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RNS Number : 4904S
St. Ives PLC
03 October 2017
 

3 October 2017

ST IVES plc

Full Year Results for the 52 weeks ended 28 July 2017

St Ives plc, the international marketing services group, announces preliminary results for the

52 weeks ended 28 July 2017.

Financial Highlights

 

52 weeks to

28 July

2017

52 weeks to

29 July

2016

%age

change

Revenue

£393.2m

£367.5m

+7%

Adjusted* profit before tax

£24.1m

£30.4m

-21%

Adjusted* basic earnings per share

13.39p

17.61p

-24%

Statutory loss before tax

£(44.1)m

£(5.7)m

-

Basic loss per share

(30.40)p

(5.93)p

-

Full year dividend

1.95p

7.80p

-

Net debt

£54.6m

£80.8m

 

 

* Adjusted profit before tax and Adjusted basic earnings exclude Adjusting Items. Adjusting Items comprise of redundancies, empty property and restructuring costs; impairments, gain or loss on disposal of properties; costs related to the acquisitions or setting up of new subsidiaries; impairment or amortisation charges related to goodwill tangible and intangible assets; contingent consideration required to be treated as remuneration; movements in deferred consideration and costs related to the St Ives Defined Benefits Pension Scheme. See note 3.

·     Further revenue growth of 13% in Strategic Marketing segment, with organic growth contributing 5%.

·     Revenue generated from the Group's overseas businesses increased from £53.7 million to £66.5 million, representing 17% of Group revenues (2016: 15%).

·     Net debt reduced by one-third to £54.6 million, representing a net debt to Adjusted EBITDA ratio of 1.6x (29 July 2016: 2.0x).

 

Operational Highlights

·     Strategic Marketing now contributing 42% of Group revenue (2016: 39%) and 75% of Adjusted operating profit, with encouraging new project wins.

·     Significant progress in key strategic priorities of Collaboration and Internationalisation:

209 clients currently working with more than one business across the Group, a 39% increase compared to the previous year.

Nine Strategic Marketing businesses serving clients on an international basis, representing over 39% of Strategic Marketing revenue (2016: 37%).

·     Due to continued decline, decisive action taken to improve performance of the two legacy segments - Marketing Activation and Books.

 

Matt Armitage, Chief Executive, said:

"Trading across our Strategic Marketing segment has recovered and we have been encouraged by new projects being won from existing and new clients. Our pipeline for the first half of the new financial year is very encouraging and we are excited by the opportunities that the increased collaboration between our businesses is generating.

While trading conditions within our Marketing Activation segment continue to be challenging, we have taken decisive action to increase efficiency and reduce costs, and remain focused on diversifying into other sectors. Similarly, within our Books business we have taken further steps to ensure that the cost base reflects the future level of volumes we now expect.

Overall, we remain confident in the long-term growth strategy currently being pursued in Strategic Marketing, and in the quality of our businesses within that segment, as illustrated by the major international clients and contracts they continue to attract. However, we recognise the need to address, decisively, the effect that legacy businesses are having on the Group's overall performance and on our ability to generate value for shareholders. This, together with further strengthening our balance sheet, remains a top priority for the Board looking forward."

For further information, please contact:

St Ives plc

020 7928 8844

 

Matt Armitage, Chief Executive

Brad Gray, Chief Financial Officer

 

 

 

MHP Communications

020 3128 8100

 

Tim Rowntree, Giles Robinson, Luke Briggs

 

 

Notes to Editors

St Ives is an international marketing services group, made up of a number of successful and dynamic businesses serving leading brands internationally, with offices in the UK, North America, China and Singapore.

We operate not as a single entity but as a group of market leading businesses, each with its own unique value proposition, offering complementary services and collaborating closely with each other wherever this adds value to clients. We work with a large number of leading, international consumer-facing brands across all major sectors - including retail & FMCG, healthcare & pharma, financial services, media, technology, automotive and charity - helping them determine strategic direction, and designing and delivering world-class solutions to match their specific requirements.

Our industry-leading Strategic Marketing businesses have strong capabilities across three specialist high growth areas: Digital, Data and Insight.

Our Marketing Activation businesses, which deliver marketing communications through a combination of print and in-store marketing services, complement our Strategic Marketing offering and collaborate with them where this adds value to clients.

The Group's strategy for further growth for the marketing services businesses is centred around three key priorities:

· organic growth through collaboration and investment in our existing brands;

· internationalisation, often client-led, into large and high growth markets; combined with

· further acquisitions of complementary, ambitious and growing Strategic Marketing businesses that share our common attributes and ethos.

Our separate long-standing Books production business, which is the UK market leader, represents a source of profit and cash generation as we pursue our overall growth strategy.

St Ives employs more than 3,000 people in the UK, North America and Asia and is listed on the London Stock Exchange (SIV) with a market capitalisation of £110.8m. 

Chief Executive's Review

 

Introduction

Overall, it has been a challenging year for the Group, which is reflected in the reported results for the period, albeit with a much-improved performance during the second half. Our focus has been on addressing the issues of the past while taking decisive action to improve the efficiency of our two legacy segments and further strengthen the Group's balance sheet. 

The principal challenges remain in our legacy Marketing Activation and Books segments where, despite their strong market positions, increased competition continues to exert downward pressure on margins. In response, the Board has taken immediate action to reduce the cost base of both segments to reflect the new market realities.

Despite these issues and their impact on the results, we are pleased to report encouraging underlying progress within our core Strategic Marketing segment. This segment lies at the centre of our long-term growth strategy and now represents some 42% of Group revenues and 75% of Adjusted operating profit. In particular, we have seen important progress in our pursuit of organic growth here, through a number of significant new business wins coupled with increasing collaboration between our various businesses and further internationalisation of the business.

Performance Highlights

Group revenue of £393.2 million was 7% higher than the comparable period in the previous year, bolstered by our Strategic Marketing segment, which delivered growth of 13%. Excluding the effects of acquisition and currency movements, organic growth across the Group was 5%. Revenue within our Books segment was 12% ahead of the previous year while revenue within our Marketing Activation segment was broadly in line with the previous year.

The Group's statutory loss before tax of £44.1 million (2016: loss of £5.7 million) includes Adjusting Items of £68.2 million (2016: £36.1 million), of which £66.1 million relates to non-cash items in the current period. The non-cash Adjusting Items include amortisation of acquired intangibles of £10.0 million, an impairment charge of £33.1 million, mainly in the Marketing Activation and Books segment and contingent consideration expense of £23.0 million. Other Adjusting Items include costs related to St Ives Defined Benefit Scheme of £1.9 million and restructuring costs of £3.0 million, offset by gain on disposal of properties of £2.8 million.

The Group's Adjusted profit before tax declined to £24.1 million (2016: £30.4 million) and Adjusted basic earnings per share decreased by 24% to 13.39 pence (2016: 17.61 pence).

The year saw further growth in our Strategic Marketing segment despite a number of project cancellations and deferrals in the last quarter of the previous financial year, which impacted revenue growth and operating margin during the first half of the current financial year. However, we are encouraged by the progress that has been made in the second half of the year to replace the cancelled work and return the segment to its previous levels of organic growth and operating margin.

Balance Sheet

Net debt as at 28 July 2017 was £54.6 million, down from £80.8 million as at 29 July 2016, representing a net debt to Adjusted EBITDA ratio of 1.6x (2016: 2.0x). Further reducing the Group's indebtedness further remains a priority for the Board.

 

Dividend

The Board has reviewed St Ives' near-term dividend policy to reflect the impact of the issues experienced in the Group's legacy businesses and the costs involved in the ongoing cost-reduction initiatives. In doing so, it has balanced the importance of dividends to shareholders, the importance of investing in the further organic growth of the Group's core Strategic Marketing segment, and the strengthening of the balance sheet. Against that background, the Board has proposed a final dividend of 1.30 pence per share, giving a full year dividend of 1.95 pence per share, a decrease of 75% against last year's full-year dividend of 7.80 pence. The Board will re-evaluate the longer-term dividend policy in due course.

If approved by shareholders, the final dividend of 1.30 pence will be paid on 18 December 2017 to the shareholders on the register at 24 November 2017, with an ex-dividend date of 23 November 2017.

Strategic Priorities

The Board remains confident in its long-term strategy for further growth, which is built around the Group's Strategic Marketing segment and remains centred around three key priorities:

Collaboration

We continue to make good progress with our collaboration agenda with over 200 of our clients currently working with more than one business across the Group; a 39% increase compared with the 150 reported in the last financial year. These include major brands such as Standard Life, Paddy Power and Expedia.

In addition, we continue to see an increase in demand for integrated solutions from clients within our Strategic Marketing segment, which, while aligning to our collaboration agenda, has led us to review and evolve our operating model within the segment. This has also resulted in us bringing a number of our Digital and Data businesses closer together.

Internationalisation

Many of our businesses now deliver international solutions for clients. Most notably, 39% of our Strategic Marketing revenue now comes from clients based outside the UK (2016: 37%), with nine businesses within this segment currently servicing clients on an international basis.

Our strategy for developing our overseas footprint remains client-driven with new office openings only taking place in territories where we can identify lucrative client-led opportunities. We will continue to be disciplined in our implementation of this strategy, targeting opportunities in large markets or in ones with the potential for significant and sustainable growth, where offices are capable of generating appropriate returns within a reasonable period of time.

Acquisitions

Given the recent challenges across the Group, we are currently prioritising organic over acquisitive growth, including leveraging the investments we have made in existing propositions and in new offices.

In the longer term, the acquisition of further complementary marketing services businesses that add value to our existing portfolio and operate in our chosen growth areas of Digital, Data and Insight services will continue to be an important element of the growth strategy of our core Strategic Marketing segment.

Outlook

Trading across our Strategic Marketing segment has recovered and we have been encouraged by the new projects being won from existing and new clients. Our pipeline for the first half of the new financial year is very encouraging and we are excited by the opportunities that the increased collaboration between our businesses is generating.

While trading conditions within our Marketing Activation segment continue to be very challenging, we have taken decisive action to increase efficiency and reduce costs, and remain focused on diversifying into other sectors. Similarly, within our Books business we have taken further steps to ensure that the cost base reflects the future level of volumes we now expect.

Overall, we remain confident in the long-term growth strategy currently being pursued in Strategic Marketing, and in the quality of our businesses within that segment, as illustrated by the major international clients and contracts they continue to attract. However, we recognise the need to address, decisively, the effect that the legacy businesses are having on the Group's overall performance and on our ability to generate value for shareholders. This, together with further strengthening of our balance sheet, remains a top priority for the Board looking forward. 

Segment Overview

Strategic Marketing

Our Strategic Marketing segment represents 42% of Group revenue for the year (2016: 39%) and 75% of Group Adjusted operating profit.

 

2017
£'m

2016
£'m

Digital Marketing

93.0

71.2

Data Marketing

32.3

36.2

Insight

37.7

36.7

 

Strategic Marketing revenue

163.0

144.1

Strategic Marketing Adjusted operating profit *

20.2

19.4

 

* Adjusted Results see note 3

We have seen further, very encouraging progress within the Strategic Marketing segment, which remains core to the Group's long-term growth strategy.

One of our key priorities was to replace the work lost in the last quarter of the previous financial year, which resulted in a challenging first half for the segment. However, following several significant new client wins and contract renewals during the period, including long-term agreements to be the digital partner of Rockwell Automation, SoftBank and DuPont Pioneer, we are pleased to have delivered a significant improvement in the performance of the segment in the second half of the financial year.

As a result of an increase in client demand for more integrated solutions, we have continued to drive our collaboration agenda and to evolve our operating model accordingly. We continue to focus on the disciplines of Digital, Data and Insight, albeit the strict distinctions between these disciplines are becoming less relevant as more integrated solutions are provided to clients.

During the year, we announced a number of senior management changes within our Digital and Data businesses. Our three Digital businesses (Amaze, Realise and Branded3) are now under the management responsibility of a single management team, while we have also announced that our Data businesses (Occam, Response One, Bench and Amaze One) will be managed by a single team. These changes will ensure that we offer a coherent proposition combined with the breadth and scale of services to support our clients' expanding digital and data requirements.

Over the period, our Data businesses have worked more closely together than ever before, both with each other and also with our Digital businesses, where numerous joint propositions have been developed. We see further opportunities for collaboration between our Digital and Data businesses as data continues to be the driving force behind successful digital marketing and transformation activities. The short-term priority within our Data businesses is to ensure that our offering is fully compliant with and able to benefit from the new General Data Protection Regulation ("GDPR") which will apply from May 2018.

Synergies between Solstice, our Chicago-based mobile and emerging technology business, and The App Business ("TAB"), our similar UK business, continue to result in both businesses sharing resources, working practices, growth frameworks and data. The two are working together to develop innovative connected digital experiences using Voice, Virtual Reality and Internet of Things technology for clients. New wins in the financial year have included projects for clients including Bosch and Electrolux.

Within our research consultancy, Incite, we have seen further growth of both our UK and US businesses through a significant number of new client wins in the technology, FMCG, finance and pharma sectors, while client spend and sentiment in Asia also improved in the second half of the financial year. We continue to support our overseas offices in order to provide an international offering to clients - a growing number of Incite's clients are serviced by more than one Incite office - and to drive long-term growth, although this continues to affect short-term profitability.

Our healthcare consultancy, Hive, has gained several major new clients during the period including Roche, Leo Pharma, Lundbeck, Ipsen, and Almirall. The business has also expanded its offering and client base in the US, delivering significant growth (albeit from a low base) through a number of client wins, including Pfizer. We see the US and further international expansion, as a significant contributor to future growth for this business.

Our retail consultancy, Pragma, has undertaken a number of large advisory projects, including strategic reviews and commercial due diligence of multinational consumer businesses. A growing number of such projects involve collaboration with FSP, our specialist property-consulting firm, particularly where catchment analysis or location planning forms a key part of the investment decision.

The progress outlined above underscores the quality of our individual Strategic Marketing businesses and the potential for further profitable growth that they offer, both individually and, more importantly, through collaboration. They offer differentiated, value-added services to clients and we are pleased that the segment's growth and margin have returned to the levels achieved in previous years.

Marketing Activation

Our Marketing Activation segment represents 39% of Group revenue for the year (2016: 42%) and 16% of Group Adjusted operating profit.

 

2017
£'m

2016
£'m

 

Marketing Activation revenue

153.7

154.8

Marketing Activation Adjusted operating profit *

4.3

8.1

 

* Adjusted Results see note 3

Trading conditions within this segment continue to be very challenging, due in large part to the ongoing pressures within the grocery retail market. While our expertise in grocery retail remains an important strength, diversification of the client base beyond this sector continues to be a priority.

The segment enjoyed new wins and project extensions during the year for clients including Royal Mail, Innocent, Superdry, AkzoNobel, ESPA and OfficeTeam, further supporting the segment's planned diversification. While we have been successful in securing this work, it should be noted that the market remains extremely price competitive in all areas. As a result, over the period the management team has been focused on protecting margins through driving efficiency improvements and cost reductions.

Moving forward our priority is on strategic growth opportunities in markets that value service and innovation and which further reduce the segment's over-reliance on grocery retail.  This will include delivering a wider portfolio of goods and services that cover the whole of the marketing operations sphere of brands and retailers.  We will also continue to focus on margin protection while differentiating our competitive offering through targeted investment in new service lines and further additional cross sales initiatives.

Books

Our market-leading Books business represents 19% (2016: 19%) of Group revenue for the year and 9% of Group Adjusted operating profit.

 

2017
£'m

2016
£'m

Books revenue

76.5

68.6

Books Adjusted operating profit *

2.6

5.8

* Adjusted Results see note 3

Revenue was 12% higher than the prior year at £76.5 million (2016: £68.6 million).

Trading during the first half of the year was generally positive, particularly during the pre-Christmas period, with sales of printed books in the UK up 5% on 2016 (as reported by Nielsen).

As announced in February 2017, we were informed by HarperCollins that our contract for the production of monochrome books in the UK would not be renewed. The contract ended on 30 June 2017. As a result of the non-renewal, significant restructuring and cost reduction initiatives have been implemented.

We continue to adapt to suit the evolving needs of clients, leveraging our well-invested digital print technology to provide a broader product range, greater capacity to support fast lead times and lower stockholding, with a continued focus on extending supply chain solutions to reduce the overall cost of the books supply chain.

 

Matt Armitage

Chief Executive

2 October 2017

 

Financial Overview

 

Overview

During a challenging year, the Group delivered revenue growth of 7%. Due to continued margin pressures within the legacy Marketing Activation and Books segments, the Group's Adjusted operating profit fell from £33.3 million to £27.1 million. However, over this period the Board has worked to strengthen the Group's balance sheet by cutting the proposed dividend by 75% compared to the prior year, and selling three surplus properties.

The Group's statutory results are set out in the table below:

 

52 weeks to

28 July

2017

52 weeks to

29 July

2016

 

Revenue

£393.2m

£367.5m

Statutory loss before interest and tax

£(40.4)m

£(1.8)m

Statutory loss before tax

£(44.1)m

£(5.7)m

Basic loss per share

(30.40)p

(5.93)p

The Group prepares adjusted results, which, in management's view reflect how the business is managed and show the performance in a manner consistent with the previous year. Adjusted results exclude items such as costs related to restructuring activities, acquisitions made in current and prior periods, disposal of sites, impairment charges and St Ives Defined Benefits Pension Scheme charges.

The Group's statutory loss before tax of £44.1 million (2016: £5.7 million) includes Adjusting Items of £68.2 million (2016: £36.1 million), of which £66.1 million relates to non-cash items in the current period.

The analysis of Adjusting Items is set out below:

 

52 weeks to

28 July

2017

£'m

52 weeks to

29 July

2016

£'m

 

Loss before tax

(44.1)

(5.7)

Add back Adjusting Items:

 

 

 

(Profit)/loss on disposal of property, plant and equipment

(2.8)

1.7

Amortisation of acquired intangibles

10.0

9.2

Expenses related to restructuring items

3.0

2.6

Impairment of goodwill and other assets

33.1

12.7

Costs associated with the acquisition and setup of subsidiaries

-

0.8

Contingent consideration required to be treated as remuneration

15.6

8.2

Increase /(decrease) in deferred consideration

7.4

(0.8)

Administrative expenses related to St Ives Defined Benefits Pension Scheme

1.9

1.7

 

Adjusted profit before tax

24.1

30.4

A non-cash impairment charge of £2.9 million was recorded in the Books segment against non-current assets and inventories due to the loss of the HarperCollins contract. Impairment charges of £29.9 million were recorded against the goodwill and non-current assets of businesses within the Marketing Activation segment. This reflects the continued decline in operating profits and expected future growth rates resulting from lower promotional activity levels within the grocery retail sector. In addition, an impairment charge of £0.3 million was recorded against intangible assets of the Data businesses for obsolete software. The Group recorded a total non-cash impairment charge of £33.1 million during the period. Further details can be found in note 3 below.

Other non-cash Adjusting items include contingent consideration required to be treated as remuneration of £15.6 million, an increase in deferred consideration of £7.4 million and amortisation of acquired intangibles of £10.0 million.

Revenue

The 7% (£25.6 million) increase in revenue included organic constant currency growth of 4%; acquisition growth of 2%; and a 1% positive currency translation impact. Over the course of the full year, revenue grew by 5% in the first half and 9% in the second half. Organic revenue growth at constant currency was 0.2% in the first half and particularly strong growth of 7% in the second half, within the Group's Strategic Marketing segment.

Revenue generated from the Group's overseas business increased from £53.7 million to £66.5 million over the financial year, representing 17% of Group revenues (2016: 15%).

Revenue from our Strategic Marketing segment increased from £144.1 million to £163.0 million with organic growth contributing 5%; acquisition growth of 4%; and currency translation of 4%.  Compared to the comparative period last year, first half organic revenue growth was subdued at 3% as the impact of the cancelled work in quarter four of FY16 took longer to replace than anticipated. Conversely, second half organic growth compared to the comparative period was 13% as new clients and projects started to generate additional revenue.

Revenue from the Marketing Activation segment decreased marginally from £154.8 million to £153.7 million; primarily as a result of reduced client spend within the retail grocery market. The revenue impact was mitigated somewhat by the segment's strategy of diversification into new areas such as food and leisure, while the UK general election also provided a one-off boost to revenue.

Revenue from the Books segment, in contrast to recent years, proved to be resilient during the financial year, increasing by 12% from £68.6 million to £76.5 million. However, following the conclusion of our print and distribution contract with HarperCollins in June 2017, we expect the non-renewal to result in a reduction of approximately £11 million in Group revenue, and £3.5 million in Group Adjusted operating profit, in the financial year ending 3 August 2018.

Adjusted gross profit margin and underlying profitability

The Adjusted operating profit decreased from £33.3 million (9% of revenue) to £27.1 million (7% of revenue).

Adjusted operating profit in the Strategic Marketing segment has increased from £19.4 million to £20.2 million with an operating margin of 12% (2016: 13%). This includes a full year contribution from TAB. The first half-contributed £6.2 million with a margin of 8% compared to the second half of £14 million at a margin of 16%.   The first half margin was detrimentally impacted by our decision to broadly maintain our skilled workforce, following project cancelations and deferrals in the fourth quarter of the prior year, in anticipation of new client and contract wins. Second half margin improved as these new clients and contracts delivered revenue without the requirement to substantially increase manpower costs.

Adjusted operating profit in the Marketing Activation segment decreased from £8.1 million to £4.3 million with an operating margin of 3% (2016: 5%). Despite the actions taken to consolidate sites to aid further restructuring and client diversification, margin has continued to be adversely impacted as the grocery retailers reduced their print spend.

Adjusted operating profit in the Books segment decreased from £5.8 million to £2.6 million with an operating margin of 3% (2016: 9%). Reduced run lengths and an increase in orders continued to impact margin.  The loss of the HarperCollins contract from 1 July 2017 has resulted in a number of headcount reductions and redundancy costs of £2.9 million, which are recorded as Adjusting Items. The restructuring was completed at the end of July 2017.

Acquisitions

Although no acquisitions were made during the year, Solstice and TAB remain within their earn out periods. Solstice's final earn out period is the calendar year ending 31 December 2017 with TAB's final period being 1 May 2017 to 30 April 2018. TAB's second deferred consideration, which was dependent on incremental EBITDA, has been agreed. Subsequent to the year-end, a cash payment of £2.2 million and the issue of a loan note of £1.6 million were made to settle the deferred consideration. The loan note is exercisable six months after issue. The Group exercised its option to pay all of the deferred consideration in cash or loan notes rather than by the issuing of shares.

The Group has reassessed the likely extent of any further deferred consideration payments to the previous shareholders of Solstice and TAB. The amount of deferred consideration payable, based upon their budgets and latest forecasts, is set out below:

 

Cash

£'m

Shares

£'m

Total

£'m

TAB

13.0

3.1

16.1

Solstice

16.0

3.9

19.9

 

29.0

7.0

36.0

The expected timings of the cash element of the deferred consideration payments are detailed below:

 

2018

£'m

2019

£'m

TAB

8.0

5.0

Solstice

12.5

3.5

 

20.5

8.5

Tax

The total tax credit was £0.7 million (2016: charge of £2.4 million).A number of Adjusting Items are not deductible for taxation purposes.

The Group's effective tax rate on the Adjusted profit before tax was 20.7% (2016: 20.8%) compared to the standard rate of tax of 24.0% (2016: 22.7%) for the Group. The Adjusted tax charge was £ 5.0 million (2016: £6.3 million).

A net income tax of £0.6 million (2016: £4.3 million) was paid in the United Kingdom, which included payments of £3.3 million in respect of 2016 and 2017 financial periods, partially offset by refunds of £2.7 million in respect of prior periods.

Dividend

The Board is recommending a final dividend of 1.30 pence per ordinary share (2016: 5.45 pence) giving a total dividend of 1.95 pence (2016: 7.80 pence). The dividend is covered 6.9 times by Adjusted earnings and will be paid on 18 December 2017 to shareholders on the register at 24 November 2017, with an ex-dividend date of 23 November 2017.

Pensions

The Group closed its Defined Benefits Pension Scheme (the "Scheme") to new members in 2002 and ceased future accrual within the Scheme in 2008. The Group accounts for post-retirement benefits in accordance with IAS19 Employee Benefits. The Consolidated Balance Sheet reflects the net deficit on the Scheme at 28 July 2017 based on the market value of the assets at that date and the valuation of liabilities using AA non-gilt bond yields.

On an IAS19 basis, the net deficit on the Scheme reduced to £16.0 million (2016: £26.4 million) before the related deferred tax asset. The value of the plan assets increased to £354.5 million (2016: £344.1 million). Approximately 65% of the plan assets are invested in return seeking assets providing a higher level of return over the longer period. Plan liabilities remained in line with the prior year at £370.5 million (2016: £370.5 million). In calculating the amount of plan liabilities, an increase in the rate of inflation was offset by an increase in the discount rate and a fall in the rate of increase in life expectancy.

The Scheme's actuarial valuation reviews determine any cash deficit payments by the Group. The Scheme's triennial valuation was as at April 2016 and the Group has reached agreement with the Scheme Trustee for future funding levels. The Group will make deficit funding contributions of £2.6 million per annum and a contribution of £0.4 million per annum (2016: £0.4 million) towards the costs of administration. The total increased contribution level to £3.0 million will apply from April 2016 and, as the funding level was maintained at £2.4 million until an agreement was reached, the contribution in the year to 3 August 2018 will be £3.8 million and thereafter will revert to £3.0 million per annum.

The charge for the year for the Group's defined contribution schemes was £3.8 million (2016: £3.9 million).

Cash Flow

Cash generated from operations was £30.7 million (2016: £23.7 million).

Total capital expenditure was as follows:

 

2017

£'m

2016

£'m

Strategic Marketing

2.1

3.1

Marketing Activation

0.8

1.5

Books

0.6

3.0

 

Total

3.5

7.6

 

 

 

 

 

 

 

 

 

 

The Group disposed of three surplus properties during the year generating cash of £11.9 million (£11.7 million, net of all costs). Two of the properties together generated net income of £1.0 million per annum and the third property was previously occupied by part of SP, our point of sale business.

Debt

The Group's revolving credit facility, which expires on 23 March 2019, remains at £95.0 million and was supplemented by a term loan of £30.0 million. Subsequent to the year-end, the Group reduced its term loan by £5.5 million to £24.5 million.

Net debt decreased during the year from £80.8 million to £54.6 million. At 28 July 2017, St Ives had drawn £80.2 million on its bank credit facility, leaving an unutilised commitment of £44.8 million. The Group had cash and cash equivalents of £25.7 million.

At 28 July 2017, the ratio of net debt to EBITDA before Adjusting Items was 1.61 times (2016: 1.96 times) as shown below:

 

 

 

 

 

2017

2016

 

 

 

 

 

£'m

£'m

Adjusted operating profit

 

 

 

 

27.1

33.3

Depreciation and amortisation

 

 

 

 

6.8

7.9

EBITDA before Adjusting Items

 

 

 

 

33.9

41.2

Net Debt

 

 

 

 

54.6

 80.8

Net debt to EBITDA before Adjusting Items

 

 

 

      1.61 

1.96

 

 

Brad Gray

Chief Financial Officer

2 October 2017

 

 

Consolidated Income Statement

 

 

 

 

52 weeks to 28 July 2017

52 weeks to 29 July 2016

 

Note

Adjusted Results

 

 

£'000

Adjusting items

(note 3)

 

£'000

Statutory Results

 

 

£'000

Adjusted Results

(restated

note 11)

£'000

Adjusting

items

(note 3)

 

£'000

Statutory Results

(restated

note 11)

£'000

 

 

 

 

 

 

 

 

Revenue

2

393,154

-

393,154

367,546

-

367,546

Cost of sales

 

(284,342)

-

(284,342)

(262,468)

-

(262,468)

Gross profit

 

108,812

-

108,812

105,078

-

105,078

Selling costs

 

(26,843)

-

(26,843)

(25,011)

-

(25,011)

Administrative expenses

 

(55,277)

(70,278)

(125,555)

(46,832)

(33,472)

(80,304)

Share of results of joint arrangement

 

355

-

355

(122)

-

(122)

Other operating income/(expense)

 

58

2,760

2,818

167

(1,651)

(1,484)

Operating profit/(loss)

 

27,105

(67,518)

(40,413)

33,280

(35,123)

(1,843)

Net pension finance expense

 

-

(638)

(638)

-

(972)

(972)

Other finance expense

 

(3,017)

-

(3,017)

(2,899)

-

(2,899)

Profit/(loss) before tax

2

24,088

(68,156)

(44,068)

30,381

(36,095)

(5,714)

Income tax (charge)/credit

 

(4,984)

5,694

710

(6,322)

3,931

(2,391)

Net profit/(loss) for the period

 

19,104

(62,462)

(43,358)

24,059

(32,164)

(8,105)

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

Shareholders of the parent company

 

    19,104

 (62,462)

   (43,358)

    24,059

   (32,164)

     (8,105)

Basic earnings/(loss) per share (p)

6

13.39

(43.79)

(30.40)

      17.61

(23.54)

(5.93)

Diluted earnings/(loss) per share (p)

6

13.39

(43.79)

(30.40)

17.49

(23.38)

(5.89)

 

 

 

Consolidated Statement of Comprehensive Income

 

52 weeks to
28 July
2017
 £'000

52 weeks to
29 July
2016
 £'000

Loss for the period

(43,358)

(8,105)

  Items that will not be reclassified subsequently to profit or loss:

 

 

  Actuarial profit on defined benefits pension scheme

8,958

83

  Tax charge on items taken through other comprehensive income

(1,584)

(545)

 

7,374

(462)

  Items that may be reclassified subsequently to profit or loss:

 

 

  Transfers of losses on cash flow hedges

302

127

  Losses on cash flow hedges

(138)

(302)

  Foreign exchange gain

369

409

 

533

234

  Other comprehensive income/(expense) for the period

7,907

(228)

Total comprehensive expense for the period

(35,451)

(8,333)

 

 

 

Attributable to shareholders of the parent company

(35,451)

(8,333)

 

 

 

 

Consolidated Statement of Changes in Equity

 

 

Share capital

£'000

Additional paid-in capital**

£'000

ESOP reserve

£'000

Treasury shares

£'000

Share option reserve

 £'000

Hedging and translation reserve

£'000

Other reserves

£'000

Retained earnings

£'000

Total

£'000

Balance at

31 July 2015

13,089

55,521

-

(820)

6,773

427

61,901

57,892

132,882

Loss for the period

-

-

-

-

-

-

-

(8,105)

(8,105)

Other comprehensive expense

-

-

-

-

-

234

234

(462)

(228)

Comprehensive income/(expense)

-

-

-

-

-

234

234

(8,567)

(8,333)

Dividends

-

-

-

-

-

-

-

(10,934)

(10,934)

Issue of shares

775

12,716

(135)

-

-

-

12,581

-

13,356

Acquisitions

365

1,334

-

657

-

-

1,991

(528)

1,828

Recognition of share-based contingent consideration deemed as remuneration

-

-

-

-

5,143

-

5,143

-

5,143

Transfer of share-based contingent consideration deemed as remuneration

-

97

-

-

(3,295)

-

(3,198)

3,382

184

Purchase of own shares

-

-

(395)

-

-

-

(395)

-

(395)

Recognition of share-based payments

-

-

-

-

(236)

-

(236)

-

(236)

Settlement of share-based
payments

15

127

530

-

(1,431)

-

(774)

868

109

Tax on share-based payments

-

-

-

-

(231)

-

(231)

255

24

Balance at

29 July 2016

14,244

69,795

-

(163)

6,723

661

77,016

42,368

133,628

Loss for the period

-

-

-

-

-

-

-

(43,358)

(43,358)

Other comprehensive income

-

-

-

-

-

533

533

7,374

7,907

Comprehensive income/(expense)

-

-

-

-

-

533

533

(35,984)

(35,451)

Dividends

-

-

-

-

-

-

-

(8,705)

(8,705)

Recognition of share-based contingent consideration deemed as remuneration

-

-

-

-

6,969

-

6,969

-

6,969

Transfer of share-based contingent consideration deemed as remuneration

-

225

-

-

(5,676)

-

(5,451)

5,754

303

Recognition of share-based payments

-

-

-

-

70

-

70

-

70

Settlement of share-based
payments

40

398

-

-

(123)

-

275

123

438

Tax on share-based
payments

-

-

-

-

(63)

-

(63)

16

(47)

Balance at

28 July 2017

14,284

70,418

-

(163)

7,900

1,194

79,349

3,572

97,205

 ** Additional paid-in capital represents share premium, merger reserve and capital redemption reserve

 

 

Consolidated Balance Sheet

 

 

 

Note

28 July
2017
£'000

29 July
2016
£'000

Assets

 

 

 

Non-current assets

 

 

 

Property, plant and equipment

 

26,235

35,559

Investment property

 

-

6,203

Goodwill

 

108,676

135,633

Other intangible assets

 

42,792

53,234

Available for sale asset

 

3

3

Investment in joint arrangement

 

517

94

Deferred tax assets

 

375

232

Other non-current assets

 

13

374

 

 

178,611

Current assets

 

 

 

Inventories

 

6,253

7,482

Trade and other receivables

 

91,063

90,761

Derivative financial instruments

 

45

-

Income tax receivable

 

124

1,246

Assets held for sale

 

11

1,481

Cash and cash equivalents

 

25,651

11,835

 

 

123,147

112,805

Total assets

 

301,758

Liabilities

 

 

 

Current liabilities

 

 

 

Trade and other payables

 

79,539

76,486

Derivative financial instruments

 

17

535

Income tax payable

 

1,461

-

Deferred consideration payable

 

15,920

1,772

Deferred income

 

7,141

6,206

Provisions

 

388

31

 

 

104,466

Non-current liabilities

 

 

 

Loans

 

80,245

92,595

Retirement benefits obligations

7

16,041

26,394

Other non-current liabilities

 

682

814

Provisions

 

1,823

2,185

Deferred tax liabilities

 

1,296

3,491

 

 

100,087

125,479

Total liabilities

 

204,553

Net assets

 

97,205

Equity

 

 

 

Capital and reserves

 

 

 

Share capital

 

14,284

14,244

Other reserves

 

79,349

77,016

Retained earnings

 

3,572

42,368

Total equity

 

97,205

133,628

These financial statements were approved by the Board of Directors on 2 October 2017.

 

 

 

Consolidated Cash Flow Statement

 

 

Note

52 weeks to
28 July
2017
 £'000

52 weeks to
29 July
2016
 £'000

Operating activities

 

 

 

Cash generated from operations

 

30,686

23,650

Interest paid

 

(3,017)

(2,899)

Income taxes paid

 

(587)

(6,286)

Net cash generated from operating activities

9

27,082

14,465

 

 

 

 

Investing activities

 

 

 

Purchase of property, plant and equipment

 

(3,154)

(7,124)

Purchase of other intangibles

 

(311)

(488)

Proceeds on disposal of property, plant and equipment

 

11,770

3,315

Acquisition of subsidiaries, net of cash acquired

 

-

(20,937)

Deferred consideration paid for acquisitions made in prior periods

 

(663)

(5,790)

Net cash generated from/(used in) investing activities

 

7,642

(31,024)

 

 

 

 

Financing activities

 

 

 

Proceeds on issue of shares

 

438

13,356

Dividends paid

5

(8,705)

(10,934)

Purchase of treasury shares

 

-

(395)

(Decrease)/Increase in bank loans

 

(15,000)

10,000

Net cash (used in)/generated from financing activities

 

(23,267)

12,027

Net increase/(decrease) in cash and cash equivalents

 

11,457

(4,532)

Cash and cash equivalents at beginning of the period

 

11,835

16,392

Effect of foreign exchange rate changes

 

2,359

(25)

Cash and cash equivalents at end of the period

9

25,651

11,835

 

 

Notes to the Consolidated Financial Statements

1. Basis of preparation

The preliminary results have been prepared on the basis of the accounting policies as set out in the Group's Annual Report and Accounts 2017. The financial information set out in the preliminary results does not comprise statutory accounts for the purpose of section 434 of the Companies Act 2006 in respect of the period ended 28 July 2017 and 29 July 2016.

The financial information for the period ended 28 July 2017 has been extracted from the Group's 2017 statutory accounts for that period which have been prepared on a going concern basis and in accordance with the recognition and measurement principles of International Financial Reporting Standards as adopted by the European Union ('IFRS') and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The preliminary results have been prepared under the historical cost convention, except for the recognition of derivative financial instruments and available-for-sale investments, and using the accounting policies set out in the Group's 2016 statutory accounts. The accounting policies adopted are consistent with those of the previous financial year, except as detailed in note 11, and there have been no changes in accounting standards during the year that have had a material effect on the Group.

The 2017 statutory accounts will be delivered to the Registrar of Companies following the Company's 2017 Annual General Meeting. The financial information for the period ended 29 July 2016 has been extracted from the Group's statutory accounts for that period, which have been delivered to the Registrar of Companies. The Auditor's report on both the Group's 2017 and 2016 statutory accounts were unqualified and did not contain statements under sections 498(2) or 498(3) of the Companies Act 2006 in respect of the 2017 and 2016 statutory accounts.

2. Segment reporting

The Group manages its business on a market segment basis, based on the Group's internal reporting to the Chief Operating Decision Maker ("CODM"). The CODM has been determined to be the Chief Executive Officer and Chief Financial Officer as they are primarily responsible for the allocation of resources to the segments and the assessment of performance of the segments.

The Strategic Marketing segment comprises of the Group's Digital, Data and Insight businesses. The Marketing Activation segment includes businesses, which deliver marketing communications through a combination of print and in-store marketing services. The Books segment comprises of Clays.

Corporate costs are allocated to revenue-generating segments as this presentation better reflects their profitability.

Business segments

 

 

52 weeks to 28 July 2017

 

 

Strategic Marketing
£'000

Marketing Activation
£'000

Books
£'000

Total
£'000

 

Revenue

 

 

 

 

 

External sales

161,196

154,258

77,700

393,154

Group sales

3,807

11,215

77

15,099

Intercompany eliminations

(2,055)

(11,732)

(1,312)

(15,099)

 

Total revenue

162,948

153,741

76,465

393,154

 

 

 

 

 

Operating profit before Adjusting Items

20,214

4,310

2,581

27,105

 

Adjusting Items

(33,283)

(28,599)

(5,639)

(67,521)

 

Statutory loss from operations

(13,069)

(24,289)

(3,058)

(40,416)

 

Net pension finance expense

 

 

 

(635)

Other finance expense

 

 

 

(3,017)

 

Statutory loss before tax

 

 

 

(44,068)

 

Income tax credit

 

 

 

710

 

Statutory net loss for the period

 

 

 

(43,358)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

52 weeks to 29 July 2016

 

 

Strategic Marketing
£'000

Marketing Activation
£'000

Books
£'000

Total
£'000

 

Revenue

 

 

 

 

External sales

138,745

159,694

69,107

367,546

Group sales

6,987

10,411

17

17,415

Intercompany eliminations

(1,577)

(15,298)

(540)

(17,415)

 

Total revenue

144,155

154,807

68,584

367,546

 

 

 

 

 

 

Operating profit before Adjusting Items

19,354

8,084

5,842

33,280

Adjusting Items

(18,140)

(15,752)

(1,231)

(35,123)

 

Statutory profit /(loss) from operations

1,214

(7,668)

4,611

(1,843)

 

Net pension finance expense

 

 

 

(972)

Other finance expense

 

 

 

(2,899)

 

Statutory loss before tax

 

 

 

(5,714)

 

Income tax charge

 

 

 

(2,391)

 

Statutory net loss for the period

 

 

 

(8,105)

 

 

Geographical segments

The Strategic Marketing, Marketing Activation and Books segments operate primarily in the UK, deriving more than 83% of the total revenue from customers located in the UK and 13% of the total revenue from customers located in the US.

The largest customer of the Group accounted for £30.0 million (2016: £25.9 million) of revenue in the current period.

3. Adjusting items

Adjusting items disclosed on the face of the Consolidated Income Statement are as follows:

Expense/(income)

2017
£'000

2017
£'000

2016
£'000

2016
£'000

Restructuring items

 

 

 

 

 

Redundancies and other charges

3,003

 

1,612

 

Costs associated with empty properties

-

 

976

 

 

 

3,003

 

2,588

 

St Ives Defined Benefits Pension Scheme costs

 

 

 

 

 

Administrative costs

756

 

582

 

Curtailment credit

-

 

(198)

 

Other

497

 

327

 

 

 

1,253

 

711

 

Costs related to acquisitions made in prior periods

 

 

 

 

 

Amortisation of acquired intangibles

9,953

 

9,237

 

Impairment of goodwill and other assets

33,058

 

12,712

 

Costs associated with prior period acquisitions and setup of subsidiaries

99

 

785

 

Contingent consideration required to be treated as remuneration

15,550

 

8,220

 

Increase/(decrease) in deferred consideration

7,362

 

(781)

 

 

 

66,022

 

30,173

 

Adjusting Items in administrative expenses

 

70,278

 

33,472

 

(Profit)/loss on disposal of property, plant and equipment

 

(2,760)

 

1,651

 

Adjusting Items before interest and tax

 

67,518

 

35,123

 

Net pension finance charge in respect of defined benefits pension scheme

 

638

 

972

 

Adjusting Items before tax

 

68,156

 

36,095

 

Income tax credit

 

(5,694)

 

(3,931)

 

Adjusting Items after tax

 

62,462

 

32,164

 

Restructuring items

The restructuring items in the current period include redundancy and restructuring costs of £1.5 million relating to the Books segment and £1.3 million relating to the Marketing Activation segment. During the period, redundancy costs of £0.2 million relating to the restructuring of Digital businesses, were incurred in the Strategic Marketing segment.

The profit on disposal of property, plant and equipment of £2.8 million relates to the sale of the Group's properties in Burnley, Peterborough and Roche. These items are recorded in the Marketing Activation segment.

3. Adjusting items (continued)

St Ives Defined Benefits Pension Scheme costs

The Scheme charges include service costs of £0.8 million, a net pension finance charge of £0.6 million and costs in relation to running the scheme of £0.5 million. These items are recorded in the Books segment.

Costs related to acquisitions made in prior periods

Charges relating to the amortisation of acquired customer relationships, proprietary techniques and software of £9.8 million and £0.2 million are recorded in the Strategic Marketing and Marketing Activation segments respectively.

Impairment charges of £23.9 million and £3.5 million are recorded against SP Group's and Tactical Solutions' respective assets due to continued decline in operating profit as a result of lower level of promotional activities in the grocery retail sector. Subsequent to the period end, the Group was informed by Sainsbury's that it would not renew its contract for the provision of marketing materials. As a result an impairment charge of £2.5 million has been recorded against the goodwill of Service Graphics in the 2016/2017 financial period. These charges have been recorded in the Marketing Activation segment.

Following the loss of the HarperCollins contract, an impairment charge of £2.9 million was recorded against non-current assets and inventories in the Books segment.

An impairment charge of £0.3 million relating to obsolete software was recorded within the Strategic Marketing segment.

In the current period, the tax credit of £5.7 million (2016: £3.9 million) relates to the items discussed above. This tax credit includes an adjustment of £0.8 million relating to the disposal of a subsidiary in a prior period.

4. Income tax credit/(charge).

Income tax credit/(charge) as shown in the Consolidated Income Statement is as follows:

 

 

2017
£'000

2016
£'000

Total current tax charge:

 

 

Current period

(4,512)

(5,468)

Adjustments in respect of prior periods

682

(27)

 

Total current tax charge

(3,830)

(5,495)

 

Deferred tax on origination and reversal of temporary differences:

 

 

Deferred tax credit

4,761

3,181

Adjustments in respect of prior periods

(221)

(77)

 

Total deferred tax credit

4,540

3,104

Total income tax credit/(charge)

710

(2,391)

 

The income tax credit/(charge) charge on the loss before and after adjusting items is as follows:

 

 

2017
£'000

2016
£'000

Tax charge on Adjusted profit before tax

(4,984)

(6,322)

Tax credit on Adjusting items

5,694

3,931

 

Total income tax credit/(charge)

710

(2,391)

 

 

4. Income tax charge (continued)

The income tax credit/(charge) can be reconciled to the loss before tax per the Consolidated Income Statement as follows:

 

 

2017
£'000

2016
£'000

 

Loss before tax

(44,068)

(5,714)

 

Tax calculated at a rate of 24.02% (2016: 22.66%)

10,585

1,295

Non-deductible charges on impairment of assets

(5,336)

(2,469)

Expenses not deductible for tax purposes

(7,486)

(2,675)

Effect of tax deductible goodwill

634

423

Effect of change in United Kingdom corporate tax rate

(287)

538

Credit on research and development activities

307

214

Other foreign taxes

-

(150)

Movement in deferred tax on industrial buildings

1,824

430

Utilisation of tax losses not previously recognised

9

107

Adjustments in respect of prior periods

460

(104)

 

Total income tax credit/(charge)

710

(2,391)

 

Income tax charge as shown in the Consolidated Statement of Comprehensive Income is as follows:

 

2017
£'000

2016
£'000

United Kingdom corporation tax credit at 19.67% (2016: 20%)

548

415

Deferred tax on origination and reversal of temporary differences

(2,132)

(960)

 

Total income tax charge

(1,584)

(545)

 

Income tax (charge)/credit as shown in the Consolidated Statement of Changes in Equity is as follows:

 

2017
£'000

2016
£'000

United Kingdom corporation tax credit at 19.67% (2016: 20%)

(16)

255

Deferred tax on origination and reversal of temporary differences

63

(231)

 

Total income tax credit

47

24

 

5. Dividends

 

per share

2017
£'000

2016
£'000

Final dividend paid for the 52 weeks ended 31 July 2015

5.55p

7,515

Interim dividend paid for the 26 weeks ended 29 January 2016

2.35p

3,419

Final dividend paid for the 52 weeks ended 29 July 2016

5.45p

7,777

Interim dividend paid for the 26 weeks ended 27 January 2017

0.65p

928

 

Dividends paid during the period

 

8,705

10,934

Proposed final dividend at the period end of 1.30p per share

(2016: 5.45p per share)

1.30p

1,857

 

6. Earnings per share

The calculation of the basic and diluted earnings per share is based on the following:

Number of shares

 

 

2017
'000

2016
'000

Weighted average number of ordinary shares for the purposes of basic earnings per share

142,642

136,633

Effect of dilutive potential ordinary shares:

 

 

   Share options

930

Weighted average number of ordinary shares for the purposes of adjusted diluted earnings per share

142,642

137,563

Basic and diluted earnings per share

 

 

 

2017

2016

 

Earnings
£'000

Earnings
per share
pence

Earnings
£'000

Earnings
per share
pence

Earnings/(loss) and basic earnings/(loss) per share

 

 

 

 

 

Adjusted earnings and Adjusted basic earnings per share

19,104

13.39

24,059

17.61

Adjusting items

(62,462)

(43.79)

(32,164)

(23.54)

 

Loss and basic loss per share

(43,358)

(30.40)

(8,105)

(5.93)

 

 

 

 

 

 

 

Earnings/(loss) and diluted earnings/(loss) per share

 

 

 

 

 

Adjusted earnings and Adjusted diluted earnings per share

19,104

13.39

24,059

17.49

Adjusting Items

(62,462)

(43.79)

(32,164)

(23.38)

 

Loss and diluted loss per share

(43,358)

(30.40)

(8,105)

(5.89)

 

 

Adjusted earnings is calculated by adding back Adjusting Items, as adjusted for tax, to the loss for the period.

7. Retirement benefits

The net obligation in respect of the St Ives Defined Benefits Pension Scheme of £16.0 million at 28 July 2017 has decreased compared to 29 July 2016 (£26.4 million) primarily due to an increase in plan assets with plan liabilities remaining broadly unchanged. In calculating the amount of plan liabilities, an increase in the rate of inflation was offset by an increase in the discount rate and a fall in the rate of increase in life expectancy.

8. Acquisition

The total impact on investing cash outflow in the current period relating to acquisitions made in prior period is as follows:

 

 

 

£'000

The App Business Limited

 

469 

Health Hive Limited

 

194 

Net cash outflow

 

663 

 

9. Notes to the condensed consolidated cash flow statement

Reconciliation of cash generated from operations

 

 

2017
£'000

2016
£'000

Loss from continuing operations

(40,413)

(1,843)

 

 

 

 

Adjustments for:

 

 

 

Depreciation of property, plant and equipment

6,149

7,201

Share of (profit)/loss from joint arrangement

(355)

122

Impairment losses

33,058

12,712

Amortisation of intangible assets

10,624

10,016

(Profit)/loss on disposal of property, plant and equipment

(2,818)

1,484

Share-based payment charge/(credit)

70

(238)

Settlement of share based payments

-

108

Net increase in derivative liabilities

-

(175)

Decrease in defined benefits pension scheme obligations

(2,789)

(2,278)

Re-measurement of deferred consideration

7,362

(781)

Charge for contingent consideration required to be treated as remuneration

15,550

8,220

(Decrease)/increase in provisions

(5)

55

 

Operating cash inflows before movements in working capital

26,433

34,603

 

Increase in receivables

(130)

(9,572)

Decrease/(increase) in inventory

583

(880)

Increase in payables

2,855

3,992

Increase/(decrease) in deferred income

948

(912)

Net decrease in provision for deemed remuneration

-

(3,581)

 

Cash generated from operations

30,689

23,650

Analysis of net debt

 

29 July
2016
£'000

Cash flow
£'000

Foreign exchange gains/(losses)
£'000

28 July
2017
£'000

Cash and cash equivalents

11,835

11,457

2,359

25,651

Bank loans

(92,595)

15,000

(2,650)

(80,245)

 

(80,760)

26,457

(291)

(54,594)

 

Cash and cash equivalents (which are presented as a single class of assets on the face of the consolidated balance sheet) comprise cash at bank and other short-term highly liquid investments with a maturity of three months or less.

The effective interest rates on cash and cash equivalents are based on current market rates.

10. Related parties

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. No material related party transactions have been entered into during the period, which might reasonably affect the decisions made by the users of these financial statements.

No executive officers of the Company or their associates had material transactions with the Group during the period.

11. Restatement

Previously the Group reported the employee costs of the Insight businesses, part of Strategic Marketing segment, under administrative expenses.  The Group's accounting policy is to include these types of costs within cost of sales and, accordingly, the comparatives have been re-stated to ensure consistency.

The impact of the prior period adjustments on the previously reported Consolidated Income Statement are summarised as follows:

 

 

52 weeks to 29 July 2016

 

Before Adjustments

Adjustments

Restated

 

£'000

£'000

£'000

 

Adjusted Results:

 

 

 

 

Cost of sales

249,730

12,738

262,468

Administrative expenses

59,570

(12,738)

46,832

 

 

 

 

 

Statutory Results:

 

 

 

 

Cost of sales

249,730

12,738

262,468

Administrative expenses

93,042

(12,738)

80,304

 

 

 

 

 

There is no impact on the Consolidated Statement of Comprehensive Income, Consolidated Statement of Changes in Equity, Consolidated Balance Sheet or Consolidated Cashflow for the comparatives.

12. Post balance sheet event

Subsequent to the period end, the Group reduced its term-loan by £5.5 million to £24.5 million.

 

The foregoing contains forward looking statements made by the directors in good faith based on information available to them up to 2 October 2017. Such statements need to be read with caution due to inherent uncertainties, including economic and business risk factors underlying such statement.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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