Design Group Regulatory News (IGR)

26 Jun 2007 07:01

International Greetings PLC26 June 2007 26 June 2007 International Greetings plc ("International Greetings" or the "Company") Continued success in the US, Europe and Asia underpins international diversification strategy International Greetings PLC (AIM: IGR), the leading designer and manufacturer ofgreetings, stationery and licensed published products announces results for theyear to 31 March 2007. Financial highlights: • Year-on-year sales maintained at £197 million • 3% rise in pre-tax profits to £18.1 million* (2006: £17.6 million**) • Earnings per share up 5% to 29.5p* (2006: 28.0p**) • Recommended final dividend of 7.75p, bringing the total dividend for the year to 10p, an increase of 11% Operational highlights: • Strategy for international growth progressing well: • Non UK sales now account for 40% of turnover (2006: 38%) and expected to continue to increase • European turnover grew by 32% to £30.0 million (2006: £22.7 million) • IG Asia sales up 52% to $32 million (2006: $21 million) • Strategic acquisitions strengthen Group's product offering, and international distribution • Alligator Books, Anchor International and Eick Pack acquired during the period • Weltec, Artex and Pinwheel acquired post year-end • Seasonal UK operating divisions restructured to ensure they remain cost effective and efficient Commenting on the results, Nick Fisher, joint CEO said: "These results not onlyreflect a year of operational consolidation but also show clearly that ourstrategy to re-position International Greetings as a truly global business, witha diverse product range is progressing well. 40% of turnover is now derivedoutside of the UK, a figure that we expect to continue to increase. "We will continue to make acquisitions which provide us with new product ranges,new distribution channels and access to new geographical markets, whilst at thesame time ensuring that we can achieve the maximum possible growth from ourexisting businesses." For further information: International Greetings: 01707 630 630 Tavistock Communications: 020 7920 3150Nick Fisher, Joint Chief Executive Jeremy Carey / Rachel Drysdale * Adjusted to exclude exceptional costs of £1,252,000 (2006: £3,310,000), profiton disposal of fixed assets of £2,240,000 (2006: £1,838,000), and amortisationof goodwill of £1,458,000 (2006: £1,031,000) ** Restated following adoption of FRS20 Share based payments Chairman's Statement 2007 As stated in my interim announcement, our strategy for growth continues to focusupon international expansion, particularly across Europe, reducing our relianceon the UK market which has experienced a challenging trading climate and seenthe demise of a number of retailers during the past year. Against thisbackground, I am pleased to report a 3% rise in adjusted profits before tax* to£18.1m, on sales of £197m, with adjusted earnings per share* growing to 29.5p, a5% increase. Reflecting our continued confidence in our business and its future prospects, weare recommending a final dividend of 7.75p, making a total of 10p for the year,an increase of 11% on last year. This will be paid on 27th September 2007 toshareholders on the register at 7th September 2007. Sales outside the UK now account for 40% of the Group's turnover, up from 38%last year. We expect this trend to continue as we develop our internationalbusinesses. In particular, turnover of our European division grew by 32%, as aresult of acquisitions and a concerted sales effort in the region. In addition to the Alligator and Anchor International acquisitions announced inthe Interim Report, we also completed the acquisition of Eick Pack towards theyear end. Based in Germany, this business supplies gift wrap for in-store giftwrapping across Europe and we expect to increase our market share in this sectorin the future. Subsequent to the financial year end, we announced three furtheracquisitions - Weltec, Artex and Pinwheel. Weltec provides a step change in our photoframe business across Europe and willoperate through Anchor International based in Holland. Artex, a gift wrapbusiness located in Poland, gives us a manufacturing and distribution platformfrom which we can continue to grow our presence in the important emergingEastern European market. In the UK, our children's book division, Alligator,acquired the business of Pinwheel, a children's book publisher, complementingtheir existing portfolio of children's licensed activity products. This is my first full period as chairman. I am delighted with the strategicprogress the Group has made this year, and am confident that strong foundationshave been laid to ensure our future success. I welcome all our new employees, particularly those working in the companies weacquired this year, and thank all our staff for their commitment to the Groupand to serving the needs of our customers around the world. Keith James OBEChairman * adjusted to exclude exceptional costs of £1,252,000 (2006: £3,310,000), profiton disposal of fixed assets of £2,240,000 (2006: £1,838,000), and amortisationof goodwill of £1,458,000 (2006: £1,031,000) Chief Executive's Report The past year has been extremely active for all areas of the Group's business.Consistent with our stated strategy, acquisitions have been made that haveenabled us to both enter new geographical regions and strengthen our position inexisting ones. In addition, a number of operating divisions have beenrestructured and refocused to ensure all opportunities to grow organically aremaximised to their full potential. UK The UK market place, which historically formed the cornerstone of InternationalGreetings' business, has encountered some well documented difficulties in recentyears. We have experienced the closure of a number of retailers, difficulttrading conditions and intense pricing pressure. To combat this we have clearlyidentified those opportunities that offer us growth potential, and have put inplace a three point strategy which reduces our reliance on our traditionalprivate label seasonal business. We have reorganised our UK seasonal trading divisions into one business unitbased in South Wales; this new structure will reduce costs, streamline oursupply and logistic functions and simplify the buying process for our customers. We are expanding our proprietary range business by developing the trading brandsof Anker, Tom Smith, Giftmaker and Copywrite, with a focus on selling highervolumes of these branded ranges to a broader customer base throughout the UK. We will continue to diversify our business with a highly focused acquisitionprogramme, investing in businesses where we can add value and which willcomplement our existing operations. This is illustrated by last year'sacquisition of Alligator Books and our more recent purchase of PinwheelChildren's Books, which takes us into a new product category that utilises ourcore strengths of design, sourcing and distribution. Europe Mainland Europe has once again been a key growth region for the Group, achievinga 32% increase in turnover. The Hoomark division is targeted to manufacture and distribute greetingsproducts with Anchor International BV, now a wholly owned subsidiary,concentrating on selling photographic and stationery products throughout Europe. The acquisition of Weltec, with its associated brand of B+H, has made us a majorsupplier to the German photoframes market and we intend to develop this productcategory further in other European territories. Mass market licensed stationery ranges have been developed by Copywrite for theEuropean market and early sales indications have been very encouraging. The acquisition of Artex in Poland provides International Greetings with a giftwrap manufacturing base in Eastern Europe and, coupled with our investment inLatvia, we now feel we have the foundations in place to build a solid businessin the region. US Our marketing and product development strategy introduced last year to stratifythe market into entry level, mass market and premium ranges for our US retailcustomer base, has performed well. Our top end brands, marketed as premium product, feature innovative designs andmaterials and, in particular, the Pepperpot brand of stationery is carving aniche of its own in the department store and independent sectors. The mass market product offers the largest volume of retail distribution in theUS and we continue to add new customers both for proprietary Giftwrap Companyranges and private label brands. Our entry level product is being marketed through the recently formed Anker USAdivision, with goods initially being fulfilled direct to customers from IG Asia.This new division has proved to be very successful and we intend to launch acatalogue of standard products, mirroring the Anker UK collection, from March2008 for next year's season. Sales in the US now account for 23% of the Group's total turnover, and webelieve the US market place offers significant potential for future growth. Far East Last year's factory move in China and investment in a new sourcing and tradingoffice in Hong Kong have both yielded significant benefits to the Group. Directsales to customers around the globe from IG Asia now represent approximately 9%of Group turnover, a 50% increase over last year's 6%. In addition to the production of Christmas crackers, we have increased output ofproducts that require a high labour content in their manufacture, particularlygift bags, which are a growth product in the worldwide gift wrapping sector. Wehave also invested $3.7m, primarily in new printing and conversion machineryduring the past 12 months in order to obtain the benefits of lower costs throughvertical integration. We will continue to develop our activities in Asia, to meet the demands of ourcustomers around the world. Design and Licensing Product development and design still remains a vital part of our industry andits importance to our future development cannot be overstated. We now employover 120 people in the creative areas of our business and have recentlyintroduced an intranet based system to allow each trading division within theGroup, wherever geographically located, to share its intellectual assets withall Group companies. This Digital Asset Management System will allow us tominimise our design costs by maximising the potential of each design createdacross the global market-place. Licensed properties continue to feature heavily within our portfolio ofproducts, and we are delighted to have obtained merchandise rights for ranges ofproducts for the UK release this week of Shrek 3 and The Simpsons Movie in July. Conclusion We have now put in place a business strategy and operational structure todeliver consistent growth for the next three years. Both organic growth andacquisition opportunities have been identified in all the product categories andgeographical regions in which we operate. Our management teams and staff arefocused and motivated to achieve our corporate goals and we look forward to thefuture with confidence. Anders Hedlund and Nick FisherJoint Chief Executives26 June 2007 Finance Review 1 Group Performance Reported turnover for the year to 31st March 2007 amounted to £196.7m (2006:£196.6m). With an increasing proportion of our business being overseas, theGroup's results are affected by movements in exchange rates on the translationof the results of overseas subsidiaries, particularly in relation to the US$.Last year the results of US$ denominated subsidiaries were translated at $1.73compared with $1.88 this year. Excluding the effect of this, Group turnoverwould have shown an increase of 2%. Overseas sales of £77.7m (2006: £74.1m)accounted for 40% (2006: 38%) of the total, of which £45.1m (2006: £47.2m) wasin the US. Excluding the effect of exchange rates, US sales increased by 2%. IGAsia, our Hong Kong subsidiary, performed extremely well with direct sales tocustomers in the UK, Europe and US increasing by 52% to $33m, compared with $21mlast year. The gross profit margin percentage (excluding exceptional costs) increased from31.2% to 32.9% primarily due to a credit of £4.2m (2006: £1.3m) in relation tocompensation for gross profit on lost sales as a result of a fire at the Group'sSouth Wales print plant in 2005. Operating profit increased from £15.0m to£18.2m. Adjusted operating profit* increased from £19.3m to £20.9m, an increaseof 8%. Exceptional items during the year of £1.3m relate to a restructuring ofthe Group's UK operations in order to maintain competitiveness. These changesincluded the relocation of production operations overseas, the integration andrelocation of Copywrite's operations into Anker and the merging of theindividual UK Christmas giftwrap, cracker and card operations into one division. Net interest payable increased from £1.8m to £2.8m, primarily due to the cost ofacquisitions and increasing interest rates during the year. The profit on disposal of fixed assets of £2.2m arose on the sale of thefreehold interest in the Group's property in Duxford which was no longerrequired following the integration of Copywrite's operations into Anker. Netprofit before taxation increased by 17% to £17.7m, with adjusted profit beforetax* increasing 3% to £18.1m. Excluding the effect of exchange rates on theprofits of overseas subsidiaries referred to above, adjusted profit before taxwould have increased by 7%. 2 Earnings Per Share and Dividend Adjusted basic earnings per share* for the year ended 31st March 2007 were29.5p, an increase of 5% over last year. Basic earnings per share were 28.1p, anincrease of 7% over last year. The final dividend proposed for the year of 7.75p (2006: 7p) makes a totaldividend for the year of 10p, an increase of 11% and is covered 2.8 times bybasic earnings per share. * adjusted to exclude exceptional costs of £1,252,000 (2006: £3,310,000), profiton disposal of fixed assets of £2,240,000 (2006: £1,838,000), and amortisationof goodwill of £1,458,000 (2006: £1,031,000) 3 Balance Sheet and Cash Flow Net debt at 31st March 2007 amounted to £38.0m, compared to £10.7m last year. Cash paid in respect of acquisitions, including debt acquired with new acquisitions, accounted for £16.8m of this movement. This included £10.5m deferred consideration paid in relation to the acquisition of Anker International PLC in May 2005. Capital expenditure of £11.9m was £6m higher than the depreciation charge, due primarily to the £1.9m purchase of propertyin the US to facilitate future growth and a total of £1.8m invested in IG Asia's operations in China. Cash from the sale of the Group's property in Duxford, giving rise to the £2.2m profit on disposal on fixed assets during the year, was not received until after the year-end and is therefore not reflected in these figures. Shareholders' funds increased by £8.1m to £83.9m and with year-end gearing of45% and interest covered 6.6 times by operating profit, the Group's financialposition remains strong. 4 Treasury Operations The Board continues to assess and manage the risks associated with the treasuryfunction as our business develops. The Group's business has a strong seasonalfocus, resulting in large variations in working capital. As a result, the Boardconsiders that long term reduction of exposure to fluctuations in interest rateson working capital is unlikely to be economically viable. A significant proportion of the Group's purchases are denominated in US$. Theeffect of exchange rate fluctuations is reduced through a combination ofmeasures including hedging and forward exchange contracts. Consolidated profit and loss account for the year ended 31 March 2007 Continuing operations Excluding acquisitions Pre-exceptional Exceptional Acquisitions Total Total item item (Restated - see Note 1) 2007 2007 2007 2007 2006 Note £000 £000 £000 £000 £000 Group turnoverincluding shareof joint ventureturnover 185,344 - 11,757 197,101 198,139 Less: Share ofjoint venture turnover (383) - - (383) (1,585) ------------------------------------------------------------------Group turnover 2 184,961 - 11,757 196,718 196,554Cost of sales (123,814) (897) (8,148) (132,859) (135,121) ------------------------------------------------------------------Gross profit 61,147 (897) 3,609 63,859 61,433Distribution expenses (16,818) - (400) (17,218) (16,481) Administrativeexpenses (26,433) (355) (1,675) (28,463) (29,942) ------------------------------------------------------------------Operating profit 2 17,896 (1,252) 1,534 18,178 15,010 Share of operating profit of joint venture - - - - 7 ------------------------------------------------------------------ 17,896 (1,252) 1,534 18,178 15,017 Profit on disposal offixed assets 2,240 - - 2,240 1,838 Net interest payable (2,477) - (280) (2,757) (1,801) ------------------------------------------------------------------ Profit onordinaryactivities beforetaxation 2-3 17,659 (1,252) 1,254 17,661 15,054 ------------------------------------ Tax on profiton ordinaryactivities 4 (4,662) (3,106) ---------------------- Profit for thefinancial year 12,999 11,948 ---------------------- Earnings per share 7 Basic 28.1p 26.2pDiluted 27.7p 25.8p ====================== Consolidated statement of total recognisedgains and losses for the year ended 31 March 2007 2007 2006 (Restated see Note 1) £000 £000 Profit for the financial year 12,999 11,948Currency translation differences arising onforeign currency net investments (2,598) 914 ----------------------- Total recognised gains and lossesrelating to the financial year 10,401 12,862 ======= Prior year adjustment (see Notes 2(d)) 68 ------- Total gains and losses recognised since the lastannual report 10,469 ======= Consolidated balance sheet at 31 March 2007 Note 2007 2006 (Restated - see Note 1) £000 £000 £000 £000 Fixed assetsIntangible assets - goodwill 26,695 21,339Tangible assets 41,882 37,134Investments in joint venture- share of gross assets - 769- share of gross liabilities - (596) -------- -------- 68,577 58,646Current assetsStocks 48,577 40,008Debtors 41,283 29,931Investments - unquoted 20 65Cash at bank and in hand 12,990 11,825 -------- -------- 102,870 81,829 Creditors: amounts fallingdue within one year (79,903) (56,382) -------- -------- Net current assets 22,967 25,447 -------- -------- Total assets less current liabilities 91,544 84,093 Creditors: amountsfalling due after morethan one year (5,737) (6,352) Provisions for liabilitiesand charges (1,939) (1,950) -------- --------Net assets 83,868 75,791 ======== ========Capital and reservesCalled up share capital 2,317 2,308 Share premium account 2,515 2,386Potential issue ofshares 6(a) & (b) 2,235 1,052Other reserves 11,759 13,964Profit and loss account 65,042 56,081 -------- -------- Equity shareholders'funds 8 83,868 75,791 ======== ======== Consolidated cash flow statement for the year ended 31 March 2007 Note 2007 2006 £000 £000Net cash inflow from operating activities 9 10,889 2,706Returns on investments and servicingof finance 10 (2,419) (1,232)Taxation (3,024) (5,980)Capital expenditure 10 (11,838) 7,809Acquisitions and disposals 10 (16,776) (13,078)Equity dividends paid (4,282) (3,578) ------- ------- Cash outflow before financing (27,450) (13,353) Financing 10 (223) (630) ------- -------Decrease in cash in the year (27,673) (13,983) ======= ======= Reconciliation of net cash flow to movement in net (debt)/funds for the year ended 31 March 2007 Note 2007 2006 £000 £000 Decrease in cash in the year (27,673) (13,983)Cash (inflow)/outflow from debtand lease financing 11 (688) 462 ------- -------Change in net debt resulting from cash flows (28,361) (13,521)Loans acquired with subsidiary (173) -New finance leases (50) -Translation differences 11 1,315 (1,013) ------- -------Movement in net debt in the year (27,269) (14,534)Net (debt)/funds at beginning of year (10,744) 3,790 ------- -------Net debt at end of year 11 (38,013) (10,744) ======= ======= Notes 1. Basis of preparation The financial information set out above does not constitute the Company'sstatutory financial statements for the years ended 31 March 2007 or 2006.Statutory financial statements for 2006 have been delivered to the registrar ofcompanies, and those for 2007 will be delivered following the company's annualgeneral meeting. The auditors have reported on those accounts; their reportswere unqualified and did not contain statements under section 237(2) or (3) ofthe Companies Act 1985. The financial statements have been prepared in accordance with applicableaccounting standards and under the historical cost accounting rules. In these financial statements the following new standard has been adopted forthe first time: FRS 20 "Share-based payments". The accounting policy under this new standard isset out below together with an indication of the effects of its adoption. Share options are, in most cases, issued at market value at the date of grantand consideration is accounted for when the option is exercised. The fair valueof options granted and not yet vested is recognised as an employee expense witha corresponding increase in equity. The fair value is measured at grant date andspread over the period during which the employees become unconditionallyentitled to the options. The fair value of the options granted is measured usinga Black Scholes model, taking into account the terms and conditions upon whichthe options were granted. The amount recognised as an expense is adjusted toreflect the number of share options ultimately expected to vest based on thecompany's anticipated future staff turnover. The corresponding amounts in these financial statements are restated inaccordance with the new policy. The impact of the adoption of FRS 20 on theresults for the year and the preceding year is set out in note 2 (d). 2. Segmental analysis (a) Geographical area of operation UK, Europe USA Group & Far East 2007 2006 2007 2006 2007 2006 (restated - (restated - (restated - see Note 1) see Note 1) see Note 1) £000 £000 £000 £000 £000 £000 Turnover 171,500 167,344 25,218 29,210 196,718 196,554 ========================================================================== Operatingprofit beforeexceptional items 17,887 16,524 1,543 1,796 19,430 18,320 Exceptionalitems (see below) (1,252) (3,310) - - (1,252) (3,310) --------------------------------------------------------------------------Operatingprofit after exceptional items 16,635 13,214 1,543 1,796 18,178 15,010 Share ofoperatingprofit of joint venture - 7 - - - 7 -------------------------------------------------------------------------- 16,635 13,221 1,543 1,796 18,178 15,017 Profit ondisposal offixed assets 2,240 1,838 - - 2,240 1,838 Net interest (1,849) (1,108) (908) (693) (2,757) (1,801) --------------------------------------------------------------------------Profit onordinary activitiesbefore taxation 17,026 13,951 635 1,103 17,661 15,054 ==========================================================================Net assets (restated - note 1) 76,783 68,406 7,085 7,385 83,868 75,791 ========================================================================== The above results relate entirely to continuing operations. (b) Exceptional items 2007 2006 £000 £000 Restructuring costs (see (i) below) 1,252 2,906Other (see (ii) below) - 404 ------------------ 1,252 3,310 ================== (i) During the year ended 31st March 2007 the Group incurred a number of costsassociated with the ongoing restructuring changes that commenced in the previous year and are being undertaken in order to maintain competitiveness. These consisted of (a) the relocation of certain UK production overseas, (b) the relocation and integration of the Copywrite Designs Ltd stationery division into Anker's operations and (c) the reorganisation of the individual UK Christmas giftwrap, cracker and cards operations into one division. The costs of these restructuring changes, primarily redundancy and machine relocation costs amounted to £1,252,000 (2006: £2,906,000). (ii) These represented one-off product safety recall and rectification costs incurred in connection with one of the Group's products. (c) Geographical analysis of turnover by destination 2007 2006 £000 £000 UK 119,043 122,443USA 45,140 47,191Europe 29,971 22,665Rest of world 2,564 4,255 -------------------- 196,718 196,554 ==================== (d) Share based payments The Company has adopted FRS20 for the first time in this period and accordinglythe operating profit is stated after charging £244,000 for the cost of shareoptions. The operating profit for the 12 months to 31st March 2006 has beenrestated to include a charge of £423,000 in respect of this cost with acorresponding reduction of £40,000 in the tax charge as a result of recognisingthe associated deferred tax asset. The only impact on the net assets as at 31stMarch 2006 relates to the deferred tax asset element and results in an increasein prior year net assets of £68,000. 3. Profit on ordinary activities before taxation 2007 2006 £000 £000Profit on ordinary activities before taxation is stated after charging/(crediting) Hire of plant and machinery - rentals payableunder operating leases 302 410Hire of other assets - operating leases 1,487 1,249Release of deferred grant income (823) (498)Depreciation - owned 5,641 5,469 - leased 235 276Amortisation of goodwill 1,458 1,031 =================== During the year payments were made to the groupauditor, KPMG Audit Plc as follows: 2007 2006 £000 £000Audit of these financial statements 39 36 Amounts receivable by the auditors and theirassociates in respect of: Audit of financial statements of subsidiariespursuant to legislation 95 80 Other services relating to taxation 76 39Services relating to corporate finance transactionsentered into or proposed to be entered into by or onbehalf of the Company or the Company's subsidiaries 24 64All other services (47) 158 The credit in 2007 for all other services relates to charges for work undertakenin 2006 in connection with the relocation of the group's Chinese factory. 4. Taxation 2007 2006 (Restated - see Note 1) £000 £000 £000 £000Current taxUK corporation tax on profits of the year 2,271 2,885 Adjustments in respect ofprevious periods (240) 22 -------- -------- 2,031 2,907Foreign taxOn profits of the year 1,591 1,369Adjustments in respect ofprevious periods 65 14 -------- -------- 1,656 1,383 --------- --------- Total current tax 3,687 4,290 Deferred taxationOrigination and reversal oftiming differences 882 (1,271)Adjustments in respect ofprevious periods 93 87 -------- --------Total deferred tax 975 (1,184) --------- ---------Tax on profits onordinary activities 4,662 3,106 ========= ========= 5. Dividends paid 2007 2006 £000 £000 Final for year ended 31st March 2006- 7.00p per share (2005: 5.75p) 3,240 2,652 Interim for year ended 31st March 2007 - 2.25p per share (2006: 2p) 1,042 926 ------------------Dividends paid 4,282 3,578 ================== 6. Acquisitions (a) On 19th November 2003, the Group acquired 100% of the issued share capital of Hoomark Gift-Wrap Partners BV. The purchase agreement provided for futurepayments of deferred consideration, based on Hoomark's profits for the 3 yearsended March 2007. At 31st March 2006, the future consideration payable wasestimated at £1,052,000, of which up to 100% was payable by the issuance of newordinary shares at the company's option. During the year ended 31st March 2007,£508,000 of this amount was paid in cash. Based on Hoomark's results for theyear ended 31st March 2007, the estimated future consideration has been increased by £83,000 less £35,000 accounted for by exchange differences. Up to100% of the total unpaid consideration of £592,000 at 31st March 2007 may be payable by the issue of new ordinary shares, at the company's option. (b) On 6th April 2006 the Group acquired 100% of the issued share capital of Alligator Books Limited, a publisher and distributor of children's books and stationery. Initial consideration of £2.569m (including costs) was paid, £2.319m in cash and £0.25m by the issue of 62,703 new ordinary shares. Estimated additional consideration of £3.66m is payable, based on Alligator's results for the year ended 31st March 2007. Up to £1.643m of the additional consideration of £3.66m is payable by the issue of new ordinary shares, at the company's option. The book value and provisional fair value of assets acquired was as follows: £000Intangible assets 3Tangible assets 52Stocks 1,375Debtors 1,569Cash 68Bank overdraft (1,839)Creditors (1,004) --------- 224Goodwill (estimated useful life of 20 years) 6,005 ---------Total Consideration 6,229 ========= Audited accounts of Alligator Books Limited for the eleven months ended 31st March 2006 reflected turnover of £5.7m, operating profit of £0.5m and interest payable of £0.1m, resulting in a profit before tax of £0.4m. (c) On 8th July 2006, the Group acquired the remaining 50% shareholding not previously owned in the holding company (Leonard Henry Holdings BV) of the Group's Dutch joint venture, Anchor International BV. Consideration of €1.26m was paid, €1m in cash and €0.26m by the issue of 44,692 new ordinary shares. The book value and provisional fair value of assets acquired was as follows: £000Tangible assets 12Stock 1054Debtors 731Cash 75Bank Overdraft (903)Creditors (623) --------- 346Less 50% share previously owned (173) ---------Net share of assets acquired 173Goodwill (estimated useful life of 20 years) 726 ---------Total consideration 899 ========= Audited accounts were not previously prepared by Leonard Henry Holdings BV.Unaudited accounts for the 12 months ended 31st December 2005 reflect turnoverof €4.8m, operating profit of €0.065m and net interest payable of €0.049mresulting in a profit before tax of €0.016m. (d) On 23rd January 2007, the Group acquired 100% of the issued share capitalof Eick Pack Werner Eick GmbH & Co ("Eick Pack"), a manufacturer of giftwrap counter rolls, based in Germany. Initial consideration of €1 was paid for the shares. The share purchase agreement also provided for the potential repayment of outstanding loans of €0.512m made by the previous shareholders to Eick Pack.€0.256m was repaid on completion, with the balance of €0.256m repayable, dependant on Eick Pack's profits for the years ended 31st March 2008 to 2010. The book value and provisional fair values of assets acquired was as follows: Book Provisional Provisional fair Value fair value value at date of adjustments acquisition £000 £000 £000 Tangible assets 29 - 29Stock 377 (38) 339Debtors 205 - 205Cash 19 - 19Bank overdraft (115) - (115)Creditors (490) - (490) --------------------------------------- 25 (38) (13) ---------------------Goodwill (estimated usefullife of 20yrs) 13 ----------------Consideration - ================ Audited accounts were not previously prepared by Eick Pack. Unaudited accountsfor the 12 months ended 31st December 2006 reflect turnover of €2.6m, operatingprofit of €0.01m and interest payable of €0.05m resulting in a loss before taxof €0.04m. 7. Earnings per share 2007 2006 (Restated see Note 1)Adjusted basic earnings per share excludingexceptional items, profit on disposal offixed assets and goodwill 29.5p 28.0pLoss per share on goodwill (3.1p) (2.2p)Loss per share on exceptional items (1.9p) (5.1p)Earnings per share on profit on disposal of fixed assets 3.6p 5.5p --------------------Basic earnings per share 28.1p 26.2p ====================Diluted earnings per share 27.7p 25.8p ==================== The basic earnings per share is based on the earnings of £12,999,000 (2006:£11,948,000) and the weighted average number of ordinary shares in issue of46,278,695 (2006: 45,536,856). The calculation of diluted earnings per share isbased on 46,998,106 (2006: 46,304,602) ordinary shares. The difference of719,411 (2006: 559,291) represents the dilutive effect of outstanding employeeshare options which has been calculated in accordance with FRS 22. Adjusted basic earnings per share excluding exceptional items, profit ondisposal of fixed assets and goodwill is calculated after adjusting forexceptional items of £1,252,000 (2006: £3,310,000), the profit on disposal offixed assets of £2,240,000 (2006: £1,838,000), amortisation of goodwill of£1,458,000 (2006: £1,031,000), and the tax attributable to these items of£192,000 (2006: tax relief of £1,691,000). 8. Reconciliation of movements in shareholders' funds 2007 2006 (Restated - see Note 1) £000 £000 Profit for the financial year 12,999 11,948Dividends paid in the year (4,282) (3,578) ---------------------- Retained profit for the financial year 8,717 8,370 Other recognised gains and losses relatingto the year (net) (2,598) 914 New share capital subscribed 531 12,879Potential issue of shares (note 6(a) and (b)) 1,183 126Purchase of own shares - (538)Share based payments 244 423 ----------------------Net addition to shareholders' funds 8,077 22,174Opening shareholders' funds as previously reported 75,723 53,589 Prior year adjustment - share based payments 68 28 ----------------------Closing shareholders' funds 83,868 75,791 ====================== 9. Reconciliation of operating profit to net cash inflow from operatingactivities 2007 2006 (Restated - see Note 1) £000 £000 Operating profit 18,178 15,010Depreciation charge 5,876 5,745(Increase) in stocks (7,521) (9,650)(Increase) in debtors (6,917) (5,715)Increase/(decrease) in creditors 1,403 (2,833)Deferred income (1,227) (632)Goodwill amortisation 1,458 1,031Utilisation of provision (605) (673)Charge for share based payments 244 423 ----------------------Net cash inflow from operating activities 10,889 2,706 ====================== 10. Gross cash flows Cash inflow/(outflow) 2007 2006 £000 £000Returns on investment and servicing of financeInterest paid (2,394) (1,668)Interest received - 455Interest element of finance lease repayments (25) (19) ---------------------- Net cash (outflow) for returns on investment andservicing of finance (2,419) (1,232) ====================== Capital expenditurePurchase of tangible fixed assets (11,933) (11,225)Disposal of tangible fixed assets 95 19,034 ----------------------Net cash (outflow)/inflow from capital expenditure (11,838) 7,809 ====================== Acquisitions and disposalsAcquisition of subsidiaries (14,081) (13,047)Net overdraft acquired with subsidiary (2,695) (31) ----------------------Net cash (outflow) for acquisitions and disposals (16,776) (13,078) ====================== FinancingNew shares issued 101 379Purchase of own shares - (538)Repayment of amounts borrowed (89) (99)Capital element of finance lease payments (280) (363)Sale/(purchase) of investments 45 (9) ----------------------Net cash (outflow) from financing (223) (630) ====================== 11. Analysis of changes in net (debt)/funds At 1 Cash Exchange Acquisition of Inception of Other At 31 March April flow movement subsidiary new finance changes 2007 2006 leases and loans £000 £000 £000 £000 £000 £000 £000 Cash atbank andin hand 11,825 1,746 (743) 162 - - 12,990Overdrafts (20,850) (26,724) 1,874 (2,857) - - (48,557) ------------------------------------------------------------------------------------------------ (9,025) (24,978) 1,131 (2,695) - - (35,567) Debt dueafter oneyear (1,147) - 139 (173) (973) 94 (2,060)Debt duewithin one year (101) 89 12 - (84) (94) (178)Finance leases (471) 280 33 - (50) - (208) ------------------------------------------------------------------------------------------------ (1,719) 369 184 (173) (1,107) - (2,446) ------------------------------------------------------------------------------------------------Total net(debt)/funds (10,744) (24,609) 1,315 (2,868) (1,107) - (38,013) ================================================================================================ This information is provided by RNS The company news service from the London Stock Exchange