REG - 4imprint Group PLC - Half-year Report
07/08/2024 07:00
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RNS Number : 4331Z 4imprint Group PLC 07 August 2024
7
August 2024
4imprint Group plc
Half year results for the 26 weeks ended 29 June 2024 (unaudited)
Strong financial performance; taking share in challenging market conditions
4imprint Group plc, (the "Group"), a direct marketer of promotional products,
today announces its half year results for the 26 weeks ended 29 June 2024. The
results for the half year and prior half year are unaudited.
Financial Overview Half year Half year Change
2024 2023
$m $m
Revenue 667.5 635.5 +5%
Operating profit 69.9 63.8 +10%
Profit before tax 73.0 66.0 +11%
Cash and bank deposits 121.5 74.5 +63%
Basic EPS (cents) 194.3 176.2 +10%
Interim dividend per share (cents) 80.0 65.0 +23%
Interim dividend per share (pence) 62.7 50.8 +23%
Operational Overview
· Demand remained steady in challenging market conditions:
· 1,085,000 total orders received in H1 2024 (H1 2023: 1,047,000)
· 145,000 new customers acquired in H1 2024 (H1 2023: 158,000)
· Favourable existing customer retention profile
· Average order value +2% over H1 2023
· Operating profit margin increased to 10.5% (H1 2023: 10.0%),
reflecting further progress in gross profit management and a more flexible
marketing mix
· $20.0m Oshkosh distribution centre expansion on budget and on time
for late Q3 completion
· Interim dividend of 80.0c per share declared (2023: 65.0c) reflects
the Group's strong financial position
Paul Moody, Chairman said:
"Based on our first half financial results and recent internal forecasts, the
Board expects that 2024 full year Group revenue will reflect a growth rate
similar to the first half of the year. As a result of improving financial
dynamics in the business, particularly higher gross profit percentage and the
flexibility of the marketing mix, it is expected that profit before tax for
the 2024 full year will remain within the current range of analysts'
forecasts.
The Board is confident in the Group's ability to manage through the current
market conditions, blending resilient near-term financial results with
attractive prospects for significant further organic growth over the medium
term."
For further information, please contact:
4imprint Group plc MHP Group
Tel. + 44 (0) 20 3709 9680 Tel. + 44 (0) 7884 494112
hq@4imprint.co.uk 4imprint@mhpgroup.com
Kevin Lyons-Tarr, Chief Executive Officer Katie Hunt
David Seekings, Chief Financial Officer Eleni Menikou
Chairman's Statement
Performance summary
In the first half of 2024 the Group delivered a resilient trading performance.
Although revenue growth was more difficult to achieve than in recent years, we
have continued to outperform the overall promotional products industry,
thereby taking further market share.
Group revenue in the first half of 2024 was $667.5m, an increase of 5% over
the same period in 2023. Despite this more modest revenue growth, the Group
produced an excellent financial performance on all other measures. Gross
profit percentage showed further encouraging progress, with the reshaped
marketing mix demonstrating the efficiency and flexibility that we expected
against a softer economic backdrop. As a result of these factors, operating
profit margin improved to 10.5% (H1 2023: 10.0%).
Profit before tax for the period was up 11% at $73.0m (H1 2023: $66.0m),
driving basic earnings per share of 194.3c (H1 2023: 176.2c). Cash conversion
remained favourable, resulting in cash and bank deposits at the half year of
$121.5m (H1 2023: $74.5m).
Strategy
In summary, our strategy remains the same - to deliver attractive organic
revenue growth by increasing our share of the fragmented yet substantial
markets that we serve.
We take a long-term view of the business and its future development. This
includes making necessary investments in the people, marketing resources and
infrastructure required for success, regardless of the immediate market
conditions. Experience has taught us that if we remain diligent in looking
after the business in more difficult times, a market share opportunity tends
to follow.
Dividend
The Group is in a very strong financial position, with substantial cash and
bank deposits at the half year of $121.5m (H1 2023: $74.5m). Consequently, and
in line with its balance sheet funding and capital allocation guidelines, the
Board has declared an interim dividend of 80.0c per share (2023: 65.0c), an
increase of 23%.
Outlook
Based on our first half financial results and recent internal forecasts, the
Board expects that 2024 full year Group revenue will reflect a growth rate
similar to the first half of the year. As a result of improving financial
dynamics in the business, particularly higher gross profit percentage and the
flexibility of the marketing mix, it is expected that profit before tax for
the 2024 full year will remain within the current range of analysts'
forecasts.
The Board is confident in the Group's ability to manage through the current
market conditions, blending resilient near-term financial results with
attractive prospects for significant further organic growth over the medium
term.
Paul Moody
Chairman
6 August 2024
Operating and Financial Review
Operating Review
Half year Half year
2024 2023
Revenue $m $m
North America 654.7 623.8
UK & Ireland 12.8 11.7
Total 667.5 635.5
Half year Half year
2024 2023
Operating profit $m $m
Direct Marketing operations 72.3 66.3
Head Office costs (2.4) (2.5)
Total 69.9 63.8
Performance overview
In our 2023 full year results announcement, issued on 13 March 2024, we noted
a slow-down in growth in the promotional products industry in the second half
of 2023, reflecting a more cautious macroeconomic environment. This
challenging market backdrop continued into the first half of 2024.
A combination of factors has caused softness in demand across our industry.
These factors include: concern over a possible recession; interest rates
remaining at higher levels for longer than anticipated; residual inflation
running higher than GDP growth; and continuing domestic and geo-political
instability. Since promotional products mostly represent discretionary spend,
our customers, both potential and existing, have kept a tight hold on their
budgets.
ASI, a North American industry body, recorded market revenue growth estimates
of only 0.1% in the fourth quarter of 2023, followed by a decline of 0.9% and
gain of 1.3% in the first and second quarters of 2024 respectively. Looked at
another way, the US promotional products market has been essentially flat and
has likely trailed the broader US economy as measured by US GDP growth. The
result of this for 4imprint has been a challenging first half of 2024 for
demand generation, contrasting clearly with the post-pandemic rebound years of
2022 and 2023. The smaller Canadian and UK markets experienced similar trading
conditions over the same period.
In total, 1,085,000 orders were received in the first half of 2024. This was
an increase of 4% over the same period in 2023, reflecting strong existing
customer retention but a more difficult environment for new customer
acquisition.
Orders from new customers totaled 250,000, 8% below the 272,000 received in
the first half of 2023. 145,000 new customers were acquired over the period
compared to 158,000 in 2023, indicative of the softening in the promotional
products industry as a whole. We expect new customer demand to improve against
the softer prior year comparative as we move though the second half of the
year.
On the other hand, 835,000 orders were received from existing customers in the
period, an increase of 8% over 775,000 in the first half of 2023. We are
pleased with the strength and resilience of our customer retention, which is a
positive indicator for future performance, demonstrating the quality of the
customers acquired in recent periods.
Average order values remained strong and were 2% higher than the same period
in the prior year.
Group revenue for the 2024 half year was $667.5m (H1 2023: $635.5m), an
increase of 5%. Operating profit for the period was $69.9m, an increase of 10%
compared to $63.8m in the first half of 2023. Importantly, we maintained a
double-digit operating profit margin percentage for the Group at 10.5% (H1
2023: 10.0%). There were two primary drivers contributing to this strength in
operating profit margin:
· Gross profit percentage for the first half of 2024 was 32.1%, a
significant improvement compared to 30.4% in the same period of 2023,
benefitting from carefully targeted price adjustments implemented throughout
2023 and the first half of 2024, along with minimal supplier costs increases.
· The resilience and flexibility of the marketing engine, where we
have doubled down on our investment, particularly in the brand component of
the mix, generating revenue per marketing dollar in the first half of $7.64
(H1 2023: $8.22). This investment will stand us in good stead as economic
conditions improve.
Our business model remains very cash-generative, with consistent negative
working capital requirements. Underlying operating cash flow conversion was
106% (H1 2023: 152%). Free cash flow of $59.1m was generated in the period (H1
2023: $80.7m), delivering a cash and bank deposits total of $121.5m (H1 2023:
$74.5m) at the half year.
Operational highlights
Good progress has been made in the period in several operational areas.
· People. We made a significant investment in people throughout
2023, most significantly in customer service and production resources. As a
result, our platform has been strengthened and consolidated to handle further
growth. In 2024 further hiring has continued, mainly concentrating on
specialist areas such as supply chain, compliance, HR, IT, merchandising and
marketing. We continue to be able to attract the level of talent that the
business requires, in large part due to our reputation in the community as a
good employer.
· Marketing. The first half of 2024 saw continued work in the
development of our marketing engine, particularly as regards the brand
element, mainly TV. We understand clearly the need to keep up our presence
(and therefore spend) on marketing to our customers. This investment mentality
is aimed at the longer-term development of the 4imprint brand as well as more
short-term activation techniques. All marketing activities are subject to our
tried and tested "test, read, adjust" approach to finding the optimal mix.
· Supply. The supply chain position has been stable in the first
half of 2024. In conjunction with our supplier partners, we have addressed
both the severe supply chain disruption and the ensuing inflationary pressures
experienced in the post-pandemic recovery period.
· Screen-printing. Our screen-print facility in Appleton has now
been operational for more than a year. We have been successful in recruiting
the team members required for the new operation, including the more recent
addition of a second shift, supporting our overall apparel decoration
capability.
· Oshkosh facilities. We announced with our 2023 full year results
that we intended to make a further expansion at our distribution centre site
in Oshkosh, Wisconsin. This facility expansion is aimed primarily at
supporting the continued growth of the apparel category of our product range.
The construction of this $20m project is well under way, with the new
footprint anticipated to be ready for occupancy in September 2024.
Outlook
In summary, although actual demand has been below our original expectations
for the 2024 half year, it is important to note that 4imprint has continued to
take market share in the period, with 6% demand level revenue growth compared
to industry statistics showing broadly flat overall revenues over the period.
In addition, an improved gross profit percentage and a more flexible marketing
portfolio have helped drive strong profitability and cash generation even as
we continue to make important investments in people and infrastructure that
will help to propel the future growth of the business.
Financial Review
Half year Half year
2024 2023
$m $m
Operating profit 69.9 63.8
Net finance income 3.1 2.2
Profit before tax 73.0 66.0
Taxation (18.3) (16.5)
Profit for the period 54.7 49.5
The Group's revenue, gross profit and operating profit in the period,
summarising expense by function, were as follows:
Half year Half year
2024 2023
$m $m
Revenue 667.5 635.5
Gross profit 214.0 193.3
Marketing costs (87.4) (77.3)
Selling costs (24.7) (22.7)
Administration and central costs (31.0) (28.5)
Share option charges and related social security costs (0.9) (0.5)
Defined benefit pension plan administration costs (0.1) (0.5)
Operating profit 69.9 63.8
Operating result
The first six months of 2024 have seen a solid financial performance, despite
market conditions remaining challenging. Demand level revenue (value of orders
received) increased by 6% over the strong 2023 comparative period, benefitting
from increases in both total order numbers (4%) and average order value (2%).
Reported revenue for the period was 5% above the first half of 2023.
The gross profit percentage of 32.1% (H1 2023: 30.4%) has benefitted from
carefully targeted price adjustments implemented throughout 2023, along with
smaller adjustments made in the period and minimal supplier cost increases.
The reshaped marketing mix continues to demonstrate the efficiency and
flexibility that we expected. With the softer market conditions presenting an
opportunity to increase our market share, additional investment has been made
into brand and search engine marketing activity whilst still maintaining spend
at a very efficient 13% of revenue (H1 2023: 12%). Revenue per marketing
dollar was $7.64 (H1 2023: $8.22).
Selling, administration, and central costs together have increased 9% over H1
2023. This increase is mainly attributable to the annualisation of the
significant investment in people made throughout 2023.
The factors outlined above have combined to deliver a significant uplift in
operating profit to $69.9m (H1 2023: $63.8m) and operating profit margin to
10.5% (H1 2023: 10.0%), demonstrating the strength of our direct marketing
model even in challenging market conditions.
Foreign exchange
The primary US dollar exchange rates relevant to the Group's results were as
follows:
Half year 2024 Half year 2023 Full year 2023
Period end Average Period end Average Period end Average
Sterling 1.26 1.26 1.27 1.23 1.27 1.24
Canadian dollars 0.73 0.74 0.76 0.74 0.76 0.74
The Group reports in US dollars, its primary trading currency. It also
transacts business in Canadian dollars, Sterling and Euros. Sterling/US dollar
is the exchange rate most likely to impact the Group's financial performance.
The primary foreign exchange considerations relevant to the Group's operations
are as follows:
· Translational risk in the income statement remains low with the
majority of the Group's revenue arising in US dollars, the Group's reporting
currency.
· Most of the constituent elements of the Group balance sheet are
US dollar-based.
· The Group generates cash mostly in US dollars, but its primary
applications of post-tax cash are Shareholder dividends, some Head Office
costs and, up until the end of July 2023, pension deficit reduction
contributions, all of which are paid in Sterling.
As such, the Group's cash position is sensitive to Sterling/US dollar exchange
movements. To the extent that Sterling strengthens against the US dollar, less
funds are available in payment currency to fund these cash outflows.
Share option charges
A total of $0.9m (H1 2023: $0.5m) was charged in the period in respect of IFRS
2 'Share-based Payments'. This was made up of two elements: (i) executive
awards under the Deferred Bonus Plan (DBP) and 2015 Incentive Plan; and (ii)
charges in respect of employee savings-related share schemes.
Current options and awards outstanding are 74,764 shares under the US Employee
Stock Purchase Plan, 10,956 shares under the UK Save As You Earn scheme, and
47,666 share awards under the DBP.
Net finance income
Net finance income in the period was $3.1m (H1 2023: $2.2m). This comprises
interest earned on cash deposits, lease interest charges under IFRS 16 and in
H1 2023, the net income on the defined benefit pension plan assets and
liabilities. The increase in the net finance income reflects the higher
average cash and bank deposits balance.
Taxation
The tax charge for the half year was $18.3m (H1 2023: $16.5m) giving an
effective tax rate of 25% (H1 2023: 25%). The primary component of the charge
relates to current tax of $17.8m (H1 2023: $17.6m) on US taxable profits.
Earnings per share
Basic earnings per share increased 10% to 194.3c (H1 2023: 176.2c), reflecting
the 11% increase in profit after tax and a weighted average number of shares
in issue marginally higher than the prior year.
Dividends
Dividends are determined in US dollars and paid in Sterling, converted at the
exchange rate on the date that the dividend is declared.
The Board has declared an interim dividend of 80.0c per share (2023: 65.0c),
an increase of 23%. In Sterling, the interim dividend per share will be 62.7p
(2023: 50.8p). The dividend will be paid on 16 September 2024 to Shareholders
on the register at the close of business on 16 August 2024.
Defined benefit pension plan
The Group sponsors a legacy UK defined benefit pension plan (the "Plan") which
has been closed to new members and future accruals for several years. The Plan
has 128 pensioners and 191 deferred members.
The Trustee of the Plan entered into an agreement with Legal and General
Assurance Society Limited to insure substantially all remaining pension
benefits of the Plan through the purchase of a bulk annuity policy at the end
of June 2023. The transaction took the form of a buy-in arrangement, with the
insurer funding the Plan for the future payment of liabilities. The fair value
of the bulk annuity policy matches the liabilities being insured, thus
eliminating inflation, interest rate and longevity risks. As a result of this
transaction, the Group ceased to make monthly deficit funding contributions to
the Plan from August 2023 but will still fund the ongoing administration costs
and settlement of residual liabilities.
The Trustee and the Group remain committed to the full de-risking of the
legacy defined benefit pension obligations. It is anticipated that we will be
able to move from a buy-in to a buy-out arrangement in 2025.
At 29 June 2024 and 30 December 2023, the Plan was in a breakeven position on
an IAS 19 basis. Gross Plan assets and liabilities under IAS 19 were both
$22.2m.
The movements in the net IAS 19 position is analysed as follows:
$m
IAS 19 surplus at 30 December 2023 -
Return on Plan assets (excluding interest income) (1.1)
Remeasurement gains due to changes in assumptions 1.1
IAS 19 surplus at 29 June 2024 -
Following the entering of the buy-in arrangement discussed above and, as
expected, the net IAS 19 position has not changed over the period.
A triennial actuarial valuation of the Plan was completed as at 30 September
2022 and this forms the basis of the IAS 19 valuation set out above.
Cash flow
The Group had cash and bank deposits of $121.5m at 29 June 2024 (1 July 2023:
$74.5m; 30 December 2023: $104.5m).
Cash flow in the period is summarised as follows:
Half year Half year
2024 2023
$m $m
Operating profit 69.9 63.8
Share option charges 0.9 0.5
Defined benefit pension administration costs paid by the Plan - 0.5
Depreciation and amortisation 2.3 2.3
Lease depreciation 0.8 0.8
Change in working capital 13.3 32.8
Capital expenditure (13.4) (3.5)
Underlying operating cash flow 73.8 97.2
Tax and interest (12.9) (14.4)
Defined benefit pension plan contributions - (2.1)
Own share transactions (0.6) (0.4)
Capital element of lease payments (0.7) (0.7)
Exchange and other (0.5) 1.1
Free cash flow 59.1 80.7
Dividends to Shareholders (42.1) (93.0)
Net cash inflow/(outflow) in the period 17.0 (12.3)
The Group generated underlying operating cash flow of $73.8m (H1 2023:
$97.2m), a conversion rate of 106% of operating profit (H1 2023: 152%). The
high conversion rate reflects the efficiency of the Group's drop-ship business
model. The cash conversion rate of 152% in H1 2023 benefitted from the
unwinding of the elevated net working capital position from the 2022 year-end
driven by disruption to the supply chain. Capital expenditure includes
expenditure on our planned $20m project to expand capacity and the solar array
at the Oshkosh distribution centre, and investments in our embroidery and
screen-printing operations.
Free cash flow decreased by $21.6m to $59.1m (H1 2023: $80.7m) due principally
to the unwinding of the abnormal net working capital position from the 2022
year-end in the first half of 2023. The decrease was partially offset by the
cessation of deficit funding contributions to the Plan from August 2023
(outflow of $2.1m in H1 2023). The 2023 final dividend of $42.1m was paid to
Shareholders in June 2024.
Balance sheet and Shareholders' funds
Net assets at 29 June 2024 were $147.8m, compared to $134.5m at 30 December
2023. The balance sheet is summarised as follows:
29 June 30 December
2024 2023
$m $m
Non-current assets 62.3 51.4
Working capital (21.2) (7.9)
Cash and bank deposits 121.5 104.5
Lease liabilities (12.0) (12.3)
Other assets and liabilities - net (2.8) (1.2)
Net assets 147.8 134.5
Shareholders' funds increased by $13.3m since the 2023 year-end. The main
constituent elements of the change were retained profit in the period of
$54.7m, net of equity dividends paid to Shareholders of $(42.1)m.
The Group had a net negative working capital balance of $21.2m at 29 June 2024
(30 December 2023: $7.9m). This net negative position reflects the strength of
our business model, with minimal inventory requirements, a high proportion of
customers paying for orders by credit card and the payment of suppliers to
agreed terms.
Financing and liquidity
Full details of the Board's balance sheet funding guidelines and capital
allocation priorities are set out on page 41 of the Annual Report &
Accounts 2023. The Board retains the same guidelines in both areas.
The primary aim of these guidelines and priorities is to provide operational
and financial flexibility through economic cycles, to be able to invest in
opportunities as they arise, and to meet commitments to both Shareholders
through dividend payments and to the Pension Plan Trustee through the full
de-risking of our legacy defined benefit pension obligations.
The Group has a $20.0m working capital facility with its principal US bank,
JPMorgan Chase, N.A. The facility has minimum net income and debt to EBITDA
covenants. The interest rate is the Secured Overnight Financing Rate (SOFR)
plus 1.6%, and the facility expires on 31 May 2026. In addition, an overdraft
facility of £1.0m, with an interest rate of the Bank of England base rate
plus 2.0% (or 2.0% if higher), is available from the Group's principal UK
bank, Lloyds Bank plc, until 31 December 2024.
The Group had cash and bank deposits of $121.5m at the period end and has no
current requirement or plans to raise additional equity or core debt funding.
Principal risks and uncertainties
The Board has ultimate responsibility for oversight and management of risk and
control across the Group. The Audit Committee assists the Board in fulfilling
its responsibilities to maintain effective governance and oversight of the
Group's risk management and internal controls.
Risks are identified through a variety of sources, including internally from
within the Group including the Board, operational and functional management
teams and the Group Environmental and Business Risk Management Committees, and
externally, to ensure that emerging risks are considered. Risk identification
focuses on those risks which, if they occurred, have the potential to have a
material impact on the Group and the achievement of its strategic, operational
and compliance objectives. Risks are categorised into the following groups:
strategic risks; operational risks; reputational risks; and environmental
risks.
Management is responsible for evaluating each significant risk and
implementing specific risk mitigation activities and controls with the aim of
reducing the resulting residual risk to an acceptable level, as determined in
conjunction with the Group's risk appetite. The Business Risk Management
Committee meets at least three times a year and reviews the consolidated Group
risk register and the mitigating actions and controls and provides updates to
the Audit Committee. This process is supplemented with risk and control
assessments completed by the operating locations and Group function annually
and the activities of the internal audit function.
The current principal risks and uncertainties that would impact the successful
delivery of the Group's strategic goals are set out on pages 45 to 53 of the
Annual Report & Accounts 2023, a copy of which is available on the Group's
investor relations website at https://investors.4imprint.com
(https://investors.4imprint.com) . These are:
· Macroeconomic conditions.
· Markets and competition.
· Effectiveness of key marketing techniques and brand development.
· Business facility disruption.
· Domestic supply and delivery.
· Failure or interruption of information technology systems and
infrastructure.
· Cyber threats.
· Supply chain compliance and ethics.
· Legal, regulatory and compliance.
· Climate change.
· Products and market trends.
These risks have not changed since the 2023 year-end.
Going concern
The condensed consolidated financial statements have been prepared on a going
concern basis. In adopting the going concern basis, the Directors have
considered the Group's business activities, principal risks and uncertainties,
performance, and financial position.
The Group has modelled its cash flow outlook for the period to 27 December
2025, considering the ongoing uncertainties in the macroeconomic and
geopolitical environment. This forecast shows no liquidity concerns or
requirement to utilise the Group's undrawn facilities described in this
Financial Review.
As described in the Financial Review section of the Annual Report &
Accounts 2023, the Group has also modelled a downside scenario reflecting
severe but plausible downside demand assumptions over a three-year horizon
which showed no liquidity concerns or requirement to utilise the Group's
undrawn facilities in the going concern period.
Based on their assessment, the Directors have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group's and Company's ability
to continue as a going concern for the period to 27 December 2025.
Kevin Lyons-Tarr David Seekings
Chief Executive Officer Chief Financial Officer
6 August 2024
Condensed Consolidated Income Statement
For the 26 weeks ended 29 June 2024
Half year Half year Full year
2024 2023 2023
Note Unaudited Unaudited Audited
$m $m $m
Revenue 6 667.5 635.5 1,326.5
Operating expenses (597.6) (571.7) (1,190.3)
Operating profit 6 69.9 63.8 136.2
Finance income 3.3 2.3 4.7
Finance costs (0.2) (0.2) (0.4)
Pension finance income - 0.1 0.2
Net finance income 3.1 2.2 4.5
Profit before tax 73.0 66.0 140.7
Taxation 7 (18.3) (16.5) (34.5)
Profit for the period 54.7 49.5 106.2
Cents Cents Cents
Earnings per share
Basic 8 194.3 176.2 377.9
Diluted 8 193.9 175.7 377.0
Condensed Consolidated Statement of Comprehensive Income
For the 26 weeks ended 29 June 2024
Half year Half year Full year
2024 2023 2023
Unaudited Unaudited Audited
$m $m $m
Profit for the period 54.7 49.5 106.2
Other comprehensive income
Items that may be reclassified subsequently to the income statement:
Currency translation differences (0.5) 1.4 1.4
Items that will not be reclassified subsequently to the income statement:
Return on pension plan assets (excluding interest income and impact of buy-in (1.1) (1.6) (1.1)
policy)
Re-measurement loss on pension buy-in policy - (4.6) (4.6)
Re-measurement gains/(losses) on post-employment obligations 1.1 (0.7) (1.8)
Tax relating to components of other comprehensive income 0.8 1.2 2.3
Other comprehensive income for the period, net of tax 0.3 (4.3) (3.8)
Total comprehensive income for the period, net of tax 55.0 45.2 102.4
Condensed Consolidated Balance Sheet
At 29 June 2024
29 June 1 July 30 Dec
2024 2023 2023
Unaudited Unaudited Audited
Note $m $m $m
Non-current assets
Intangible assets 1.4 1.8 1.5
Property, plant and equipment 46.0 30.8 34.7
Right-of-use assets 11.0 12.3 11.4
Deferred tax assets 3.9 3.0 3.8
Retirement benefit asset - 0.1 -
62.3 48.0 51.4
Current assets
Inventories 20.4 18.3 13.6
Trade and other receivables 74.7 81.4 68.4
Corporation tax debtor - - 0.4
Other financial assets - bank deposits - - 14.0
Cash and cash equivalents 121.5 74.5 90.5
216.6 174.2 186.9
Current liabilities
Lease liabilities 10 (1.6) (1.4) (1.4)
Trade and other payables (116.3) (115.8) (89.9)
Current tax creditor (1.6) (0.5) -
(119.5) (117.7) (91.3)
Net current assets 97.1 56.5 95.6
Non-current liabilities
Lease liabilities 10 (10.4) (11.6) (10.9)
Deferred tax liabilities (1.2) (0.4) (1.6)
(11.6) (12.0) (12.5)
Net assets 147.8 92.5 134.5
Shareholders' equity
Share capital 18.9 18.8 18.9
Share premium reserve 70.8 68.5 70.8
Other reserves 5.3 5.8 5.8
Retained earnings 52.8 (0.6) 39.0
Total Shareholders' equity 147.8 92.5 134.5
Condensed Consolidated Statement of Changes in Shareholders' Equity
(unaudited)
For the 26 weeks ended 29 June 2024
Retained earnings
Share Other
capital Share reserves
premium
reserve
Own Profit Total
shares and loss equity
$m $m $m $m $m $m
Balance at 1 January 2023 18.8 68.5 4.4 (0.9) 49.4 140.2
Profit for the period 49.5 49.5
Other comprehensive income 1.4 (5.7) (4.3)
Total comprehensive income 1.4 43.8 45.2
Proceeds from options exercised 0.1 0.1
Own shares utilised 0.6 (0.6) -
Own shares purchased (0.5) (0.5)
Share-based payment charge 0.5 0.5
Dividends (93.0) (93.0)
Balance at 1 July 2023 18.8 68.5 5.8 (0.8) 0.2 92.5
Profit for the period 56.7 56.7
Other comprehensive income - 0.5 0.5
Total comprehensive income - 57.2 57.2
Shares issued 0.1 2.3 2.4
Own shares utilised 0.1 (0.1) -
Own shares purchased (0.6) (0.6)
Share-based payment charge 0.6 0.6
Deferred tax relating to components of equity 0.2 0.2
Dividends (17.8) (17.8)
Balance at 30 December 2023 18.9 70.8 5.8 (1.3) 40.3 134.5
Profit for the period 54.7 54.7
Other comprehensive income (0.5) 0.8 0.3
Total comprehensive income (0.5) 55.5 55.0
Own shares utilised 1.1 (1.1) -
Own shares purchased (0.6) (0.6)
Share-based payment charge 0.9 0.9
Deferred tax relating to components of equity 0.1 0.1
Dividends (42.1) (42.1)
Balance at 29 June 2024 18.9 70.8 5.3 (0.8) 53.6 147.8
Condensed Consolidated Cash Flow Statement
For the 26 weeks ended 29 June 2024
Half year Half year Full year
2024 2023 2023
Unaudited Unaudited Audited
Note $m $m $m
Cash flows from operating activities
Cash generated from operations 12 87.1 98.4 166.9
Tax paid (15.8) (16.5) (33.8)
Finance income received 3.1 2.3 4.3
Lease interest (0.2) (0.2) (0.4)
Net cash generated from operating activities 74.2 84.0 137.0
Cash flows from investing activities
Purchase of property, plant and equipment (13.5) (3.6) (10.0)
Proceeds from sale of property, plant and equipment 0.1 0.1 0.3
Decrease in current asset investments - bank deposits 14.0 36.1 21.0
Net cash from investing activities 0.6 32.6 11.3
Cash flows from financing activities
Capital element of lease payments (0.7) (0.7) (1.4)
Proceeds from issue of ordinary shares - - 2.4
Proceeds from share options exercised - 0.1 0.1
Purchases of own shares (0.6) (0.5) (1.1)
Dividends paid to Shareholders 9 (42.1) (93.0) (110.8)
Net cash used in financing activities (43.4) (94.1) (110.8)
Net movement in cash and cash equivalents 31.4 22.5 37.5
Cash and cash equivalents at beginning of the period 90.5 51.8 51.8
Exchange (losses)/gains on cash and cash equivalents (0.4) 0.2 1.2
Cash and cash equivalents at end of the period 121.5 74.5 90.5
Notes to the Interim Financial Statements
1 General information
4imprint Group plc is a public limited company incorporated in England and
Wales, domiciled in the UK and listed on the London Stock Exchange. Its
registered office is 25 Southampton Buildings, London, WC2A 1AL. The Group is
engaged in the direct marketing of promotional products.
The Group presents these interim condensed consolidated financial statements
in US dollars and, consistent with the statutory accounts for the period ended
30 December 2023, rounded to $0.1m. Numbers in the financial statements were
previously rounded to $'000, however, given the growth of the Group, it is now
considered appropriate to round numbers to $0.1m.
These interim condensed consolidated financial statements, which were
authorised for issue in accordance with a resolution of the Directors on 6
August 2024, do not comprise statutory accounts within the meaning of Section
434 of the Companies Act 2006. Statutory accounts for the period ended 30
December 2023 were approved by the Board of Directors on 12 March 2024 and
delivered to the Registrar of Companies. The report of the auditors on those
accounts was unqualified, did not contain an emphasis of matter paragraph and
did not contain any statement under Section 498 of the Companies Act 2006.
The financial information contained in this report has neither been audited
nor reviewed by the auditors, pursuant to Auditing Practices Board guidance on
Review of Interim Financial Information.
2 Basis of preparation
These interim condensed consolidated financial statements for the 26 weeks
ended 29 June 2024 have been prepared, in US dollars, in accordance with the
Disclosure and Transparency Rules of the Financial Conduct Authority and IAS
34 'Interim Financial Reporting', as adopted by the United Kingdom, and should
be read in conjunction with the Group's financial statements for the period
ended 30 December 2023, which were prepared in accordance with UK-adopted
International Accounting Standards.
As outlined in the Going concern section of the Financial Review, the
Directors consider it appropriate to continue to adopt the going concern basis
in preparing these interim condensed consolidated financial statements.
The tax charge for the interim period is accrued based on the best estimate of
the tax charge for the full financial year.
3 Accounting policies
The accounting policies adopted in the preparation of these interim condensed
consolidated financial statements are consistent with those followed in the
preparation of the Group's annual consolidated financial statements for the
period ended 30 December 2023, as described in those annual financial
statements. New accounting standards applicable for the first time in this
reporting period have no impact on the Group's results or balance sheet.
4 Estimates and judgments
The critical accounting judgments and key assumptions and sources of
estimation uncertainty were the same as those applied to the Group's annual
consolidated financial statements for the period ended 30 December 2023,
except for the 'purchase of a bulk annuity policy' critical accounting
judgment that related to the purchase of a bulk purchase annuity policy in
2023 and which therefore has no impact on the half year 2024.
5 Financial risk management
The Group's activities expose it to a variety of financial risks: currency
risk; credit risk; liquidity risk; and capital risk. These interim condensed
consolidated financial statements do not include all financial risk management
information and disclosures required in the annual financial statements; they
should be read in conjunction with the Group's annual consolidated financial
statements for the period ended 30 December 2023. There have been no changes
in any financial risk management policies since that date.
6 Segmental reporting
The Group has two operating segments, North America and UK & Ireland. The
costs of the Head Office are reported separately to the Board, but this is not
an operating segment.
Half year Half year 2023 Full year 2023
Revenue 2024 $m $m
$m
North America 654.7 623.8 1,302.6
UK & Ireland 12.8 11.7 23.9
Total Group revenue 667.5 635.5 1,326.5
Profit Half year 2024 Half year 2023 Full year 2023
$m $m $m
North America 72.6 66.3 141.0
UK & Ireland (0.3) - 0.2
Operating profit from Direct Marketing operations 72.3 66.3 141.2
Head Office costs (2.4) (2.5) (5.0)
Operating profit 69.9 63.8 136.2
Net finance income 3.1 2.2 4.5
Profit before tax 73.0 66.0 140.7
Other segmental information
Assets Liabilities
29 June 2024 1 July 2023 30 Dec 29 June 1 July 2023 30 Dec
$m $m 2023 2024 $m 2023
$m $m $m
North America 148.0 139.7 125.6 (126.0) (120.5) (99.8)
UK & Ireland 4.2 4.4 3.6 (4.1) (4.4) (2.9)
Head Office 126.7 78.1 109.1 (1.0) (4.8) (1.1)
278.9 222.2 238.3 (131.1) (129.7) (103.8)
Head Office assets principally include other financial assets - bank deposits,
cash and cash equivalents and deferred tax assets. Head Office liabilities
include other payables and accruals.
7 Taxation
Taxation for the period has been calculated using the estimated tax rate that
would be applicable to the full year. The major components of the income tax
expense in the interim condensed consolidated income statement are:
Half year 2024 Half year 2023 Full year 2023
$m $m $m
UK tax - current - 1.8 2.0
Overseas tax - current 17.8 15.8 32.1
Total current tax 17.8 17.6 34.1
Origination and reversal of temporary differences 0.5 (1.1) 0.4
Total deferred tax 0.5 (1.1) 0.4
Taxation 18.3 16.5 34.5
On 20 June 2023 the UK Finance Bill was substantively enacted in the UK,
including legislation to implement the OECD Pillar Two income taxes for
periods beginning on or after 31 December 2023. The legislation includes an
income inclusion rule and a domestic minimum tax, which together are designed
to ensure a minimum effective tax rate of 15% in each country in which the
Group operates. Similar legislation is being enacted by other governments
around the world. The Group has applied the mandatory temporary exception in
the Amendments to IAS 12 issued in May 2023 and endorsed in July 2023 and has
neither recognised nor disclosed information about deferred tax assets or
liabilities relating to Pillar Two income taxes and there is no current tax
impact on the financial statements for the half year 2024. Based on an
assessment of historic data and forecasts for the period ending 28 December
2024, the Group does not expect a material exposure to Pillar Two income taxes
for the full year 2024.
8 Earnings per share
The basic and diluted earnings per share are calculated based on the following
data:
Half year Half year Full year
2024
2023
2023
$m $m $m
Profit after tax 54.7 49.5 106.2
Half year Half year Full year
2024 Number 2023 Number 2023 Number
'000 '000 '000
Weighted average number of shares 28,155 28,068 28,105
Dilutive effect of share-based payments 60 82 66
Diluted weighted average number of shares 28,215 28,150 28,171
Basic earnings per share 194.3c 176.2c 377.9c
Diluted earnings per share 193.9c 175.7c 377.0c
The weighted average number of shares excludes shares held by the 4imprint
Group plc employee benefit trust (EBT). The effect of excluding shares held by
the EBT is to reduce the average number by 17,774 (H1 2023: 17,444; FY 2023:
18,008).
9 Dividends Half year Half year Full year
2024 2023 2023
Equity dividends - ordinary shares $m $m $m
Interim paid: nil (H1 2023: nil; FY 2023: 65.0c) - - 17.8
Final paid: 150.0c (H1 2023: 120.0c; FY 2023: 42.1 34.9 34.9
120.0c)
Special paid: nil (H1 2023: 200.0c; FY 2023: 200.0c) - 58.1 58.1
42.1 93.0 110.8
The Directors have declared an interim dividend for 2024 of 80.0c per ordinary
share (interim 2023: 65.0c), an estimated payment amount of $22.5m, which will
be paid on 16 September 2024 to Shareholders on the register at the close of
business on 16 August 2024.
10 Leases
The Group leases premises in Oshkosh and Appleton, Wisconsin, and in London,
England. Set out below are the carrying amounts of lease liabilities and the
movements during the period:
Half year 2024 Half year 2023 Full year 2023
$m $m $m
At start of period 12.3 13.7 13.7
Additions 0.4 - -
Interest charge 0.2 0.2 0.4
Payments (0.9) (0.9) (1.8)
At end of period 12.0 13.0 12.3
Current 1.6 1.4 1.4
Non-current 10.4 11.6 10.9
11 Capital commitments
The Group had capital commitments contracted but not provided for in the
financial statements at 29 June 2024 for property, plant and equipment of
$4.7m (1 July 2023: $1.6m; 30 December 2023: $16.3m).
12 Cash generated from operations
Half year Half year Full year
2024 2023 2023
$m $m $m
Profit before tax 73.0 66.0 140.7
Adjustments for:
Depreciation of property, plant and equipment 2.2 2.1 4.3
Amortisation of intangible assets 0.1 0.2 0.4
Depreciation of right-of-use assets 0.8 0.8 1.7
Profit on disposal of property, plant and equipment (0.1) (0.2) -
Share option charges 0.9 0.5 1.1
Net finance income (3.1) (2.2) (4.5)
Defined benefit pension administration costs paid by the Plan - 0.5 0.5
Contributions to defined benefit pension Plan - (2.1) (6.5)
Changes in working capital:
(Increase)/decrease in inventories (6.8) (0.2) 4.5
(Increase)/decrease in trade and other receivables (6.5) 3.8 20.0
Increase in trade and other payables 26.6 29.2 4.7
Cash generated from operations 87.1 98.4 166.9
13 Related party transactions
Transactions and balances between the Company and its subsidiaries have been
eliminated on consolidation. The Group did not participate in any related
party transactions with parties outside of the Group.
Alternative Performance Measures
An Alternative Performance Measure (APM) is a financial measure of historical
or future financial performance, financial position, or cash flows, other than
a financial measure defined or specified within IFRS.
The Group uses APMs to supplement standard IFRS measures to provide users with
information on underlying trends and additional financial measures, which the
Group considers will aid users' understanding of the business.
Definitions of the Group's APMs can be found on pages 146 and 147 of the
Annual Report & Accounts 2023.
Reconciliations of the free cash flow, capital expenditure, underlying
operating cash flow, and cash and bank deposits APMs to their closest IFRS
measures are provided below:
Half year 2024 Half year 2023
$m $m
Net movement in cash and cash equivalents 31.4 22.5
Add back: Decrease in current asset investments - bank deposits (14.0) (36.1)
Add back: Dividends paid to Shareholders 42.1 93.0
Less: Exchange (losses)/gains on cash and cash equivalents and bank deposits (0.4) 1.3
Free cash flow 59.1 80.7
Half year 2024 Half year 2023
$m $m
Purchase of property, plant and equipment (13.5) (3.6)
Proceeds from sale of property, plant and equipment 0.1 0.1
Capital expenditure (13.4) (3.5)
Half year 2024 Half year 2023
$m $m
Cash generated from operations 87.1 98.4
Add: Contributions to defined benefit pension Plan - 2.1
Add: Profit on disposal of property, plant and equipment 0.1 0.2
Less: Purchases of property, plant and equipment and intangible assets (13.5) (3.6)
Add: Proceeds from sale of property, plant and equipment 0.1 0.1
Underlying operating cash flow 73.8 97.2
29 June 1 July 30 Dec
2024 2023 2023
$m $m $m
Other financial assets - bank deposits - - 14.0
Cash and cash equivalents 121.5 74.5 90.5
Cash and bank deposits 121.5 74.5 104.5
Statement of Directors' Responsibilities
The Directors confirm that, to the best of their knowledge, these interim
condensed consolidated financial statements have been prepared in accordance
with IAS 34 as adopted by the United Kingdom and that the interim management
report includes a fair review of the information required by DTR 4.2.7 and
4.2.8, namely:
· An indication of the important events that have occurred during
the first half of the year and their impact on the interim condensed
consolidated financial statements, and a description of the principal risks
and uncertainties for the remaining six months of the financial year; and
· Material related party transactions in the first half of the year
and any material changes in the related party transactions described in the
last annual report.
The Directors of 4imprint Group plc are as listed in the Group's Annual Report
& Accounts 2023.
By order of the Board
Kevin Lyons-Tarr David Seekings
Chief Executive Officer Chief Financial Officer
6 August 2024
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