RNS No 4423r
INTERNATIONAL GREETINGS PLC
15 July 1999
Earnings up 20% at International Greetings
Strong core performance supported by acquisitions
Two for one bonus issue proposed
International Greetings PLC today reported a strong set
of results for the year ended March 31 1999, showing
earnings per share 20% ahead at 40.4p compared with 33.7p
last year.
The Board is recommending a final dividend of 7p per
share, payable on September 7 1999 to shareholders on the
register on August 20 1999. Dividends for the year total
10p, an increase of 16% over last year.
A resolution to make a two for one bonus issue, to
further enhance the liquidity in the company's shares,
will be proposed at the Annual General Meeting.
Highlights of the year's performance include:
* Pre-tax profits up 18% at #7.8 million (1998: #6.6
million)
* Earnings per share up 20% at 40.4p (1998: 33.7p)
* Final dividend per share 7p up 16% (1998: 6.0p)
* Strong performance from core business
* Initial contributions from Copywrite and The Cracker
Company acquisitions
Nick Fisher, Joint Chief Executive, said: "We are
delighted with this year's results. Our established
businesses have performed well and both acquisitions made
last year have exceeded our expectations.
"We continue to invest in all areas of our business and
this year have committed significant sums to new
lithographic printing and conversion machinery. Such
investments ensure that we continue to provide our
customers with the very best levels of service and
product development.
"With our US division meeting its growth targets for this
year, together with a strong UK order book for this
Christmas, we are confident in the outlook for the
future."
Copies of this announcement will be available at the
company's offices at Belgrave House, Acrewood Way, St
Albans AL4 OJY, until July 29 1999.
For further information, contact:
International Greetings PLC 01727 844 888
Nick Fisher, Joint Chief Executive
Grandfield 0171 417 4170
Michael Henman/Clare Abbot
CHAIRMAN'S STATEMENT
I am delighted to report that your company has again
performed impressively during the year ended 31 March
1999, highlighted as follows:
* Profit before tax #7.8m up 18%
* Earnings per share 40.4p up 20%
* Dividend for the year 10p up 16%
These are very pleasing results which demonstrate the
continuing strength of our business. The core activities
have again performed well. This has been achieved with
the continued commitment of our employees, for which I
would like to take this opportunity to thank them all.
Many members of our workforce took up the opportunity
during the year to acquire shares under the recently
established Employee Share Purchase Scheme, and I welcome
them as shareholders in our company.
The purchase of the Copywrite and Cracker Company
businesses during the year confirmed our commitment to
expand and to seek new areas of opportunity. Their
integration into the Group's operations has gone
extremely well. I am pleased to report that both
businesses made positive, albeit small contributions to
net profit, even after associated financing costs. The
underlying strength of the Copywrite business, together
with the improvements implemented since last July, are
encouraging for the future.
We have taken steps after the year-end to broaden our
institutional shareholder base and enhance the
marketability and liquidity of the company's shares. In
April, the directors successfully arranged a placing of
part of their shareholding to increase the free float in
the company's shares. In addition, a resolution to make a
two for one bonus issue to ordinary shareholders will be
proposed at the forthcoming Annual General Meeting on 3
September 1999.
Outlook
The Group continues to perform well and the focus on
quality and service throughout the Group's activities
gives the Board confidence in the future. Accordingly,
the Board is recommending a final dividend of 7p, making
a total for the year of 10p per share, an increase of 16%
over last year. The final dividend will be paid on 7
September 1999 to shareholders on the register at the
close of business on 20 August 1999.
John Elfed Jones CBE DL
Chairman
REVIEW OF OPERATIONS
The strength of the Group's core business continues to
lie in the strong and long term nature of our
relationships with major multiple retailers in the UK.
The 15% increase in turnover over last year (excluding
acquisitions) demonstrates this strength. Investment in
the core activities of the business is essential to
maintain our leading market position. It is a vital part
of our commitment to continual improvement in design,
product quality and customer service.
Gift wrap
In the gift wrap division, #600,000 has been invested in
new conversion machinery. This increase in capacity
supplements the increase in print capacity that has
resulted from investment in gravure printing equipment in
recent years. Further investment in this area has also
enabled us to improve and broaden the range of products
available to our customers by applying sophisticated
finishing processes to the printed paper.
Cards
The rapid expansion of the Group over recent years has
meant that our base in St Albans has become too small and
a move to larger premises is underway. A suitable
building in Hatfield was acquired last December. Work to
adapt the building to our required specification
commenced in February and it is anticipated that the move
into the building will be completed by the end of August
this year.
In addition to providing a more suitable and efficient
environment for the Group's head office, sales and design
functions, the move will provide the opportunity for a
considerable expansion in the cards and tags divisions'
manufacturing operations. Over #700,000 has been
committed in the current year to investment in a new six
colour litho printing press, embossing, foiling and other
finishing machinery. This will enable these divisions to
bring in-house a number of operations previously
subcontracted and should result in improved operational
efficiency. It is expected that this project should be
completed by the end of this year in time to be able to
reap the benefits for next year.
Crackers
The Cracker division successfully completed the
integration of The Cracker Company (acquired in May 1998)
into its operations during the year and has proved an
excellent acquisition at minimal cost.
The Cracker division's product range has also been
extended by an agreement with a leading US manufacturer
of Halloween and party products to sell and distribute
their range in the UK.
USA
In the US, the strength of our range of gift wrap designs
and relationship with independent sales organisations
means we are now generally recognised as the preferred
supplier of gift wrap and related products to the leading
department and speciality stores in the country. A
considerable amount of management commitment and
investment has been involved in reaching this strategic
objective, and we look forward with confidence to the
benefits we expect to accrue from attaining this
position.
Stationery
The acquisition of the Copywrite business in July last
year added a new product category, character stationery
and bags, to the Group's operations. The recovery and
rejuvenation of the business, which had gone into
receivership under the previous ownership, has been a key
objective of senior management this last year. A
programme of action was instituted to rationalise the
company's product ranges and improve customer service and
operational efficiency. We have also been most impressed
by the quality and commitment of the employees retained
within the Copywrite business. It is very much as a
result of their considerable efforts that performance has
exceeded initial expectations and the business has made a
small, but positive contribution to net profit. Under the
direction of a newly appointed Managing Director, who has
extensive experience in all areas of the gift stationery
business, we are optimistic about the future potential of
this business.
Summary
The last year has been a busy one for the Group. Ensuring
the continuing development of the Group's core
activities, alongside the work associated with the
acquisitions made during the year has been a considerable
challenge to all concerned. We believe the results
demonstrate this challenge has been met with considerable
success to date, and are confident will continue to be
met in the future. We will continue to pursue a balanced
policy of organic growth supplemented by selective
acquisitions.
Anders Hedlund Nick Fisher
Joint Chief Executive Joint Chief Executive
FINANCE REVIEW
The strong performance of the Group's core activities is
reflected in this year's results.
* Turnover #72.2m up 35%
* Operating profit # 9.4m up 23%
* Shareholders' funds #17.8m up 33%
Turnover for the year to 31 March 1999 showed an increase
of 35% to #72.2m (1998: #53.5m) with operating profit up
by 23% to #9.4m (1998: #7.6m). Turnover and operating
profit attributable to the acquisitions was #10.5m and
#0.4m respectively. Excluding these figures, turnover
would have shown a 15% increase and operating profit an
18% increase over the previous year's figures.
Overall, the operating profit margin showed a reduction
from 14.3% to 13.1% although excluding acquisitions, the
operating profit margin would have shown an increase from
14.3% to 14.6%. The acquisitions accounted for 15% of the
Group's enlarged turnover but contributed only 5% to the
Group's operating profit. The performance of our major
acquisition, Copywrite Designs, exceeded initial
expectations, making a positive contribution to profit
for the eight months it was part of the Group and
representing a rapid turnaround from the losses it made
previously.
Interest payable increased from #1.0m to #1.6m, of which
#0.2m related to the acquisitions during the year. Profit
before taxation rose to #7.8m, an increase of 18% over
last year's #6.6m.
This year's overall tax charge of #2.4m represents an
effective tax charge of 30.8%, compared with last year's
32.4%.
Earnings per share and dividends
Earnings per share for the year to 31 March 1999 were
40.4p, an increase of 20%.
The final dividend of 7p makes a total dividend for the
year of 10p, which is covered four times by earnings per
share.
Balance sheet and cash flow
Shareholders' funds increased by #4.4m to #17.8m, #4.1m
from retained profits and #0.3m from new shares issued.
Cash outflow during the year amounted to #8.1m. Of this
outflow, #5.2m resulted from acquisitions made, #4.1m
initially invested and #1.1m from post-acquisition
cashflows, primarily working capital movements. A further
#3.4m outflow (including recoverable value added tax)
resulted from the purchase of our new property in
Hatfield (see review of operations). Various long-term
financing arrangements are currently being reviewed in
relation to this property and it is anticipated that the
outcome of this review will result in a significant cash
inflow and reduction in overall gearing in the current
year.
Group debt at 31 March 1999 amounted to #14.5m, and
gearing was 81% compared with last year's 49%. This
increase is entirely as a result of the acquisitions and
property purchase referred to above, in the absence of
which gearing would have reduced to 35%.
Treasury operations
The directors have established a framework for managing
the risks associated with the treasury function which are
continually evolving as the Group's business activities
grow. The most significant treasury exposures faced by
the Group are considered at Board level.
The Group's business has a strong seasonal element
resulting in large variations in working capital
requirements. As a result, the Board has considered that
long term restriction of the exposure to interest rate
fluctuations on working capital funding is unlikely to be
economically viable. Where opportunities exist, however,
for short term fixing of elements of this funding at
attractive rates, for example, through the use of
acceptance credits, these options are considered.
The seasonality of the Group's business means that
interest cover is considered the most appropriate
indicator of the Group's financial strength. Operating
profits covered the interest expense for the year six
times, and reflects the continuing strength of the
Group's finances.
Mark Collini
Finance Director
Consolidated Profit & Loss Account for the year ended 31
March 1999
1999 1998
Continued Acquisitions Total
Note #000 #000 #000 #000
2
Turnover 61,638 10,513 72,151 53,496
Cost of sales (41,135) (7,742) (48,877) (35,597)
--------------------------------------
Gross profit 20,503 2,771 23,274 17,899
Distribution expenses (3,997) (1,058) (5,055) (3,784)
Administrative expenses (7,522) (1,281) (8,803) (6,479)
-------------------------------------
Operating profit 8,984 432 9,416 7,636
Interest payable
and similar charges (1,363) (218) (1,581) (1,014)
------------------------------------
Profit on ordinary
activities before
taxation 2 7,621 214 7,835 6,622
------------------
Tax on profit on
ordinary activities 3 (2,414) (2,149)
-------------------------------------
Profit on ordinary
activities after taxation 5,421 4,473
Minority interests - (27)
-------------------------------------
Profit for the financial year 5,421 4,446
Dividends - equity 4 (1,372) (1,135)
-------------------------------------
Retained profit for
the financial year 4,049 3,311
-------------------------------------
Earnings per share 5
Basic 40.4p 33.7p
Diluted 39.8p 32.8p
Consolidated Statement of Total Recognised Gains &
Losses for the year ended 31 March 1999
1999 1998
#000 #000
Profit for the financial year 5,421 4,446
Currency translation differences arising on
foreign currency net investments 57 (22)
Total recognised gains and losses relating to 5,478 4,424
the financial year
Consolidated Balance Sheet at 31 March 1999
1999 1998
#000 #000 #000 #000
Fixed assets
Intangible assets -
goodwill 1,574 214
Tangible assets 19,343 12,291
--------------------------------
20,917 12,505
Current assets
Stocks 15,687 14,135
Debtors 14,265 9,747
Cash at bank and in hand - -
--------------------------------
29,952 23,882
Creditors: amounts falling
due within one year (29,910) (19,712)
--------------------------------
Net current assets 42 4,170
--------------------------------
Total assets less current
liabilities 20,959 16,675
Creditors: amounts falling
due after more than one
year (1,878) (2,128)
Provisions for liabilities
and charges (685) (479)
Deferred income (552) (624)
-------------------------------
Net assets 17,844 13,444
-------------------------------
Capital and reserves
Called up share capital 677 661
Share premium account 1,909 1,631
Other reserves 1,289 1,232
Profit and loss account 13,969 9,920
------------------------------
Equity shareholders' funds 17,844 13,444
Consolidated Cash Flow Statement for the year ended 31
March 1999
1999 1998
#000 #000
Net cash inflow from operating
activities 8,071 4,867
Returns on investments and servicing
of finance (1,522) (900)
Taxation (2,157) (1,447)
Capital expenditure (7,275) (3,770)
Acquisitions and disposals (4,111) (250)
Equity dividends paid (1,216) (937)
----------------------
Cash outflow before financing (8,210) (2,437)
Financing 158 1,065
----------------------
Decrease in cash (8,052) (1,372)
----------------------
Reconciliation of Net Cash Flow to Movement in Net
Debt for the year ended 31 March 1999
1999 1998
#000 #000
Decrease in cash in the year (8,052) (1,372)
Cash inflow/(outflow) from financing 423 (852)
--------------
Change in net debt resulting from
cash flows (7,629) (2,224)
Inception of finance leases (137) (650)
Translation differences (87) 46
----------------
Movement in net debt in the year (7,853) (2,828)
Net debt at beginning of year (6,637) (3,809)
----------------
Net debt at end of year (14,490) (6,637)
----------------
Notes:
1. Basis of Information
The financial information set out above does not
constitute the company's statutory accounts for the years
ended 31 March 1999 or 1998. Statutory accounts for 1998
have been delivered to the registrar of companies, and
those for 1999 will be delivered following the company's
annual general meeting. The auditors have reported on
those accounts; their reports were unqualified and did
not contain statements under section 237(2) or (3) of the
Companies Act 1985.
This statement has been prepared on the basis of the
accounting policies as set out in the Group's Annual
Report for the year ended March 31 1998.
2. Segmental analysis
UK and Europe USA Group
1999 1998 1999 1998 1999 1998
#000 #000 #000 #000 #000 #000
Turnover 63,347 45,713 8,804 7,783 72,151 53,496
------------------------------------------
Operating profit 8,826 6,969 590 667 9,416 7,636
Net interest (1,581)(1,014)
------------
Profit on ordinary
activities before taxation 7,835 6,622
------------------------------------------
Net assets 15,566 11,349 2,278 2,095 17,844 13,444
------------------------------------------
There is no material difference between turnover by
origin, as shown above, and turnover by destination. The
above results relate entirely to continuing operations.
3. Taxation
1999 1998
#000 #000
UK Corporation tax 2,312 1,844
Deferred taxation 32 137
Overseas taxation - current 113 62
- deferred (28) 38
Adjustments relating to an earlier
year:
UK Corporation tax (2) 70
Overseas taxation (13) -
Deferred taxation - (2)
---------------
2,414 2,149
---------------
4. Dividends
1999 1998
#000 #000
Interim paid - 3p per share (1998:2.6p) 424 343
Final proposed - 7p per share (1998:6.0p) 948 792
---------------
1,372 1,135
---------------
5. Earnings per share
1999 1998
Earnings per share 40.4p 33.7p
Diluted earnings per share 39.8p 32.8p
Earnings per share have been calculated in accordance
with Financial Reporting Standard 14 and the comparative
figures restated accordingly. The basic earnings per
share is based on earnings of #5,421,000 (1998:
#4,446,000) and the weighted average number of ordinary
shares in issue of 13,418,445 (1998: 13,198,969). The
calculation of diluted earnings is based on 13,624,155
(1998: 13,575,562) ordinary shares. The difference of
205,710 (1998: 376,593) represents the dilutive effect of
outstanding employee share options which has been
calculated in accordance with FRS 14.
6. This preliminary announcement was approved by the
Board of Directors on July 15 1999.
END
FR CCQCQFDKDNOD
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