow before changes in working capital and provisions | | 3,816 | 3,437 |
| Decrease/ (increase) in trade and other receivables | | 269 | (865) |
| (Increase)/ decrease in inventories | | (5) | 20 |
| (Decrease)/ increase in trade and other payables | | (17) | 323 |
| | | | |
| Cash generated from Operations | | 4,063 | 2,915 |
| Tax paid | | (344) | (1,042) |
| | | | |
| Net cash inflow/(outflow) from operating activities | | 3,719 | 1,873 |
| | | | |
| Cash flows from investing activities | | | |
| Proceeds from sale of plant and equipment | | 150 | 82 |
| Interest received | | 241 | 194 |
| Acquisition of plant and equipment | | (235) | (910) |
| Capitalised development expenditure | | (530) | - |
| Dividends received | | - | - |
| | | | |
| Net cash (outflow)/inflow from investing activities | | (374) | (634) |
| | | | |
| Cash flows from financing activities | | | |
| Proceeds from the issue of share capital | | 41 | 11 |
| Repurchase of own shares | | (82) | - |
| Interest paid | | (187) | (208) |
| Payment of finance lease liabilities | | (1,165) | (811) |
| Inter company transfers | | - | - |
| Dividends paid | | (1,300) | (828) |
| | | | |
| Net cash (outflow)/inflow from financing activities | | (2,693) | (1,836) |
| | | | |
| Net increase/(decrease) in cash and cash equivalents | | 652 | (597) |
| Exchange losses on cash and cash equivalents | | (5) | - |
| Cash and cash equivalents at start of year | | 2,855 | 3,452 |
| | | | |
| Cash and cash equivalents at 31 March | | 3,502 | 2,855 |
| | | | |
Notes
(forming part of the financial statements)
1 Basis of preparation
Printing.com plc (the "Company") is a company incorporated and domiciled in the UK.
The Group financial statements are authorised for issue by the Board of Directors on 9 June 2008. European Union law (EULAW) (IAS Regulation EC 1606/2002) requires that the financial statements of the Group are prepared in accordance with International Financial Reporting Standards as adopted by the EU (EU-IFRS). The financial statements have been prepared on the basis of the recognition and measurement requirements of EU-IFRS that are endorsed by the EU and effective at 31 March 2008.
The financial information does not constitute the Company's statutory accounts for the years ended 31 March 2008 or 2 April 2007 (but is derived from those accounts). Statutory accounts for 2007 have been delivered to the registrar of companies, and those for 2008 will be delivered in due course. The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and (iii) did not contain statements under section 237 (2) or (3) of the Companies Act of 1985. The statutory accounts for the financial year ended 31March 2008 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.
Transition to Adopted IFRSs
Both the Group and the Company are preparing their financial statements in accordance with Adopted IFRS for the first time and consequently both have applied IFRS 1. An explanation of how the transition to Adopted IFRSs has affected the reported financial position, financial performance and cash flows of the Group will be provided in the statutory accounts. There have been no changes in the restatement from those published in the prior year.
IFRS 1 grants certain exemptions from the full requirements of Adopted IFRSs in the transition period. The following exemptions have been taken in these financial statements:
Business combinations - Business combinations that took place prior to 1 April 2006 have not been restated.The principal components of revenue are the design and production of publicity and marketing material, and franchise fee income. All of the revenue is in one continuing business segment being the development of the Printing.com Franchise and originates principally in the United Kingdom and Republic of Ireland.
Analysis by geographical destination
| | Revenue | Assets | Capital expenditure | ||||
| | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | |
| | £000 | £000 | £000 | £000 | £000 | £000 | |
| | | | | | | | |
| United Kingdom | 12,738 | 11,548 | 6,807 | 6,501 | 1,186 | 3,854 | |
| Republic of Ireland | 684 | 522 | 356 | 302 | 5 | - | |
| Rest of the world | 57 | 66 | 35 | 4 | 68 | 12 | |
| | | | | | | | |
| | 13,479 | 12,136 | 7,158 | 6,807 | 1,259 | 3,866 | |
Recognised in the income statement
| | 2008 | 2007 |
| | £000 | £000 |
| | | |
| Current tax expense | | |
| Current year | 808 | 492 |
| Foreign tax | 4 | - |
| Adjustments for prior years | (290) | - |
| | | |
| | 522 | 492 |
| Deferred tax expense | | |
| Origination and reversal of temporary differences | 31 | 209 |
| Movement due to change in tax rate | (49) | - |
| Adjustments for prior years | 285 | 6 |
| | | |
| Total tax in income statement | 789 | 707 |
| | | |
Reconciliation of effective tax rate
| | 2008 | 2007 |
| | £000 | £000 |
| | | |
| Profit for the period | 2,421 | 2,293 |
| Total tax expense | (789) | (707) |
| | | |
| Profit after taxation | 1,632 | 1,586 |
| | | |
| Tax using the UK corporation tax rate of 30% (2007: 30%) | 726 | 688 |
| Permanent differences | 54 | 13 |
| Overseas tax losses not recognised | 4 | - |
| Effect of equity settled share based payments | 8 | - |
| Deferred tax on shares | 51 | - |
| Adjustments in respect of prior periods – current tax | (290) | - |
| Adjustments in respect of prior periods – deferred tax | 285 | 6 |
| Movement due to change in tax rate | (49) | - |
| | | |
| Total tax expense | 789 | 707 |
| | | |
It has been announced that the corporation tax rate applicable to the Company has changed from 30% to 28% from 6 April 2008. The deferred tax asset/liability as at 31 March 2008 has been calculated at 28%.
Notes (continued)
The calculations of earnings per share are based on the following profits and numbers of shares.
| | 2008 | 2007 |
| | £000 | £000 |
| | | |
| Profit after taxation for the financial year | 1,632 | 1,586 |
| | | |
Weighted average number of shares.
| | 2008 | 2007 |
| | Number of shares | Number of shares |
| | | |
| For basic earnings per ordinary share | 44,892,441 | 44,730,883 |
| Exercise of share options | 1,654,969 | 2,173,229 |
| | | |
| For diluted earnings per ordinary share | 46,547,410 | 46,904,112 |
| | | |
| | 2008 | 2007 |
| | £000 | £000 |
| | | |
| Final dividends paid in respect of prior year but not recognised as liabilities in that year | 850 | 559 |
| Interim dividends paid in respect of the current year | 450 | 269 |
| | | |
| Total dividend paid in the year | 1,300 | 828 |
| | | |
After the balance sheet date dividends of 2p per qualifying ordinary share (2007:1.9p) were proposed by the Directors. The dividends have not been provided for.
| Customer | Region | Town | Post Code |
| Sign It (Nottm) Ltd | Central England | Beeston, Nottingham | NG9 2AY |
| Graphic Results | Central England | Belper | DE56 1BA |
| East Birmingham Store | Central England | Birmingham | B26 3JR |
| South West Birmingham Store | Central England | Birmingham | B16 9RD |
| Birmingham Store | Central England | Birmingham | G3 8LZ |
| Artichoke Design Ltd | Central England | Birmingham | B18 6NN |
| Vicki Interiors Limited | Central England | Burntwood | WS7 3GL |
| Coventry Store | Central England | Coventry | CV2 4BE |
| ADECS Ltd | Central England | Coventry South | CV4 8HX |
| Image I.T. Limited | Central England | Daventry | NN11 8RY |
| Sportwise Marketing Ltd t/a Immediate Design | Central England | Derby | DE1 3QB |
| Synergy | Central England | Derby - Crewton | DE24 8SR |
| Multiprint & Embroidery Limited | Central England | Derby - Littleo | DE23 6FP |
| FSeven Design Solutions | Central England | Digbeth | B9 4AA |
| Kualo Limited | Central England | Gloucester | GL2 2AT |
| Hussellworks | Central England | Halesowen | B63 3HR |
| Clientel Systems Limited | Central England | Kibworth | LE8 0HS |
| Leicester Store | Central England | Leicester | NG1 6DQ |
| 4si Solutions Ltd | Central England | Leicester | LE3 0LE |
| For Colour Ltd | Central England | Lincoln | LN2 4US |
| Trident Design & Print | Central England | Lutterworth | LE17 4EE |
| Penz n Print Ltd | Central England | Market Rasen | LN8 3EN |
| For Colour | Central England | Newark, Nottingham | NG24 1LE |
| Northampton Store | Central England | Northampton | NN1 5QJ |
| Custard Creative | Central England | Northampton | NN3 6WL |
| Nottingham Store | Central England | Nottingham | L2 2HF |
| Oxford Store | Central England | Oxford | OX2 7HT |
| Peterborough Store | Central England | Peterborough | PE2 8AN |
| ITS-Ideas Taking Shape Ltd | Central England | Rugby | CV21 2SD |
| Mail Boxes Etc. | Central England | Shrewsbury | SY1 1HN |
| Boomerang Print Design Ltd | Central England | Solihull | B91 3RT |
| High Tide Media Limited | Central England | Sutton Coldfield | B72 1NE |
| Runtime Print Ltd | Central England | Telford | TF2 8AJ |
| Albry Printing Company Ltd | Central England | Wallingford | OX10 9DA |
| Wolverhampton Store | Central England | Wolverhampton | WV1 4BL |
| Red Hot Media | East | Lowestoft | NR33 0AA |
| Goldengate Productions | East | Suffolk | IP30 9QS |
| Keith Nolan Limited | Ireland | Athlone | EE1 1EE |
| Kwik Kopy | Ireland | Ballymena | BT43 6EB |
| Malik Bond | Ireland | Belfast - South | BT7 2JA |
| Twist Design | Ireland | County Donegal | EE1 1EE |
| Dublin Store | Ireland | Dublin | Dublin 2 |
| North Dublin Store | Ireland | Dublin | Dublin 7 |
| Trivium Limited | Ireland | Maynooth - Coun | EE1 1EE |
| Graphic Facilities | Ireland | Mullingar | EE1 1EE |
| Creative State Limited | Ireland | Naas - County K | EE1 1EE |
| Desktop | Ireland | Omagh | BT78 1DW |
| Tullow Manufacturing Limited | Ireland | Tullow | EE1 1EE |
| Thomas Hughes & Sons Ltd | Ireland | Wexford | EE1 1EE |
| Central London Store | London | Baker Street | BS1 3LZ |
| Alpha to Omega | London | Beckenham | BR3 3HX |
| Plug and Play Design | London | Bramley | GU6 8JJ |
| Shiver | London | Camden | NW1 0AG |
| Fireworks Design and Print | London | Catford | FK9 5GQ |
| DNA Creative | London | Clapham | SW11 1TH |
| City & Clerkenwell Store | London | Clerkenwell | EC1M 5QA |
| Print Express | London | Colindale | NW9 5DL |
| Last Print LLP | London | Docklands E16 | E14 0JY |
| Ealing Store | London | Ealing | W13 8SB |
| 0800 Promote Ltd | London | Finchley | N3 1TR |
| Creekside Press | London | Greenwich | SE10 9QX |
| Guildford Store | London | Guildford | GU2 4BE |
| Hampstead Store | London | Hampstead | NW1 6UY |
| Colour Division | London | Hampstead | NW6 1SD |
| Digipix Ilford | London | Ilford | IG1 4DU |
| Envisualise Ltd | London | Kingston | KT2 6LX |
| London Office Services | London | London | W1G 8JR |
| 1st Creative | London | London SE1 | SE1 3ER |
| Marmoset Media Ltd | London | London SW17 | SW17 7PJ |
| Expocentric Communication Ctrs | London | Mayfair | W1S 4LW |
| Endgold Ltd | London | Nottinghill | W11 3HT |
| Orpington Store | London | Orpington | BR6 0JY |
| Reading Store | London | Reading | RG1 4QA |
| Ditto Office Services Ltd | London | Sevenoaks | TN13 1AS |
| London Print Compamy | London | Shaftesbury Avenue | WC2H 8EB |
| DNA Solutions UK Limited | London | Slough | SL1 4JG |
| Toppers Print & Design Ltd | London | Stevenage | SG1 3HR |
| Cloudmire Limiter | London | Swiss Cottage | NW3 6JP |
| Kink Design | London | Thornton Heath | EC2A 3LT |
| Source Grafik Design | London | Thornton Heath | SE6 1TJ |
| Wernham Printers Ltd | London | Tottenham | N17 6QD |
| Printroomsoho Ltd | London | Wardour Street | W1F 0TS |
| Watford Store | London | Watford | WD17 1RA |
| Creographics | London | Wimbledon | SW19 8TY |
| Centrepoint Print | Midlands | Birmingham - Erdington | B23 6LR |
| Kaleidoscope Press Ltd | Midlands | Leamington Spa | CV33 9GX |
| Ozmedia Print Solutions | Midlands | Loughborough | LE11 5AA |
| Pewter Design | Midlands | Market Harborough | LE16 7DS |
| St Ives Quickprint Ltd. | Midlands | St Ives | PE27 3WS |
| Modus Print | Midlands | Worcester | WR1 1JZ |
| Astral Graphics | Midlands | Worksop | S81 8AP |
| Indigo Print & Design | North East | Alnwick | NE66 1HB |
| Documentshop.com limited | North East | Barnsley | S70 2HG |
| Smart Card International Limited | North East | Beverley | HU17 0TB |
| Fountains Associates Limited | North East | Bishop Auckland | DL14 7EL |
| Bradford Store | North East | Bradford | BD1 3BA |
| John Siddall (Printers) Ltd | North East | Cleckheaton | BD19 3JL |
| RT Design | North East | Consett | DH8 6BP |
| Total Graphics | North East | Darlington | TS18 3TQ |
| Doncaster Store | North East | Doncaster | DN1 1HT |
| Tigher Limited | North East | Durham | DH1 1RF |
| Washington Direct Mail | North East | Gateshead | NE11 0SH |
| Loyalty Matters Ltd | North East | Harrogate | HG3 2XA |
| Winny Limited | North East | Hartlepool | TS25 5TG |
| Pink Custard Design Ltd | North East | Hull | HU1 1PS |
| Ryedale Printing Works Ltd | North East | Kirbymoorside | YO62 6YB |
| Leeds Store | North East | Leeds | LS1 3DL |
| The Factory Partnership Ltd | North East | Leeds | LS12 2DS |
| Ideas Start Here Ltd | North East | Leeds | LS8 2HU |
| Middlesbrough Store | North East | Middlesbrough | TS1 1LY |
| Mix Marketing Ltd | North East | Mirfield | WF14 8AH |
| Newcastle Store | North East | Newcastle | B5 4JL |
| Direct Business Products | North East | Newcastle | NE12 9UP |
| Via Creative Consultants Ltd | North East | Redcar | TS10 5SH |
| Bluprint | North East | Rotheram | S60 2LZ |
| Desk Top Publishing Ltd | North East | Scunthorpe | DN15 6LJ |
| Sheffield Store | North East | Sheffield | S1 4GF |
| Runway 24 | North East | Sheffield - Hillsborough | S6 4GH |
| Eidos Design Limited | North East | Slaithwaite | HD7 5BQ |
| Marckell Business Solutions Ltd | North East | South Shields | NE33 1TL |
| Stuart Lockerbie T/A Maskerade. | North East | Sunderland | SR2 7PR |
| G3 Advertising | North East | Thirsk | Y07 1HL |
| Goweb Print Ltd | North East | Wakefield | WF2 9BL |
| Colour Box Design Company Ltd | North East | York | YO24 1AR |
| ER Design & Print Service Ltd | North West | Alsager | CW2 7AX |
| Ardwick - One21 Designs | North West | Ardwick | M12 6JH |
| Rhino Design | North West | Ashton-under-Lyne | OL6 6XJ |
| Gud Design Ltd | North West | Birkenhead - Ea | CH41 1EU |
| Granthams | North West | Blackpool | FY1 4PE |
| Print Hub Design | North West | Bolton | BL1 3QN |
| Digeridoo | North West | Bolton | BL7 9NY |
| Moorish Idol | North West | Bolton - South | BL3 5AB |
| Wild Thang | North West | Bootle | L20 8LQ |
| Fluidmedia.net Ltd | North West | Bury | BL9 0LL |
| Brightspark Design & Print | North West | Carlisle | CA2 7AJ |
| RAS Limited | North West | Chester | CH3 5AG |
| William Seabrook Associates Ltd | North West | Chorlton - Manchester | M21 8UP |
| Kingfisher Print | North West | Clayton-le-Moors | BB5 5JQ |
| Northstar Creative Design & Advertising LLP | North West | Colne | BB8 9BD |
| Mail Boxes Etc | North West | Didsbury | M20 6UG |
| ScissorsPaperStone | North West | Eccles | M30 8GH |
| First Impression Limited | North West | Glossop | SK13 8ER |
| Lancaster Store | North West | Lancaster | LA1 1XN |
| Liverpool Store | North West | Liverpool | NE1 4AE |
| Elite Invite Limited | North West | Liverpool | L22 4QD |
| RPG Print Ltd | North West | Liverpool West | L7 0ES |
| Plinkfizz Limited | North West | Longton | ST3 4HY |
| Infinity Creative | North West | Macclesfield | SK11 6HN |
| Copycat Print Ltd | North West | Maghull | L31 2HB |
| North Manchester Store | North West | Manchester | M4 5AG |
| Manchester Store | North West | Manchester | LE1 1LB |
| Alert 2 Media | North West | Manchester | M1 1DZ |
| Chilli Cactus Limited | North West | Manchester | SK9 1RA |
| The Agency Creative limited | North West | Manchester | M17 1DZ |
| Creation Publicity Ltd | North West | Manchester | M17 1DZ |
| Print Design Warehouse Ltd | North West | Marple | SK8 1DW |
| Red Fred Limited | North West | Nantwich | CW5 6PQ |
| SmartStudios | North West | North Manchester | M4 4DE |
| The Creative Hub (UK) Ltd | North West | Ormskirk - Live | L39 3AJ |
| Granthams | North West | Preston | PR1 2UQ |
| Daleprint | North West | Rochdale | OL16 2AW |
| Chris Thew Design & Print Limited | North West | Rossendale | BB4 8EQ |
| Hashem Media | North West | Sale | M33 6RH |
| The Graphics Department | North West | Salford | M3 6BF |
| Impressions Design & Print Ltd | North West | Sandbach - Ches | CW11 1DA |
| I Design | North West | Southport | PR9 0NS |
| Masterprint (NW) Ltd | North West | St Helens | WA10 1DH |
| Studio Three Ltd | North West | Stockport | SK2 6NG |
| Impact Digital | North West | Timperley | WA14 1PJ |
| The Hub | North West | Trafford Park | M17 1FG |
| AF Reprographic | North West | Tyldesley | M29 8DS |
| Warrington Store | North West | Warrington | WA1 1EN |
| Printel UK Ltd | North West | Widnes | WA8 9LG |
| Mooney Media Ltd | Northern Ireland | County Down | BT32 3QD |
| Go Fish Design & Print | Northern Ireland | Lisburn | BT28 1AG |
| Xpress Printing | Northern Ireland | Newtonabbey | BT36 4PU |
| Native Print | Noth East | Newcastle - Heaton | NE6 5HL |
| The Business Boutique UK Ltd | Scotland | Aberdeen | AB24 5BW |
| Steptoe Creative Limited | Scotland | Ayr - Scotland | EE1 1EE |
| J&J Cornfield T/A Printing.com | Scotland | Coatbridge | ML6 9AF |
| Dundee Store | Scotland | Dundee | M3 4EN |
| Edinburgh Store | Scotland | Edinburgh | S1 4GF |
| Elevate You Limited | Scotland | Edinburgh | EH11 4EP |
| Digisnaps Ltd | Scotland | Edinburgh | EH2 2PJ |
| Glasgow Store | Scotland | Glasgow | NW3 5HS |
| SPD Print Solutions Ltd | Scotland | Glasgow | G40 4DU |
| Triple 333 Ltd | Scotland | Glasgow - City | G4 0QR |
| J&J Cornfield Partnership | Scotland | Hamilton | ML3 6DS |
| Republique Limited | Scotland | Linlithgow | BN3 3LL |
| Delta Design Ltd | Scotland | Livingstone | EH54 8PT |
| Glasgow Print | Scotland | North Glasgow | G20 9AY |
| Creative Concept UK Ltd | Scotland | Paisley | PA1 1TX |
| South Glasgow Store | Scotland | South Glasgow | G5 9RR |
| Tangerine Industries Ltd | Scotland | Stirling | FK8 1JW |
| Brighton Store | South | Brighton | BN1 4JB |
| Talon Graphics | South | Brighton | CR7 8DD |
| Tudor Printers Limited | South | Worthing | BN11 1UY |
| Ashford Store | South East | Ashford | TN24 8UU |
| Cambridge Store | South East | Cambridge | CB3 0AX |
| Think IMG Ltd | South East | Canterbury | CT1 2NR |
| Studio Direct (Printing) Ltd | South East | Chelmsford | CM2 6JP |
| Inprint | South East | Colchester | CO1 1PB |
| TRS Graphics Ltd | South East | Croydon | CR0 1QR |
| Jellybean Graphics | South East | Croydon | CR9 6YJ |
| Dorking Print Solutions Ltd | South East | Dorking | RH4 2ES |
| Home Counties Graphics Ltd | South East | Dunstable | LU6 1SX |
| Accomplice Limited | South East | Hailsham | BN27 1AU |
| JBS Print & Design | South East | Leatherhead | KT22 0AN |
| Luton Store | South East | Luton | LU1 2PL |
| Clearmist Designs Limited | South East | Maidenhead | SL6 1NB |
| Colourwave Printers | South East | Maidstone | ME16 0JZ |
| Norwich Store | South East | Norwich | NR1 1PL |
| Graphics One Limited | South East | Norwich | NR7 0EQ |
| Colourwave | South East | Ramsgate | CT11 8NT |
| Felix Ltd | South East | Rochester | ME2 4HZ |
| Colour Creatives Limited | South East | Sidcup - Kent | DA14 6ES |
| Grow Marketing Limited | South East | Whitstable | CT3 4JH |
| Print Creative. | South West | Bath | BA1 2JB |
| Digillicious | South West | Bexhill | TN40 1JB |
| Bournemouth Store | South West | Bournemouth | BH11 8PN |
| Bristol Store | South West | Bristol | EH3 9LY |
| Imageglossy Ltd | South West | Christchurch | BH23 1QD |
| Exeter Store | South West | Exeter | EX4 3AJ |
| Paw Print Design | South West | Gosport | PO15 7HH |
| Wessex Direct Ltd | South West | Minehead | TA24 5BJ |
| Full Colour Store | South West | Newton Abbott | SW6 6SE |
| Plymouth Store | South West | Plymouth | PL4 0AU |
| Neil Cheesewright T/A Chalk and Cheese Design | South West | Ruislip | HA4 6HH |
| Southampton Store | South West | Southampton | SO15 2AE |
| Wessex Direct Ltd | South West | Taunton | TA2 6BB |
| Wessex MAlthouse Direct Ltd | South West | Torquay | TQ1 3AW |
| Printing South West | South West | Totnes | TQ9 5DW |
| Whitman Design & Print Limited | South West | Truro | TR1 2HE |
| Anneset Productions | South West | Weston-Super-Mare | BS23 3DE |
| Cardiff Store | Wales | Cardiff | CF5 1JF |
| Australian Welsh | Wales | Cardiff | CF14 3JP |
| Colourbox | Wales | Swansea | SA1 5TY |