RNS Number : 2521C
Litho Supplies PLC
29 August 2008
LITHO SUPPLIES Plc
Results for the six months ended 30 June 2008
OVERVIEW
Litho Supplies Plc, the leading supplier of consumable products, analogue and digital equipment and related services to the printing,
graphic arts and corporate markets in the UK, announces its results for the six months ended 30 June 2008.
Overview:
- Pre-tax profits (after the add back of reorganisation costs) of �0.34m
(�0.58m).
- Sales of �25.38m (�22.41m).
- Strong sales and profit performance by Graphic Arts Equipment Limited since
its acquisition on 24 January 2008, with exclusive UK distribution rights
for the Horizon and Perfecta print finishing ranges of equipment.
- The board is recommending an interim dividend of 0.50p per share (2.00p)
reflecting current market conditions, recent acquisition payments and the
ongoing reorganisation of the business.
Litho Supplies Chief Executive Michael Hammond said:
"The first half of 2008 has been a challenging environment with the uncertainty in the financial markets affecting the confidence in
many industry sectors with the resulting impact on the print market.
Despite these conditions, I am pleased to report a good performance from our newly acquired subsidiary, Graphic Arts Equipment Limited,
selling exclusively in the UK the Horizon and Perfecta ranges of print finishing equipment.
In order to most effectively serve the printing and corporate market, we are continuing with the reorganisation of the Group and
addressing the cost base, including the centralisation of our administration to our head office in Breaston, Derbyshire."
Contacts:
Michael Hammond, Chief Executive Tel: 01332 873921
Eddie Williams, Sales Director Tel: 01332 873921
Gerry Mitchell, Financial Director Tel: 0117 9724455
Mike Coe, Blue Oar Securities Plc Tel: 0117 933 0020
CHAIRMAN'S HALF YEARLY STATEMENT AND INTERIM MANAGEMENT REPORT
Unaudited results for the six months ended 30 June 2008
The unaudited half year results for the six months ended 30 June 2008 show pretax profits of �0.34m (�0.58m) after adding back �0.30m
(�0.09m) of costs associated with the reorganisation of the business. The profit before tax after reorganisation expenses was �0.04m
(�0.49m) and sales for the period were �25.38m (�22.41m).
Basic earnings per share for the six months ended 30 June 2008 were 0.16p (1.78p). As a comparison the basic earnings per share before
reorganisation costs were 1.52p (2.21p).
The uncertainties in the financial markets during the period have affected confidence in many sectors which in turn has impacted on the
printing sector making market conditions extremely competitive.
The Group has incurred higher fuel costs in the first six months of the year for the distribution of products to our customers. Also,
whilst the majority of our purchases are in Sterling, we do have some products settled in Euros and Dollars and, particularly in relation to
the Euro purchases, products have increased in price due to currency movements. Against the backdrop of an extremely competitive market,
these increased costs have been passed on to customers where possible.
In October 2007 we completed the acquisition of Graphica Plus Limited, trading as Andersons, serving the wide format printing, proofing
and signage markets. Graphic Arts Equipment Limited (GAE) and Shinohara (UK) Limited (Shinohara) were also acquired in January 2008. GAE
sells print finishing equipment, maintenance and support, with sole UK distribution rights for Horizon and Perfecta equipment, and Shinohara
sells Shinohara printing presses. 423,602 ordinary shares of 10p each in Litho Supplies Plc were admitted to listing on 31 January 2008 at a
price of 47p each as part of the consideration for Payrite Services Limited, the holding company of GAE. The cash consideration and working
capital requirements of these acquisitions, together with the reorganisation costs of the business, have had a considerable impact on our
bank balance compared to the previous year. Net cash balances at 30 June 2008 were �149,000 (�4.87m).
Taking all these points into consideration and the cash costs of further reorganisation of the business that will be carried out in the
second half, the board has considered it prudent to declare a reduced interim dividend of 0.50p (2.00p).
The dividend will be paid on 31 October 2008 to shareholders on the register on 3 October 2008. The ex-dividend date is 1 October 2008.
Trading performance
Sales in the UK of consumable and media products which remain, with electronic and wide format equipment sales, the core activity of the
business were �16.86m (�16.70m) with the complementary consumable products sold by Graphica Plus Limited, trading as Andersons, providing
�1.27m of the total.
We are continuing with our policy of the consolidation of end of line analogue products which continue to decline in order to maintain
strict controls over stockholding of these products.
Progress has been maintained with both telesales and on-line ordering during the period and both functions are extremely important,
combined with the ongoing implementation of our new computer system, in order to service our customers as efficiently and cost effectively
as possible. Further progress on the implementation of the computer system will be made in the second half.
With the present economic conditions, sales of consumable products, including plates, pressroom, flexographic and wide format products,
have all been extremely competitive with pressure on gross margins. We have worked hard on the sales mix of products, both to provide
effective solutions for our customers and also to maintain gross margins. Sales and margins of pressroom products held up best in comparison
to the other consumable products that we distribute.
Sales of electronic equipment were �4.12m (�5.37m) with a number of customers deferring their capital investment decisions until
confidence in the UK economy improves; whilst other customers have not been prepared to commit to the higher charges being requested by the
finance providers. Complementary equipment sales were added by our acquisitions GAE and Shinohara of �4.10m and �299,000 respectively.
The integration and reorganisation of Graphica Plus Limited, trading as Andersons, has continued in the first half of 2008. Progress is
being made in expanding the active customer base of the company but while we believe the printing sector that Graphica Plus serves, such as
the point of sale and signage markets, will display growth in the medium to long term, it has been quiet as the economy has slowed down.
Some further reorganisation of Graphica Plus will therefore take place in the second half of the year.
GAE has performed extremely well since acquisition in January 2008; it has a quality range of finishing products, a strong management
team and has benefited from access to Litho Supplies' customer base. GAE has also had a positive start to the second half of the year.
Following continued increases in energy costs and raw materials, many manufacturers are now implementing price increases which we will
have to pass on to all of our customers.
In April 2008 we exhibited at Sign & Digital UK at the NEC. The sales leads obtained at this exhibition were positive and will provide
opportunities in the second half of the year, albeit that the signage and point of sale sectors have been affected by the present economic
conditions.
We were also in attendance at Drupa 2008, a large European exhibition held in Dusseldorf, Germany in May 2008. This exhibition provided
good opportunities for complementary products and new supplier relationships to be identified for the future.
Prospects
The second half will to a great extent be dependent on confidence returning to the UK economy which, when it happens, should quickly
filter through to the printing sector and our customer base. With our portfolio of printing products, including the complementary products,
added to by our recent acquisitions, we are well placed to take advantage of increased trading activity.
I am pleased to announce that with effect from August 2008, we secured the exclusive UK agency for sales and support of the Hamada range
of offset presses. The brand is a market leader in the high street, inplant and commercial print sectors, and sits very nicely alongside our
existing Shinohara range of presses and other equipment within our portfolio.
We will be holding cost effective open house events at our GAE showroom commencing in September to demonstrate to our customers the full
benefits offered by these press systems, together with the automated finishing products that we distribute.
From the beginning of August 2008 we have taken on the exclusive UK distribution agreement for CGS, a print software product linked to
consumable media sales opportunities. We are constantly reviewing and considering other opportunities in order to grow the business but
also at the same time reorganising the Group to address the cost base; this reorganisation will continue in the second half of 2008 and will
involve a number of one-off costs.
We are also attending Total Print! Expo at Earl's Court in October 2008 with support from our suppliers to promote our full ranges of
office equipment and finishing products such as Fastback and Fujipla.
The relocation of our central administration and accounting function from Bristol to our Head Office at Breaston will take place at the
end of September, at which time we will be appointing a new Finance Director to replace Gerry Mitchell who has held this position for the
last 13 years. A further announcement will be made at the appropriate time.
There is no doubt that we are operating in much tougher market conditions than we have seen for some time, but I consider that the
reorganisation changes we continue to make to the structure of the business will strengthen our platform and enable us to look forward to
2009 with more confidence provided, of course, market conditions do not deteriorate further.
As usual, I am extremely grateful to all of our customers and suppliers, both new and longstanding, for their continual support and I
thank all of our employees for their loyalty and hard work over the last six months.
B C Clark
Chairman
29 August 2008
Litho Supplies Plc
Responsibility statement
We confirm that to the best of our knowledge:
The condensed set of financial statements have been prepared in accordance with International Accounting Standard 34.
By order of the Board
Chief Executive Officer
M J HAMMOND
29 August 2008
Litho Supplies Plc
Condensed Consolidated Income Statement
6 months 6 months Year
Ended ended ended
30 June 30 June 31 Dec
2008 2007 2007
Unaudited Unaudited Audited
�'000 �'000 �'000
Continuing operations
Revenue
Sale of goods 25,385 22,410 43,254
Cost of sales 21,427 18,847 36,599
Gross profit 3,958 3,563 6,655
Distribution costs 1,315 1,094 2,235
Administrative expenses 2,328 2,011 3,888
Reorganisation costs 300 91 211
Profit from continuing operations
before tax and net finance income 15 367 321
Finance costs 5 - 1
Finance income 26 122 198
Profit before tax 36 489 518
Income tax expense - 107 (6)
Profit for the period 36 382 524
Attributable to:
Equity holders of the company 36 382 501
Minority interest - - 23
36 382 524
Earnings per share
-basic 0.16p 1.78p 2.33p
-diluted 0.16p 1.65p 2.28p
Litho Supplies Plc
Condensed Consolidated Statement of Recognised Income and Expense
6 months 6 months Year
Ended Ended ended
30 June 30 June 31 Dec
2008 2007 2007
Unaudited Unaudited Audited
�'000 �'000 �'000
Income and expense recognised directly in
equity
Actuarial gain for the period (501) 1,732 1,834
Deferred tax credit (charge) 140 (520) (550)
Net income recognised directly in equity (361) 1,212 1,284
Profit for the period 36 382 524
Total recognised income for the period (325) 1,594 1,808
Attributable to: Equity holders of the
company (325) 1,594 1,785
Minority interest - - 23
(325) 1,594 1,808
Litho Supplies Plc
Condensed Consolidated Balance Sheet
30 June 30 June 31 Dec
2008 2007 2007
Unaudited Unaudited Audited
�'000 �'000 �'000
Assets
Non-current assets
Property, plant and equipment 876 410 547
Intangible assets 4,084 1,089 2,393
Deferred tax asset 1,093 966 979
6,053 2,465 3,919
Current assets
Inventories 7,493 4,357 4,437
Trade receivables 10,451 10,513 9,260
Income tax receivable 113 26 208
Other current assets 1,880 1,195 1,284
Cash and cash equivalents 786 4,873 3,543
20,723 20,964 18,732
Total assets 26,776 23,429 22,651
Equity
Equity attributable to equity holders
of the parent
Share capital 2,219 2,144 2,177
Share premium 13,744 13,420 13,587
Other reserves 511 511 511
Retained earnings (7,384) (6,554) (6,791)
Minority interest in equity - - 23
Total equity 9,090 9,521 9,507
Liabilities
Non-current liabilities
Interest bearing loans and borrowings 34 2 -
Retirement benefit obligation 2,594 3,038 2,531
2,628 3,040 2,531
Current liabilities
Trade and other payables 12,095 9,552 9,263
Interest bearing loans and borrowings 827 2 2
Provisions 2,136 1,314 1,348
15,058 10,868 10,613
Total liabilities 17,686 13,908 13,144
Total equity and liabilities 26,776 23,429 22,651
Litho Supplies Plc
Condensed Consolidated Statement of Changes in Equity
Share Share Retained Other Total
capital premium earnings reserves Equity
�'000 �'000 �'000 �'000 �'000
At 1 January 2007 2,144 13,420 (7,719) 511 8,356
Actuarial gains - - 1,732 - 1,732
Deferred tax charge - - (520) - (520)
Profit for the period - - 382 - 382
Total recognised income for
the
Period
- - 1,594 - 1,594
Dividends - - (429) - (429)
At 30 June 2007 2,144 13,420 (6,554) 511 9,521
Actuarial gains - - 102 - 102
Deferred tax charge - - (30) - (30)
Profit for the period - - 142 - 142
Minority interest - - (23) - (23)
Total recognised expense for
the
Period
- - 191 - 191
Issue of shares 33 167 - 200
Dividends - - (428) - (428)
At 31 December 2007 - Audited
2,177 13,587 (6,791) 511 9,484
Actuarial gains - - (501) - (501)
Deferred tax credit - - 140 - 140
Profit for the period - - 36 - 36
Total recognized income for
the
Period
- - (325) - (325)
Issue of shares 42 157 - - 199
Dividends - - (268) - (268)
At 30 June 2008 2,219 13,744 (7,384) 511 9,090
Litho Supplies Plc
Condensed Consolidated Cash Flow
6 months 6 months Year
ended ended Ended
30 June 30 June 31 Dec
2008 2007 2007
Unaudited Unaudited Audited
�'000 �'000 �'000
Cash flows from operating activities
Cash flows generated from operations (1,689) 162 17
Income tax paid 94 - -
Net cash flows from operating activities
(1,595) 162 17
Cash flows from investing activities
Proceeds from sale of property,
plant and equipment 7 100 12
Proceeds from sale of non-current assets
held for sale - - 91
Interest received 32 133 216
Interest paid (5) - (1)
Purchase of property, plant and equipment (209) (129) (296)
Acquisitions (1,529) (10) (683)
Net cash flows from investing activities
(1,704) 94 (661)
Cash flows from financing activities
Payment of finance lease liabilities (11) (2) (4)
Finance lease 184 - -
Dividends paid to equity holders of the
company (268) (429) (857)
Net cash flows from financing activities
(95) (431) (861)
Net decrease in cash and cash
equivalents (3,394) (175) (1,505)
Net cash and cash equivalents at start of
period 3,543 5,048 5,048
Net cash and cash equivalents at end of
period 149 4,873 3,543
Notes to the Condensed Financial Statements:
1. The financial information in this half yearly statement for the six months
ended 30 June 2008 and the comparative figures for the six months ended 30 June
2007 do not constitute statutory accounts as defined in Section 240 of the
Companies Act 1985. The financial information for the full preceding year is
extracted from the statutory accounts for the financial year ended 31 December
2007, as stated under IFRS as adapted for use in the European Union. Those
statutory accounts, upon which the auditors issued an unqualified opinion, have
been delivered to the Registrar of Companies.
2. The half yearly condensed financial statements for the six months ended 30 June
2008 have been prepared on the basis of the IFRS expected to be in issue for
the year ending 31 December 2008 and in accordance with the consistent use of
accounting policies that are disclosed in the audited consolidated financial
statements for the year ended 31 December 2007.
3. The business risks disclosed in the directors' report and audited consolidated
financial statements for the year ended 31 December 2007 were still applicable
for the six months ended 30 June 2008 and the board considers they will still
apply for the remainder of the financial year. Further information regarding
potential business risks to the Group is disclosed above in the chairman's half
yearly statement and interim management report.
4. EARNINGS PER SHARE
The earnings per share have been calculated as follows:
6 months 6 months Year
ended ended ended
30 June 30 June 31 Dec
2008 2007 2007
Profit available for equity
Shareholders �36,000 �382,000 �501,000
Basic:
Weighted average number of
shares of 10p each in issue 22,122,072 21,436,148 21,499,847
Earnings per share 0.16p 1.78p 2.33p
Diluted:
Weighted average number of
shares of 10p each in issue 22,122,072 23,121,148 21,944,847
Earnings per share 0.16p 1.65p 2.28p
Taking into consideration the exercise price of the options, the number of
dilutive potential shares from unexercised executive share options granted as
at 30 June 2008 was nil and as at 30 June 2007 was 1,685.000.
5.
DIVIDENDS
The dividends paid in May 2008 and May 2007 were 1.25p per share and 2.00p per share respectively.
The board is declaring an interim dividend for 2008 of 0.50p per share to shareholders on the register on 3 October 2008 and will be paid
on 31 October 2008. These half yearly results do not reflect this
dividend payable.
6.
INTEREST BEARING LOANS AND BORROWINGS
Effective Maturity June June December
Interest rate 2008 2007 2007
% �'000 �'000 �'000
Current
Bank loan 7.23 2008 2 - -
Obligations under finance
leases and hire purchase
contracts
9.5 2009 188 2 2
Bank overdraft Base rate On demand
+1.5 637 - -
827 2 2
Non-current
Obligations under finance
leases and hire purchase
contracts
11.3 2010 34 - -
7. PROVISIONS FOR LIABILITIES AND CHARGES
6 months 6 months Year
ended ended Ended
30 June 30 June 31 Dec
2008 2007 2007
�'000 �'000 �'000
Balance at 1 January 2,531 5,188 5,188
Pension cost for the period (11) 11 33
Contributions during the period (427) (429) (856)
Actuarial losses (gains) 501 (1,732) (1,834)
2,594 3,038 2,531
8.
ACQUISITIONS
On 24 January 2008 Litho Supplies (UK) Limited acquired 100% of the share capital of Payrite Services Limited, its main trading subsidiary
Graphic Arts Equipment Limited, and the remaining 49% of the share capital of Shinohara (UK) Limited. The Group already owned 51% of the
share capital of Shinohara (UK) Limited, all private companies based in the UK.
Graphic Arts Equipment's principal activity is the sale, installation and servicing of leading lines of printing and finishing equipment
with exclusive distribution agreements for Horizon and Perfecta in the UK and Ireland. Shinohara (UK) Limited markets, sells and services
the Shinohara Printing Press.
Details of the aggregate net assets acquired and goodwill for the acquisitions above are as follows:
�'000
Purchase consideration:
Cash paid 1,400
Direct cost relating to the acquisition 43
Fair value of shares issued 200
Deferred performance - related consideration 600
2,243
Fair value of assets acquired (see below) 651
Goodwill 1,592
2,243
It has not been possible to accurately allocate a fair value to the experienced management, sales and technical team acquired and the
customer relationships, therefore the excess of the purchase consideration over the asset and
liabilities acquired has been treated as goodwill.
The assets and liabilities arising from the acquisitions provisionally determined are as follows:
Fair value Net book value
�'000 �'000
Cash and cash equivalents 259 259
Property, plant and equipment 230 230
Inventories 1,835 1,835
Trade and other receivables 413 413
Trade and other payables (2,034) (2,034)
Borrowings (52) (52)
Net assets acquired 651 651
The fair value of the shares issued was based on the average mid-market price of the company's shares over the seven business days
immediately preceding the completion date. A total of 423,602 ordinary shares were issued as part of the consideration for Payrite Services
Limited and its main trading subsidiary, Graphic Arts Equipment Limited.
The acquired business of GAE contributed revenues of �4.10m and net profit of �418,000 (excluding any reorganisation and integration costs)
to the Group for the post acquisition period 24 January 2008 to 30 June 2008.
Shinohara (UK) Limited contributed revenues of �299,000 and a net loss of �1,000 to the Group for the period 24 January 2008 to 30 June
2008. Marketing and advertising expenditure was incurred in this period to promote the Shinohara range of presses and the trading result
above is after charging this expenditure.
9. CASH AND CASH EQUIVALENTS
For the purposes of the cash flow statement, cash and cash equivalents comprise the following:
6 months 6 months Year
Ended Ended Ended
30 June 30 June 31 Dec
2008 2007 2007
�'000 �'000 �'000
Cash at bank and in hand 786 4,873 3,543
Bank overdraft (637) - -
Net cash at bank and in hand 149 4,873 3,543
10. ISSUED CAPITAL
30 June
2008
No.'000
Authorised Ordinary shares of 10p each 32,000
Share capital Share premium
No.'000 �'000 �'000
Ordinary shares issued and
fully paid
At 1 January 2008
21,768 2,177 13,587
Issued during period 423 42 157
At 30 June 2008 22,191 2,219 13,744
The shares issued during the period were part of the consideration for the acquisition of Payrite Services Limited and its 100% subsidiary
Graphic Arts Equipment Limited, the shares were admitted to listing on 31 January 2008.
11.
RELATED PARTY TRANSACTIONS
Company
During the period the company received �200,000 from Litho Supplies (UK) Limited for shares issued as part of the consideration for the
acquisition disclosed in note 8 above.
On 25 April 2008 a dividend was received by Litho Supplies Plc from its subsidiary Litho Supplies (UK) Limited via Litho Supplies
Investments Limited.
12. This half yearly statement was approved by the board on 29 August 2008
and copies of this statement together with the accounts for the year
ended 31 December 2007 and the interim report for the period ended 30
June 2007, can be obtained from the Company Secretary at the Registered
Office:- Unit 2, Chapel Way, Avon Valley Business Park, St Annes Park,
Bristol, BS4 4EU.
The 2008 half yearly statement is also available with other financial
information on the company's website www.litho.co.uk, under the
corporate section.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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