Design Group Regulatory News (IGR)

13 Dec 2006 07:01

International Greetings PLC13 December 2006 13 December 2006 INTERNATIONAL GREETINGS PLC ("International Greetings" or "the Group") International growth continues to strengthen performance International Greetings PLC (AIM:IGR), the global designer and manufacturer ofgreetings products, film and television character based licensed stationery,books and gifts, today announces interim results for the six months ended 30September 2006. Financial highlights: • Turnover for the period was £85.1m (2005: £83.8m) • Operating profit of £6.2m (2005: £6.5m**) • Interest payable during the period increased to £1m (2005: £0.7m) • Profit before tax of £5.2m (2005: £5.8m**) • Adjusted *profit before tax amounted to £6.2m (2005: £6.5m**) • Basic earnings per share for the period were 8.2p (2005: 9.3p**) • Adjusted *earnings per share were 10.1p (2005: 10.6p**) • Interim dividend increased 12.5% to 2.25p per share reflecting the Board's continued confidence in the Group. Operational highlights: • Acquisitions of Alligator Books and the remaining 50% shareholding in the Group's Dutch joint venture, Anchor International, performing well and providing strong potential for future growth • Continued growth in European sales underlined by 20% increase at Hoomark • Focus on developing business in the mass market retail sector in Europe following the integration of Anchor International • Full season of manufacturing in China with all orders on time and within budget • New distribution channel planned for the US, offering a complete range of greetings and stationery products to mid-size retail groups • Licensed range of Christmas products launched for the recently released Warner Bros film "Happy Feet" • Licences signed for "The Simpsons Movie", "Spider-Man 3", "Shrek 3" and "Pirates of the Caribbean 3". Commenting on the results, Nick Fisher, Joint Chief Executive, said: "Whilst weoperate in the highly competitive UK retail sector and are not immune to itschallenges, we have completed the majority of this season's deliveries to ourcustomers. Internationally, we have achieved our targets both in terms ofincreased sales and new market opportunities in Europe and the US, and believewe have put in place a strong foundation for future growth. "As the only listed company in our sector in Europe, we have reinforced ourposition as an industry consolidator and we continue to identify suitableacquisitions in all our geographic areas of operation. This is an important partof our future growth strategy." For further information: Nick Fisher, Joint Chief Executive, International Greetings: 01707 630 630Richard Sunderland/Rachel Drysdale, Tavistock Communications: 020 7920 3150 * figure excludes amortisation of goodwill of £669,000 (6 months to 30 September2005: £520,000, 12 months to 31 March 2006: £1,031,000), exceptional item of£304,000 (6 months to 30 September 2005: £121,000, 12 months to 31 March 2006:£3,310,000) and profit on disposal of fixed assets of £nil (6 months to 30September 2005: £nil, 12 months to 31 March 2006: £1,838,000). ** figure restated following adoption of FRS20 (Share based payments) CHAIRMAN'S STATEMENT 2006 I am pleased to announce the interim results for the six months to 30 September2006, this being the first results announcement since I became Chairmanfollowing this year's AGM. During the period we have seen a number of excitingdevelopments within the Group, particularly on an international level. We haveseen impressive sales growth in Europe, bedded down two acquisitions, developedfurther our US strategy and completed the first full season of production at ourfactory in China. As we have indicated in previous years, the seasonality of the Group's businessmeans that the first six month figures are not a reliable indicator of the fullyear figures, as turnover during the months of September and October, whichstraddle the half-year end, accounts for just over a third of the Group's entireannual turnover. As a result, the interim results are extremely sensitive to thespecific timing of deliveries to our customers. Turnover for the period was £85.1m (2005: £83.8m), with operating profit of£6.2m (2005: £6.5m**). Net interest payable during the period increased to £1.0mfrom £0.7m last year, resulting in profit before tax of £5.2m (2005: £5.8m**).Adjusted *profit before tax amounted to £6.2m (2005: £6.5m**). Basic earningsper share for the period were 8.2p (2005: 9.3p**), whilst adjusted *earnings pershare were 10.1p (2005: 10.6p**) The above figures include turnover of £4.8m and profit before tax of £0.5mattributable to the acquisitions of Alligator Books and the remaining 50%shareholding not previously owned in the Group's Dutch joint venture, AnchorInternational, which were acquired in April and July respectively this year.Both of these acquisitions have performed well and met our expectations withregard to turnover and profit during the period. The integration of bothbusinesses into our existing operational structure has proceeded smoothly andthe potential for future growth opportunities is excellent. European sales continue to grow impressively, with a 20% like-for-like increasein turnover of our Hoomark division. We are concentrating on developing ourEuropean business in the mass market retail sector, where we see considerablescope for future growth. The integration of Anchor International has enabled usto create a European stationery and gift division, which will play an importantpart in our plans for further expansion in Europe. I am pleased to report that all orders in our new factory in China werecompleted on time and within budget and we continue to look for opportunities tofurther expand production in this facility. In the US, in addition to supplying the mass market and independent retailsectors, we are planning to develop a new distribution channel, replicating theAnker business model in the UK which will offer a complete range of greetingsand stationery products to mid-size retail groups. Design and licensed merchandise, as always, play an important role in ourbusiness. We have launched licensed ranges of Christmas products for therecently released Warner Bros film "Happy Feet", and have signed licences for"The Simpsons Movie", "Spider-Man 3", "Shrek 3" and "Pirates of the Caribbean3", all due to be released during 2007. Current TradingThe UK retail sector is operating in a highly competitive business climate. Inaddition, consumers are carrying out their Christmas shopping later, seeking tobenefit from intense competition between the retailers. Although we havecompleted the majority of this season's deliveries to our customers, we are notimmune from this challenging retail climate. As the only listed company in our sector in Europe, we have reinforced ourposition as an industry consolidator. Having successfully integrated twobusinesses in the first half of the year, we continue to look for suitablebusinesses to acquire in all the geographic areas in which we operate. This isan important part of our future growth strategy. At the same time we remainclearly focused on maximising sales opportunities in all our existing businessesand markets, particularly Europe and the US, and are currently working ondesigns and product ranges for Christmas 2007 for all our major UK retailcustomers. Reflecting our confidence in the outcome for the full year and our future plansfor growth, we are proposing to pay an interim dividend of 2.25p a share, anincrease of 12.5% over last year. The dividend will be paid on 25 January 2007to all shareholders on the register on 22 December 2006. On a personal note, I am delighted to have been appointed Chairman ofInternational Greetings and on behalf of the Board would like to thank JohnElfed Jones for the invaluable contribution he has made during his 10 yeartenure as Chairman. John remains on the Board as a non-executive Director, so wewill continue to benefit from his considerable experience and expertise. Keith James OBEChairman * figure excludes amortisation of goodwill of £669,000 (6 months to 30 September2005: £520,000, 12 months to 31 March 2006: £1,031,000), exceptional item of£304,000 (6 months to 30 September 2005: £121,000, 12 months to 31 March 2006:£3,310,000) and profit on disposal of fixed assets of £nil (6 months to 30September 2005: £nil, 12 months to 31 March 2006: £1,838,000). ** figure restated following adoption of FRS20 (Share based payments) International Greetings PLC Interim Report 2006Consolidated profit and loss account for the six monthsto 30 September 2006 Note Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30 Sept 2006 30 Sept 2005 31 Mar 2006 (restated (restated -see note 1) -see note 1) £000 £000 £000 Continuing Operations Acquisitions Total Turnover 2 80,271 4,822 85,093 83,771 198,139--------------------------------------------------------------------------------------------------------- Operating profit before exceptional item 2 5,906 567 6,473 6,615 18,320 Exceptional item 4 (304) - (304) (121) (3,310)---------------------------------------------------------------------------------------------------------Operating profit 5,602 567 6,169 6,494 15,010 Share of operating profit ofjoint venture - - - - 7--------------------------------------------------------------------------------------------------------- 6,494 15,017 Profit on disposal of fixed assets - - - - 1,838Net interest payable (863) (95) (958) (670) (1,801)---------------------------------------------------------------------------------------------------------Profit before taxation 4,739 472 5,211 5,824 15,054Taxation 6 (1,408) (1,637) (3,106)---------------------------------------------------------------------------------------------------------Profit for the period 3,803 4,187 11,948--------------------------------------------------------------------------------------------------------- Earnings per share 5Basic 8.2p 9.3p 26.2pDiluted 8.1p 9.1p 25.8p--------------------------------------------------------------------------------------------------------- Statement of recognised gains and lossesfor the six months to 30 September 2006 Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30 Sept 2006 30 Sept 2005 31 Mar 2006 (restated- (restated- see note 1) see note 1) £000 £000 £000Profit for the period 3,803 4,187 11,948Currency translation differencesarising on foreign currency net (1,512) 703 914investmentsShare based payments 112 199 423--------------------------------------------------------------------------------------------------Total recognised gains and losses relatingto the period 2,403 5,089 13,285-------------------------------------------------------------------------------------------------- International Greetings PLC Interim Report 2006Consolidated balance sheet at 30 September 2006 Unaudited Unaudited Audited 30 Sept 2006 30 Sept 2005 31 Mar 2006 (restated- (restated- see note 1) see note 1) Note £000 £000 £000 Fixed assetsIntangible assets - goodwill 25,422 22,318 21,339Tangible assets 40,017 46,381 37,134Investments - 170 173-------------------------------------------------------------------------------------------------- 65,439 68,869 58,646 Current assetsStocks 62,254 59,605 40,008Debtors 75,460 68,045 29,863Investments 15 58 65Cash at bank and in hand 10 3 11,825-------------------------------------------------------------------------------------------------- 137,739 127,711 81,761 Creditors: amounts falling due withinone year (119,053) (120,991) (56,382)-------------------------------------------------------------------------------------------------- Net current assets 18,686 6,720 25,379 Total assets less current liabilities 84,125 75,589 84,025 Creditors: amounts falling due aftermore than one year (7,155) (5,467) (6,352) Provisions for liabilities and charges (1,548) (1,781) (1,882) --------------------------------------------------------------------------------------------------Net assets 75,422 68,341 75,791-------------------------------------------------------------------------------------------------- Capital and reservesCalled up share capital 2,314 2,306 2,308Share premium account 2,455 15,079 2,386Potential issue of shares 1,052 672 1,052Other reserves 12,845 724 13,964Profit and loss account 56,756 49,560 56,081--------------------------------------------------------------------------------------------------Equity shareholders' funds 7 75,422 68,341 75,791-------------------------------------------------------------------------------------------------- International Greetings PLC Interim Report 2006Consolidated cash flow statementfor the six months to 30 September 2006 Unaudited Unaudited Audited 6 months to 6 months to 12 Months 30 Sept 2006 30 Sept 2005 to 31 Mar 2006 Note £000 £000 £000 Net cash (outflow)/inflow fromoperating activities 8 (40,073) (47,311) 2,706Returns on investments and servicingof finance 9 (1,020) (483) (1,232)Taxation (703) (1,642) (5,980)Capital expenditure 9 (6,610) (4,145) 7,809Acquisitions and disposals 9 (16,372) (13,145) (13,078)Equity dividends paid (3,240) (2,652) (3,578)---------------------------------------------------------------------------------------------------Cash (outflow) before financing (68,018) (69,378) (13,353)Financing 9 973 (76) (630)---------------------------------------------------------------------------------------------------(Decrease) in cash (67,045) (69,454) (13,983)--------------------------------------------------------------------------------------------------- Reconciliation of net cash flow to movement in net (debt)/fundsfor the six months to 30 September 2006 Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30 Sept 2006 30 Sept 2005 31 Mar 2006 £000 £000 £000 (Decrease) in cash in the period (67,045) (69,454) (13,983) Cash (outflow)/inflow from debt and lease financing (935) 117 462-------------------------------------------------------------------------------------------------- Change in net (debt) resulting from cash flows (67,980) (69,337) (13,521) Translation differences 892 (564) (1,013)--------------------------------------------------------------------------------------------------Movement in net (debt) in the period (67,088) (69,901) (14,534) Net (debt)/funds at beginning of period (10,744) 3,790 3,790--------------------------------------------------------------------------------------------------Net (debt) at end of period (77,832) (66,111) (10,744)-------------------------------------------------------------------------------------------------- International Greetings PLC Interim report 2006Notes: 1. Basis of preparationThe financial information contained in this interim report does not constitutestatutory accounts as defined in Section 240 of the Companies Act 1985 and isunaudited. The comparative figures for the year ended 31 March 2006 are an abridged versionof the published accounts and are not the company's statutory accounts for thatfinancial year. Those accounts have been reported on without qualification bythe auditors, and without any statement under Section 237 (2) or (3) of theCompanies Act 1985, and have been delivered to the Registrar of Companies. The interim statement has been prepared under the same accounting policies asthose used for the financial statements for the year ended 31 March 2006, withthe exception of share options which are now accounted for under FRS20 (Sharebased payments) -see note 3. The comparative figures for the 6 months ended 30 September 2005 and the year ended 31 March 2006 have been restated toreflect this change where appropriate. 2. Acquisitions(a) On 6 April 2006, the Group acquired 100% of the issued share capital ofAlligator Books Limited, a publisher and distributor of children's books andstationery. An initial consideration of £2.5m was paid, £2.25m in cash and £0.25mby the issue of 62,703 new ordinary shares. Further payments may become payable,depending on profitability for the year ended 31 March 2007, in a mixture ofcash and shares. During the period from 7 April 2006 to 30 September 2006, theGroup's results include turnover of £3.5m, interest payable (including intereston cash consideration) of £0.1m and profit before tax of £0.4m attributable toAlligator. (b) On 8 July 2006, the Group acquired the remaining 50% shareholding notpreviously owned in the holding company (Leonard Henry Holdings BV) of theGroup's Dutch joint venture, Anchor International BV. Consideration of €1.26mwas paid, €1m in cash and €0.26m by the issue of 44,692 new ordinary shares. During the period from 9 July 2006 to 30 September 2006, the Group's resultsinclude turnover of £1.3m, interest payable (including interest on cashconsideration) of £nil and profit before tax of £0.1m attributable to AnchorInternational BV. 3. Share based paymentsThe company has adopted FRS20 for the first time in this period and accordingly,the period's operating profit is stated after charging £112,000 for the cost ofshare options. The operating profits for the 6 months to 30 September 2005 andthe 12 months to 31 March 2006 have been restated to include charges of £199,000and £423,000 respectively, and net assets as at 30 September 2005 and 31 March2006 have been increased to reflect the tax impact of this change by £107,000and £68,000 respectively. 4. Exceptional ItemThe exceptional item of £304,000 during the six months to 30 September 2006represents the costs incurred in merging the sales functions for the UK giftwrap, Christmas cracker and card divisions. The exceptional item of £121,000 during the six months to 30 September 2005represented the costs associated with the transfer of manufacturing of greetingscards and tags from Hatfield to a new facility in Latvia. The exceptional items of £3,310,000 during the 12 months to 31 March 2006represented £2,906,000 of costs incurred in restructuring the group's UKoperations and a one-off product safety recall and rectification cost of£404,000. 5. Earnings per share Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30 Sept 2006 30 Sept 2005 31 Mar 2006 (restated- (restated- see note 1) see note 1) Adjusted basic earnings pershare excluding exceptionalitems, profit on disposal offixed assets andamortisation of goodwill 10.1p 10.6p 28.0p Loss per share on exceptional item (0.5p) (0.2p) (5.1p) Earnings per share on profiton disposal of fixed assets - - 5.5pLoss per share on goodwill (1.4p) (1.1p) (2.2p)-------------------------------------------------------------------------------------Basic earnings per share 8.2p 9.3p 26.2p-------------------------------------------------------------------------------------Diluted earnings per share 8.1p 9.1p 25.8p------------------------------------------------------------------------------------- The calculation of basic earnings per share is based on 46,257,862 (6 months to30 September 2005: 45,002,232, 12 months to 31 March 2006: 45,536,856) ordinaryshares being the average number of shares in issue during the period. Thecalculation of diluted earnings per share is based on 47,003,239 (6 months to 30September 2005: 45,822,342, 12 months to 31 March 2006: 46,304,602) ordinaryshares. The difference of 745,377 (6 months to 30 September 2005: 820,110, 12months to 31 March 2006: 767,746) represents the dilutive effect of outstandingemployee share options which have been calculated in accordance with FRS 14. Adjusted basic earnings per share excluding exceptional items, profit ondisposal of fixed assets and amortisation of goodwill is calculated afteradjusting for the exceptional item of £304,000 (6 months to 30 September 2005:£121,000, 12 months to 31 March 2006: £3,310,000), the profit on disposal offixed assets of £nil (6 months to 30 September 2005: £nil, 12 months to 31 March2006: £1,838,000), amortisation of goodwill of £669,000 (6 months to 30September 2005: £520,000, 12 months to 31 March 2006: £1,031,000) and tax reliefattributable to these items of £113,000 (6 months to 30 September 2005: £60,000,12 months to 31 March 2006: £1,691,000). 7. Reconciliation of movement in shareholders' funds Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30 Sept 2006 30 Sept 2005 31 Mar 2006 (restated- (restated-see see note 1) note 1) £000 £000 £000 Profit for the period 3,803 4,187 11,948Dividend (3,240) (2,652) (3,578)-------------------------------------------------------------------------------------------------- 563 1,535 8,370 Currency translation differencesarising on foreign currency net investments (1,512) 703 914Share based payments 112 199 423New share capital subscribed 468 12,541 12,879Potential issue of shares - (254) 126Purchase of own shares - - (538)--------------------------------------------------------------------------------------------------Net (reduction in)/addition to shareholders' funds (369) 14,724 22,174Opening shareholders' funds 75,791 53,617 53,617-------------------------------------------------------------------------------------------------Closing shareholders' funds 75,422 68,341 75,791------------------------------------------------------------------------------------------------- 8. Reconciliation of operating profit to net cash (outflow)/inflow from operating activities Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30 Sept 2006 30 Sept 2005 31 Mar 2006 (restated- (restated- see note 1) see note 1) £000 £000 £000 Operating profit before exceptional item 6,473 6,615 18,320Exceptional item (304) (121) (3,310)Depreciation charge 3,255 2,592 5,745FRS 20 charge 112 199 423(Increase) in stocks (20,802) (29,500) (9,650)(Increase) in debtors (44,131) (44,241) (5,715)Increase/(decrease) in creditors 15,512 17,087 (2,833)Deferred income (455) (193) (632)Goodwill amortisation 669 520 1,031Utilisation of provisions (402) (269) (673)-----------------------------------------------------------------------------------------------Net cash (outflow)/inflow from operating activities (40,073) (47,311) 2,706---------------------------------------------------------------------------------------------- 9. Gross Cash Flow Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30 Sept 2006 30 Sept 2005 31 Mar 2006 £000 £000 £000 Returns on investment and servicing of financeNet interest paid (1,011) (474) (1,213)Interest element of finance lease repayments (9) (9) (19)------------------------------------------------------------------------------------------- (1,020) (483) (1,232)------------------------------------------------------------------------------------------- Capital expenditurePurchase of tangible fixed assets (7,005) (4,335) (11,225)Disposal of tangible fixed assets 109 190 19,034Disposal of investments 286 - -------------------------------------------------------------------------------------------- (6,610) (4,145) 7,809------------------------------------------------------------------------------------------- Acquisitions and disposalsAcquisition cost (13,714) (13,114) (13,047)Net overdraft acquired with subsidiary (2,658) (31) (31)------------------------------------------------------------------------------------------- (16,372) (13,145) (13,078)------------------------------------------------------------------------------------------- FinancingNew shares issued 38 41 379Purchase of own shares - - (538)New loan 1,203 - -Repayment of amounts borrowed (177) (48) (99)Capital element of finance lease payments (91) (69) (363)Purchase of investments - - (9)------------------------------------------------------------------------------------------- 973 (76) (630)------------------------------------------------------------------------------------------- 10. Analysis of movement in net (debt)/funds At Exchange Acquisition At 31 Mar 2006 Cash flow Movement of subsidiary 30 Sept 2006 £000 £000 £000 £000 £000 Cash at bank and in hand 11,825 (11,357) (458) - 10 Overdrafts (20,850) (53,030) 1,235 (2,658) (75,303)-------------------------------------------------------------------------------------------------------- (9,025) (64,387) 777 (2,658) (75,293) Banks loans (1,248) (1,026) 94 - (2,180)Finance leases (471) 91 21 - (359)-------------------------------------------------------------------------------------------------------- (1,719) (935) 115 - (2,539)--------------------------------------------------------------------------------------------------------Total net (debt)/funds (10,744) (65,322) 892 (2,658) (77,832)-------------------------------------------------------------------------------------------------------- This information is provided by RNS The company news service from the London Stock Exchange