RNS Number:8048S
Litho Supplies PLC
13 March 2007
LITHO SUPPLIES Plc
Results for the year ended 31 December 2006
HIGHLIGHTS
Litho Supplies Plc, the leading supplier of analogue and digital consumable
products, equipment and related services to the printing, graphic arts and
corporate markets in the UK, announces its results for the year ended 31
December 2006 as reported under International Financial Reporting Standards.
Overview:
* Sales of #42.88m (2005: #44.05m) generating a pretax profit
before reorganisation costs of #1.14m (2005: #1.25m).
* Strong control over working capital and, in particular, a
significant reduction in stock holdings combined with continued cost
control has resulted in a net cash balance at 31 December 2006 of
#5.05m compared to #4.30m at 31 December 2005.
* The Board recommends a final dividend of 2.00p per share
(2005: 1.90p), an increase of 5.26%, reflecting both the strength of
the company's balance sheet and cash position.
Litho Supplies Chief Executive Michael Hammond said:
"Market conditions in the printing industry in 2006 continued to be challenging
with weak demand and over-capacity in the market. Considering these trading
conditions, I am pleased with the results for the year.
The strength of the Group's balance sheet and cash position provides
opportunities for both organic growth and acquisitions. I am also particularly
encouraged by our opportunities in the wide format and office equipment markets.
"
Contacts:
Michael Hammond, Chief Executive Tel: 01332 873921
Gerry Mitchell, Financial Director Tel: 0117 9724455
Barrie Newton, Corporate Synergy Plc Tel: 01225 424 666
CHAIRMAN'S STATEMENT
Results for the year ended 31 December 2006
The audited results for the year ended 31 December 2006 show a pretax profit
before reorganisation costs of #1.14m (2005: #1.25m) on sales for the year of
#42.88m (2005: #44.05m). The comparative year had the benefit of a #0.24m
surplus on the disposal of a property. Reorganisation charges were #0.13m
(2005: #0.05m) and the pretax profit for the year after these charges was #1.01m
(2005: #1.44m).
Basic earnings per share (EPS) before and after reorganisation charges were
4.22p (2005: 5.19p) and 3.62p (2005: 4.95p) respectively.
As foreshadowed in my interim statement, market conditions in the printing
industry are still suffering from over-capacity and weak demand, particularly
from advertisers for printed media. These conditions have affected trading in
the second half and confidence is still not strong. Manufacturers' price rises
in the second quarter of 2006 to counter the increases in raw materials and
energy costs helped initially but towards the end of 2006, there was a gradual
erosion of sale prices for both equipment and consumable products.
Taking these market conditions into consideration, the results for the year,
particularly in respect of cash flow, are I believe commendable.
The Board continues to focus attention on maintaining a solid balance sheet,
seeing this as essential to the future strength of the company. In this
connection, I am pleased to report a further significant reduction in stock
levels. This, together with our constant close attention to credit control and
cash collection, has resulted in a net cash balance at 31 December 2006 of
#5.05m compared with #4.30m at 31 December 2005.
The Board is recommending a final dividend of 2.00p (2005: 1.90p) per share, an
increase of 5.26%. The dividend will be paid on 31 May 2007 to shareholders on
the register on 4 May 2007. The ex-dividend date is 2 May 2007. The total
dividend for the year is 3.95p per share compared with 3.775p per share for the
previous year, an increase of 4.64%.
Trading performance
UK analogue and digital consumable product sales which, with electronic
equipment sales, remain the core activity of the business, were #32.96m (2005:
#34.56m). As the decline of conventional analogue products continued, we have
started to consolidate the product lines we offer by expanding our private label
range of analogue products. This strategy will allow the company to remain
competitive with end-of-line products for a longer period and also offer other
manufacturers access to the UK market.
Within the mix of our product range, sales of pressroom, flexo and wide format
consumable products were maintained at a similar level to the previous year.
These figures have, however, been achieved in a period of extremely challenging
market conditions and consolidation within the printing sector and I remain
optimistic for these areas.
There has been an increase in business failures within the printing market
during 2006 with the banks and financial institutions taking a very hard line.
Despite an increased emphasis on our already stringent credit control management
during the year, the bad debt charge was higher in 2006 than the previous year
by #130,000. Without this additional bad debt charge, trading profits from
continuing business activities would have been slightly ahead of last year.
There is, of course, also a resultant impact on turnover from losing a customer
arising from the liquidation.
We have now established ourselves in the wide format market and our new
partnership with DuPont for the distribution of their wide format equipment and
consumables is already presenting significant opportunities. These products,
combined with our existing portfolio of wide format equipment and consumable
products, will allow us to capitalise on the growing proofing, signage, point of
sale and exhibition markets.
Sales of electronic equipment in the year were #9.47m (2005: #9.13m) with
continued growth in the sales of Computer to Plate (CtP) devices. There was
also a strong performance with the sale of digital printing equipment in the
fourth quarter of 2006.
Electronic equipment service and other added value services provided a good
contribution in 2006 and will benefit from the strong CtP sales with
opportunities for new maintenance contracts in 2007.
The Litho Supplies website has been revised and our on-line ordering facility
was launched in the year with more than 15% of our customers' consumable sales
now being taken on-line, with potential for this figure to grow significantly
from here.
Sales of Xerox office equipment products through our trading name L.S. Digital
is now well established in the West Country and we were also appointed the Xerox
concessionaire for the Edinburgh area in October 2006. In December 2006 we
extended L.S. Digital further by taking a similar concessionaire appointment in
the South West to expand this business opportunity to the commercial and
corporate sectors. Xerox office products are complementary to the portfolio of
binding and presentation products sold by Murodigital. We have also recruited
staff experienced in selling and supporting Xerox office products in order to
drive L.S. Digital forward.
Reorganisation
With the changes in technology that the printing sector has experienced, it is
inevitable that our company has had to undergo an element of reorganisation. We
are continuing to make changes with a major emphasis on new technology in order
to address the current and future dynamics of the printing and corporate
markets.
Pensions
As reported last year, it is now a requirement under International Financial
Reporting Standards that the assets and liabilities of the Litho Supplies (UK)
Limited Pension Scheme are incorporated into the Group's accounts.
I am pleased to report that with improvements in equity and property markets,
rising bond yields (used to discount the liabilities), combined with the
additional contributions from the company, there has been a reduction in the
Pension Scheme deficit by #1.66m during the year.
The Board will continue to monitor the position closely but, as indicated in
previous reports, it is considered that it is in the best interests of both the
Pension Scheme and the company that a reasonable balance is achieved in
determining future funding.
Prospects
The traditional print market has both changed and declined with the advent of
new technology and consolidation within the sector. However, we have identified
new products and focused on complementary markets such as wide format and office
equipment products. I am hopeful, going forward, that these opportunities
should redress the decline in turnover from the traditional printing products
that we supply.
As indicated earlier in this report, in the spring of 2006 there were price
increases by some of the major manufacturing suppliers to the industry and
further increases have been announced for the beginning of 2007 which will, of
course, have to be passed on to our customers.
In April 2007 we will be exhibiting at the bi-annual Northprint exhibition in
Harrogate which will enable us to demonstrate to our customers some exciting
digital printing equipment, consumable products and future technologies. We
believe we have an unequalled range of products that are distributed by one
supplier and we shall be well represented at the exhibition.
Sales of consumable products in the first two months of 2007 have continued at a
similar level to 2006. However, there have been some encouraging equipment
orders and the Northprint exhibition will be a good indicator of whether
confidence is returning to the printing sector and I will report on the success
of the exhibition at our Annual General Meeting on 9 May 2007.
We are also pleased to announce a business relationship with Graphic Arts
Equipment Limited, a well established and respected company that distributes
print finishing equipment together with other added value services, in the joint
marketing of the Shinohara digital press. A working Shinohara press will be on
our stand at the Northprint exhibition.
We continue to seek additional opportunities to grow the business, both
organically as well as by acquisition, and are in a strong position to do this
given the strength of our balance sheet and cash position. However, any
acquisitions must be at a price which adds value to the company and reflects the
difficult conditions in the industry.
We are very appreciative of the ongoing support of our suppliers and our
customers in these challenging times.
Finally, it needs to be repeated that these results would not have been possible
without the continuing hard work and loyalty of our people and I thank them all
for that.
B C Clark
Chairman
13 March 2007
Consolidated Income Statement
for the year ended 31 December 2006
Total Total
2006 2005
#'000 #'000
Continuing operations
Revenue
Sale of goods 42,877 44,048
Cost of sales 35,607 36,725
Gross profit 7,270 7,323
Distribution costs 2,209 2,111
Administrative expenses 4,090 3,831
Reorganisation costs 128 50
Profit from continuing operations before
tax and net finance income 843 1,331
Finance costs 3 5
Finance income 173 110
Profit before tax 1,013 1,436
Income tax expense 237 373
Profit for the year 776 1,063
Attributable to:
Equity holders of the Company 776 1,063
Earnings per share from
continuing activities
- basic 3.62p 4.95p
- diluted 3.36p 4.71p
Consolidated Statement of Recognised Income and Expense
for the year ended 31 December 2006
Total Total
2006 2005
#'000 #'000
Income and expense recognised
directly in equity
Actuarial gains/(losses) for the year 992 (1,080)
Deferred tax (charge)/credit (298) 202
Net income/(expense) recognised
directly in equity 694 (878)
Profit for the year 776 1,063
Total recognised income
for the year 1,470 185
Attributable to:
Equity holders of the company 1,470 185
Consolidated Balance Sheet
at 31 December 2006
2006 2005
#'000 #'000
Assets
Non-current assets
Property, plant and equipment 361 439
Intangible assets 1,089 1,089
Deferred tax asset 1,575 2,000
3,025 3,528
Current assets
Inventories 3,612 4,588
Trade and other receivables 11,006 11,387
Income tax receivable 44 -
Other current assets 931 1,447
Cash and cash equivalents 5,048 4,370
20,641 21,792
Non-current assets classified as held for sale 87 -
20,728 21,792
Total assets 23,753 25,320
Equity
Equity attributable to equity holders
of the parent
Share capital 2,144 2,144
Share premium 13,420 13,420
Other reserves 511 508
Retained earnings (7,719) (8,364)
Total equity 8,356 7,708
Liabilities
Non-current liabilities
Interest bearing loans and borrowings 2 6
Retirement benefit obligation 5,188 6,849
5,190 6,855
Current liabilities
Trade and other payables 8,942 9,239
Interest bearing loans and borrowings 4 77
Income tax payable - 198
Provisions 1,261 1,243
10,207 10,757
Total liabilities 15,397 17,612
Total equity and liabilities 23,753 25,320
Consolidated Cash Flow
for the year ended 31 December 2006
2006 2005
#'000 #'000
Cash flows from operating activities
Cash flows generated from operations 1,586 1,249
Income tax paid (352) (199)
Net cash flows from operating activities 1,234 1,050
Cash flows from investing activities
Proceeds from sale of property,
plant and equipment 360 164
Interest received 157 111
Interest paid (3) (5)
Purchase of property, plant and equipment (158) (218)
Acquisitions (10) (490)
Net cash flows from investing activities 346 (438)
Cash flows from financing activities
Payment of finance lease liabilities (6) (24)
Payment for repurchase of shares - (12)
Dividends paid to equity holders of the
company (825) (794)
Net cash flows from financing activities (831) (830)
Net increase/(decrease) in cash and
cash equivalents 749 (218)
Net cash and cash equivalents at 1 January 4,299 4,517
Net cash and cash equivalents at 31
December 5,048 4,299
Consolidated Statement of Changes in Equity
for the year ended 31 December 2006
Share Share Retained Other Total
Capital Premium Earnings Reserves Equity
#'000 #'000 #'000 #'000 #'000
At 1 January 2005 2,146 13,420 (7,743) 497 8,320
Actuarial losses - - (1,080) - (1,080)
Deferred tax credit - - 202 - 202
Profit for the year - - 1,063 - 1,063
Total recognised
income for the year - - 185 - 185
Share Option expense - - - 9 9
Dividends - - (794) - (794)
Repurchase of shares (2) (12) 2 (12)
At 31 December 2005 2,144 13,420 (8,364) 508 7,708
Actuarial gains - - 992 - 992
Deferred tax charge - - (298) - (298)
Profit for the year - - 776 - 776
Total recognised
income for the year - - 1,470 - 1,470
Share Option expense - - - 3 3
Dividends - - (825) - (825)
At 31 December 2006 2,144 13,420 (7,719) 511 8,356
NOTES TO THE ACCOUNTS
1. The figures for the year ended 31 December 2006 and 2005 do
not constitute statutory accounts within the meaning of S.240 of the Companies
Act 1985. The figures for the year ended 31 December 2006 have been extracted
from the statutory accounts for that year which have yet to be delivered to the
Registrar of Companies and on which the auditors have issued an unqualified
audit report. The figures for the year ended 31 December 2005 have been
extracted from the statutory accounts for that year which have been delivered to
the Registrar of Companies and on which the auditors have issued an unqualified
audit report. No statement has been made by the auditors under Section 237(2)
or (3) of the Companies Act 1985 in respect of either of these sets of accounts.
This announcement was approved by the board of directors on 13 March 2007.
2. EARNINGS PER SHARE
The earnings per share have been calculated as follows:
2006 2005
#'000 #'000
Net profit attributable to equity holders
before reorganisation costs 904 1,113
Reorganisation costs (128) (50)
Profit attributable to equity holders
after reorganisation costs 776 1,063
Weighted average number of Ordinary Shares
Basic 21,436,148 21,456,216
Dilutive share options 1,685,000 1,110,000
Diluted 23,121,148 22,566,216
Basic:
Weighted average number of Ordinary
shares of 10p each in issue 21,436,148 21,456,216
Earnings per share before reorganisation costs 4.22p 5.19p
Earnings per share after reorganisation costs 3.62p 4.95p
Diluted:
Weighted average number of Ordinary
shares of 10p each in issue 23,121,148 22,566,216
Earnings per share before reorganisation costs 3.91p 4.93p
Earnings per share after reorganisation costs 3.36p 4.71p
3. DIVIDENDS PAID AND PROPOSED
Declared and paid during the year:
2006 2005
#'000 #'000
Ordinary final dividend paid
1.90p (2005: 1.825p) per share 407 392
Ordinary interim dividend paid
1.95p (2005: 1.875p) per share 418 402
825 794
Proposed for approval at AGM (not recognised
as a liability as at 31 December)
Ordinary final dividend per share 2.00p 1.90p
This information is provided by RNS
The company news service from the London Stock Exchange
END
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