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Final Results
RNS Number : 3250V
Domino Printing Sciences PLC
12 December 2013
 
12 December 2013                               
 
2013 Results
From the Preliminary Statement for the year ended 31 October 2013

                                                                                                      

2013

2012

Change

Revenue

£335.7m

£312.1m

+8%

Underlying profit before taxation (note 9)

£53.0m

£53.7m

-1%

Profit before taxation

£17.7m

£53.9m

-67%

Research and development expenditure

£19.5m

£16.7m

+17%

Net cash inflow from operating activities before taxation

£54.9m

£56.4m

-3%

Basic earnings per share (note 2)

5.22p

36.90p

-86%

Underlying earnings per share (note 2)

35.30p

36.02p

-2%

Dividends per share (declared - note 5)

21.66p

20.63p

+5%

 
Highlights

 

q New products driving sales growth

q Early success with the full colour digital label press

q Aftermarket sales have been robust

q Double digit sales growth in our largest territories: USA, China, Germany

q Strong cash flow

q Dividend increased by 5 per cent

 

Peter Byrom, Chairman, commented "The Group has made good progress in sales in 2013 delivering revenue growth of 8 per cent.  Significant investment has been made in Research and Development and in building capability in our digital printing business and this has meant profits have remained broadly at prior year levels.  Underlying pre-tax profits were £53.0 million compared to £53.7 million last year. Action has been taken to direct investment to areas of the business with the strongest growth potential.  Strong cash flow has been maintained throughout the year. Net cash inflow from operating activities before tax was £54.9 million.  The Board has declared an increase in the annual dividend of 5 per cent.

 

"Our businesses in the USA, Germany and China, the largest markets for the Group, all reported double digit sales growth.  Market conditions in these territories were improved during 2013 when compared to the previous year but in some parts of the world we still see reduced investment and a more cautious attitude among customers. We have been pleased with the performance of our new products, and in particular the achievement of our target of ten digital label press installations over the course of the year.  Digital printing is an area in which we are investing and we expect to see further progress during 2014.

 

 "Investment in Research and Development was increased to £19.5 million.  In addition to the introduction of a new colour digital label press in September 2013, the N610i, we launched a number of other printers and fluids products over the course of the year.  We continue to progress the development of a new generation of printers based upon common technology architecture. 

 

"In our interim results published in June we reported that progress in TEN Media with its compliance systems was not proceeding as anticipated and we had written down the value of our holding in the company to $5 million.  There has been no significant progress over the past six months and we have therefore written the value down to nil, bringing the total impact on profit for the year to £30.3 million.  Domino retains exclusive supply rights under contracts held with TEN Media, but there is no indication of when or whether the company will commence roll-out of its systems. 

 

"Our recent order intake provides tentative signs that market conditions are improving.  While we remain cautious about the prospects for a full recovery to historic levels of global GDP growth, we are optimistic that our investments in new products and capabilities coupled with emerging market opportunities will fuel stronger organic sales growth in 2014.   We are continuing to invest in the business, improving our prospects for the future." 

 

Issued on behalf of Domino Printing Sciences plc by Smithfield Consultants Limited - Will Swan

T +44 (0)20 7360 4900

Enquiries:

Peter Byrom

Chairman

 

Nigel Bond       

Group Managing Director

                                           

 

Andrew Herbert

Group Finance Director

 

T+44 (0)20 7360 4900 until 12.00 /  T+44 (0)1954 781888 after 14.30

 



Cautionary statement

 

This Preliminary Statement in its entirety has been prepared solely to provide additional information to shareholders.  It contains statements that are forward looking.  These statements are made by the Directors in good faith based on the information available to them up to the time of approval.  Such statements should be treated with caution due to the inherent uncertainties and risks associated with forward looking information.

 

Our business

 

The Group operates across global markets, providing manufacturers and printers with the ability to code, mark or print data, information or graphical images on to their products or packaging at high speed, typically in line in the manufacturing or printing process.

 

We design, manufacture and sell a wide range of printing equipment and associated consumables and support services that encompass ink jet, thermal and laser technologies.  Our products are capable of printing on a broad spectrum of materials and substrates and offer full variability for personalisation, customisation or unique identification of products.

 

Demand for our products and services is created through legislation and mandate, typically meeting the need to inform consumers, and through providing manufacturers and printers with an economic means of decorating, identifying, tracing, protecting or authenticating their products for commercial or regulatory purposes.

 

In 2013 our revenue split by location of customer was 25 per cent in the Americas, 41 per cent in Europe and 34 per cent in Asia/Rest of World.  We have an installed base well in excess of 200,000 printers operating worldwide.

 

Typical customers are manufacturers, multinational, regional and national companies, spread across a wide range of market sectors.   We also supply printers of labels, mail and other web based materials to meet their short run and variable printing needs.

 

Food, beverage, pharmaceutical and commercial printing are the largest segments; combined they represent approximately 67 per cent of total sales.  Our breadth of industry coverage and lack of reliance on any one or small group of customers provides a natural hedge against sector specific market risk.

 



Chairman's Statement

 

'Further progress and an increase in dividends'

 

I am pleased to report further progress of the Group during 2013.  Sales have increased by 8 per cent to £335.7 million, underlying pre-tax profits were £53.0 million and net cash inflow from operating activities before tax was £54.9 million.

 

We have continued to invest in people, in particular expanding our capabilities in the digital printing business, and in our product range.  Research and Development expenditure was increased to £19.5 million and we successfully introduced a number of new products including the N-Series digital label press. 

 

The performance of TEN Media has been a major disappointment to us.  Delays in the business coupled with uncertainty about its future have led us to the view that our investment has been permanently impaired.  This has been treated as a one-off cost in the year.

 

The strong balance sheet and cash generation of the Group has allowed us to sustain the progressive improvement in dividends.  This year the Board is proposing a final dividend of 14.06 pence per share which when added to the interim dividend of 7.60 pence represents an increase of 5 per cent for the year as a whole.  

 

Over the course of the year the Board and its committees have addressed the corporate governance requirements arising from changes to regulations.  In our 2013 Annual Report we will present our first Strategic Report on the business and increased disclosures on matters affecting audit and remuneration.

 

Earlier this year Garry Havens announced his retirement from the Group and will step down from the Board in December 2013.  I would like to thank Garry for his contribution to the Group. 

 

Phil Ruffles has announced that he does not intend to stand for re-election at the next Annual General Meeting on 19 March 2014. Phil has served as a Non-Executive Director for 11 years and I have appreciated his considerable contribution to the Group over this period.

 

Our recent order intake provides tentative signs that market conditions are improving.  While we remain cautious about the prospects for a full recovery to historical levels of global GDP growth, we are optimistic that our investments in new products and capabilities coupled with emerging market opportunities will fuel stronger organic sales growth in 2014.  We are continuing to invest in the business, improving our prospects for the future. 

 

 

 

 

 

 

Peter Byrom

Chairman

 

 

 

Group Managing Director's Overview

 

'The momentum from sales growth in 2013 coupled with the investments we have made in support of key strategies, places the Group in a strong position to maintain performance improvements in 2014 and beyond'

 

My aspiration is to see sustained growth of our business several percentage points above global GDP growth. I believe this can be achieved by capitalising on new market and sector opportunities, by introducing new products to retain and attract customers and by taking advantage of legislation requiring increased variable data solutions on packaging. These drivers will vary year on year but, in combination with growing output levels as global consumption increases, my belief is that this should position the Group to deliver sales growth in excess of global GDP growth.

 

For the year to 31 October 2013 the business grew by 8 per cent.  We experienced difficult economic conditions in our core sectors across Europe for most of the year, although as we closed the year short-term order intake was beginning to show more encouraging signs. In Asia, it was pleasing to see improving economic data emerging from China where our sales increased by 11 per cent over the year as a whole.  Our recent trend of improving results in the USA continued with another year of double digit growth.

 

Evidence suggests that there are signs of improvement in many world economies, and confidence is starting to pick up.  While some customers remain cautious, we are optimistic that we go into 2014 with a more positive economic outlook than in the past two years.

 

Our profit in the year to 31 October 2013 was broadly at the same level as the previous year. We have executed our plans to invest in a number of business initiatives, building a greater portfolio of opportunities to help drive growth.  In combination, these investments have absorbed the additional gross margin generated from sales growth in the year but have established a number of platforms from which we will benefit in the future.

 

The major disappointment of the year has been the absence of revenue and profits from TEN Media, a significant investment for the Group in 2011, which was expected to generate positive returns during 2013. However, on-going delays and now a shortage of funds in TEN Media have frustrated progress in that business.  This has held back our profit growth.  Uncertainty around the future of the business has also caused us to consider the value of the investment the Group holds in TEN Media to be permanently impaired, and we have written down the value of that investment to nil.  The potential for the TEN Media business in the future remains uncertain.

 

During 2013, we maintained a high level of Research and Development expenditure in our core business, continuing our programme of product harmonisation and development of common platforms.  The goal is to build our product range on a common platform, delivering a consistently high user experience across the range while helping reduce complexity in the business, simplifying and streamlining our manufacturing and marketing operations. This is a key item in our strategy to sustain gross margins.

 

In addition to the platform work in Research and Development we invested in development of new products to meet the Falsified Medicines Directive, which is likely to be the most significant legislation driver requiring coding in the next three years and a significant growth opportunity for the Group. We identified the need to build additional capability into our printers and to develop new inks to meet the mandated requirements and I am pleased that we have completed the necessary work.

 

For a number of years we have been developing our digital label press business.  This enables our expansion into a new and fast growing market as high-speed digital ink jet is adopted for the production of full colour labels applied to product packaging. This is adjacent to our core business and, we believe, will eventually overlap with it.

 

In 2013, we accelerated investment to build our digital print capability.  Following on from the launch of the N600i full colour digital press in October 2012, we introduced the N610i in September 2013.  This product introduces a wider colour range including white and significantly increases the size of available market. Our goal in 2013 was to install ten full colour presses.  This was achieved (nine recognised in revenue in the year) and we hope to follow this up in 2014 with a further 25 digital press installations.  Each digital press attracts considerable fluids revenues.

 

In addition to the investment made in technology and product development in the year, we also expanded our sales and marketing resources across Europe and North America and have built a strong team through which we expect to deliver our 2014 goals.

 

In November 2013, we launched our new F-series fibre laser to complement our industry leading successful range of CO2 lasers.  This is an example of an investment we made to expand our product portfolio to both retain our position with existing customers in new applications and to position ourselves to attract new customers who have requirements we could not previously meet.

 

Over the past five years we have undertaken a major programme in our manufacturing operations to improve productivity and efficiency in the Group. This has included investment in IT systems to build out a more integrated global network, which although not yet complete, has yielded substantial performance improvements. In combination with this, we have made excellent progress in our efforts to consolidate our global supply network. 

 

I am pleased with the progress we made with the execution of our strategy in 2013 in most areas. We end the year with a broad and strong product range, able to meet the opportunities available to us and an expanded sales and marketing network, with next steps defined to develop the infrastructure and operational performance of the Group.  I am disappointed with the progress made in TEN Media and while I am satisfied that Domino has done all it can to support the programme, matters beyond our control have continued to frustrate progress.

 

In addition to our revenue growth aspirations, our goal is to further improve the bottom line return on sales of the business with a longer-term target of getting back to and then ahead of the 19% we achieved in 2011. We have indicated over the past two years that investment was needed to achieve this and this would erode the return in the short-term, but once we start to see sustained economic improvement, I am confident we are now in a position to start to move forwards on an upward trajectory.

 

 

 

Nigel Bond

Group Managing Director

 

 

 

 

 

Financial review

 

Trading results

 

Sales in the year were £335.7 million, 7.6 per cent ahead of 2012.  Movements in exchange rates contributed 1.4 per cent to growth, sales made in companies acquired during 2012 contributed 1.4 per cent and growth in the core business was 4.8 per cent. 

 

Capital equipment revenues, which represented 43 per cent of total sales in 2013 (2012: 42 per cent), increased by 8 per cent in the year.  Digital printing products represented 6 per cent of the total 8 per cent equipment growth, primarily a result of the introduction of the N-Series full colour digital label press.  Ten N-Series full colour presses were shipped in the year of which revenue was recognised for nine.  One installation had not completed its full acceptance test at 31 October 2013 and so revenue was deferred.   Revenue growth from coding and marking equipment was 2 per cent.

 

Consumables revenues, including fluids, increased by 6 per cent on prior year, in line with the increase in installed base.  Spares and service revenues grew by 9 per cent.

 

The rate of gross margin was 48.1 per cent compared to 49.7 per cent in the prior year.  The strengthening of sterling has had the effect of reducing the gross margin rate by 0.5 percentage points and a combination of investment in manufacturing capacity in our digital printing operation and reduced average selling prices primarily in developing markets has reduced the rate by 1.1 percentage points. 

 

Selling and distribution costs and administrative expenses before one-off costs were £89.3 million, an increase of 5 per cent on prior year.  Increased investment in sales and support resources, notably in the digital printing business, coupled with the impact of a full year of costs in Graph-Tech and PostJet (both acquired part way through 2012) was offset to some extent by savings in administration, in particular reduced share scheme charges.

 

Investment in Research and Development was increased to £19.5 million, 17 per cent ahead of prior year.  In addition to the impact of Research and Development costs in Graph-Tech, we increased our expenditure on the development of a new core printer range based on common platform architecture, and invested further in longer-term technology development work. 

 

Operating profit before the impact of one-off exceptional costs, reassessment of contingent consideration and amortisation of acquired intangible assets was £52.7 million, 1.5 per cent below prior year (2012: £53.5 million).

 

One-off costs

 

The Group incurred one-off costs of £33.9 million in the year comprised of £30.3 million in respect of the write down in value (to nil) of the investment held in TEN Media and £3.6 million in respect of restructuring and redundancy costs. In October 2013, organisational changes were made to improve efficiency and to re-direct investment towards areas of greater opportunity.  Changes made in our North American and European businesses led to £3.6 million of redundancy and other related one-off costs.  The first year benefits are estimated to be £4.4 million. These are being directed towards further investment in sales and marketing resources in the digital printing business and our Asian operations.  Provisions for deferred consideration in respect of the acquisitions of Graph-Tech and PostJet were adjusted in the year based on the latest view of likely outcomes, resulting in a credit to the Income Statement of £1.9 million.  IFRS 3 requires these adjustments to be taken to the income statement for all acquisitions arising since 1 November 2010.

 

Interest and financing costs

 

The Group has remained in a net cash positive position throughout the year.  In managing cash resources we have utilised a combination of interest bearing deposits and short term debt facilities.  Investment income was £1.1 million (2012: £0.8 million) and interest paid on debt was £0.8 million (2012: £0.6 million).  

 

Profit before tax

 

The Group continues to report on both statutory and underlying measures of performance.  Profit before tax was £17.7 million.  Underlying profit before tax which is stated before the effects of one-off exceptional items, amortisation of acquired intangible assets, adjustments to provisions for contingent consideration arising on acquisitions and non-cash interest charges derived from the accounting for discounted contingent consideration arising on acquisitions was £53.0 million (2012: £53.7 million). 

 

Provisions for contingent consideration in respect of the acquisitions of Graph-Tech and PostJet were adjusted in the year based on the latest view of likely outcomes.  This resulted in a net income of £1.9 million

 

Underlying measures


2013

2012

2011

2010

2009

Revenue £m

335.7

312.1

314.1

300.0

256.1

Investment in R&D £m

19.5

16.7

15.3

15.6

11.7

EBITA £m

52.7

53.5

59.4

54.5

35.7

Return on sales %

15.7

17.2

18.9

18.2

14.0

Profit before tax £m

53.0

53.7

59.5

54.7

35.7

Basic earnings per share (p)

35.30

36.02

38.66

36.05

23.68

Net cash inflow from operating activities before tax £m

54.9

56.4

51.1

59.7

45.4

 

Statutory measures


2013

2012

2011

2010

2009

Profit before tax £m

17.7

53.9

57.4

52.1

28.0

Earnings £m

5.8

40.7

40.8

37.2

19.2

Shares in issue (average '000)

111,839

111,207

110,756

109,835

109,187

Shares in issue (year-end '000)

112,196

111,431

111,054

110,281

109,346

Basic earnings per share (p)

5.22

36.90

37.20

34.25

17.81

Dividends paid per share (p)

20.99

19.41

16.72

13.93

12.25

Net assets per share (p)

176.8

190.7

174.0

155.1

129.9

 

Taxation

 

The tax charge of £11.8 million reflects an underlying effective tax rate excluding the impact of non-taxable one-off items of 25.7 per cent (2012: 25.9 per cent).  This rate reflects the range of jurisdictions in which the Group earns profit and pays tax. 

 



Earnings per share

 

Basic earnings per share were 5.22 pence (2012: 36.90 pence).  Underlying earnings per share were 35.30 pence (2012: 36.02 pence).  Fully diluted earnings per share were 5.18 pence (2012: 36.57 pence) on a weighted average number of shares in issue of 111,586,441.

 

Dividends

 

The Board is recommending a final dividend of 14.06 pence which when added to the interim dividend of 7.60 pence represents a total dividend of 21.66 pence per share for the year as a whole.  Dividend cover is 1.6 times underlying earnings per share.  The value of dividends paid during the year represented 55 per cent of net cash inflow from operating activities (2012: 54 per cent).

 

Cash

 

Net cash inflow from operating activities before taxation was £54.9 million (2012: £56.4 million).  There was a small net increase in working capital: inventories increased by £1.4 million and trade receivables increased by £7.2 million reflecting growth in sales.  These were offset by an increase in trade and other payables of £8.0 million, as a result of movements in restructuring provisions (£3.1 million), bonus accruals (£1.7 million), deferred income (£1.6 million) and trade payables and other accruals (£1.6 million).

 

We invested £9.4 million (2012: £6.7 million) in fixed assets in the year including £0.5 million on the completion of our new factory near Delhi in India and £1.6 million in fitting out a new leasehold demonstration and offices facility for our digital printing business at Bar Hill near Cambridge, UK.  We have planning permission to build a new factory and office facility adjacent to the site of our headquarters in Bar Hill, Cambridge but that project remains on hold. 

 

A small amount of cash (£0.2 million) was paid out in respect of deferred consideration on acquisitions made in prior years.  Other cash outflows included payment of taxation of £12.0 million, purchase of shares for the employee benefit trust of £0.9 million and reduction in short term debt of £0.4 million.

 

Net cash at year end was £25.5 million.

 

Net assets

 

Net assets at year end totalled £198.4 million, a decrease of £14.1 million (2012: £212.5 million).  Profit for the period after one-off items was £5.8 million, other comprehensive income was £2.0 million, share related and other equity movements were £1.6 million and dividends distributed to shareholders were £23.5 million

 

Treasury

 

The Group is exposed to interest rate movements and to changes in the value of sterling relative to a number of foreign currencies.  It is our policy to manage these exposures in a manner that provides certainty in the short-term while guarding against any level of speculation.  Surplus cash is placed on short-term deposit with approved banks. The amount of cash held overseas is £45.0 million, of which £27.0 million is held in China.   Limits are placed on the amount of exposure with any individual bank.  Bank debt is primarily short-term in nature with drawdown renewed as required.  This has proven to be a cost effective option given the low level of LIBOR and competitive borrowing costs.

 

The Group has a £50 million revolving credit facility with the Royal Bank of Scotland committed until 30 November 2016.  This is adequate to meet anticipated working capital requirements.

 

The Group continues to make sales and receive income in a range of currencies.  We manage transactional exposure where possible through the use of plain forward contracts, selling or buying currency based on the expected net cash inflows or outflows on a rolling three or 12 month basis.  Principal exposures are to the US dollar and euro, both of which we sell forward aiming to cover 90 per cent of our exposure over a rolling 12 month period.  Other material exposures where we do not presently have forward contract cover in place include the Chinese renminbi and the Indian rupee.  Changes in the foreign exchange markets are creating opportunities for simple derivatives and we anticipate being able to cover at least a portion of renminbi exposure during 2014.

 

Forward contracts in place and maturing during the year had the effect of reducing net sterling receipts by £0.7 million when compared to the prevailing rate in the prior year.  Losses as a result of a weaker euro offset gains from a stronger US dollar.  Contracts in place covering expected cash flows in 2014 will realise net gains of £0.3 million when compared to 2013 rates.

 

No action is taken to hedge translation effects on reported profits in the income statement.  In 2013, the impact from movement of exchange rates on translation of short-term balances held by Group subsidiaries in non-functional currencies and consolidation of overseas profits was to reduce reported profit by £0.1 million.  Similarly no action is taken to hedge Group investments denominated in foreign currencies in the balance sheet.  In 2013, this resulted in an increase in value of reserves of £2.8 million.

 

Going concern

 

The Group's business activities together with its financial position and factors likely to affect its future development and performance are described in the Strategic Report.  The Group has considerable financial resources and a broad customer base across many geographies and market sectors.  As a consequence the directors believe that the Group is well placed to manage its business risks successfully.  In considering the financial position of the Group and forecasts of future performance the Directors have a reasonable expectation that the Company and Group have adequate resources to continue in operation for the foreseeable future.  Accordingly, the Group continues to adopt the going concern basis in preparing its accounts.

 

 

 

 

 



 

Condensed Consolidated Income Statement

For the year ended 31 October 2013


 

2013

2013

2013

2012



Before exceptional items

Exceptional items (Note 10)

Total


Note

£'000

£'000

£'000

£'000

Continuing operations

Revenue

3

335,673

-

335,673

312,062

Cost of sales

(174,210)

(210)

(174,420)

(156,948)

Gross profit


161,463

(210)

161,253

155,114






Selling and distribution expenses

(62,290)

(1,308)

(63,598)

(55,715)

Administrative expenses (excluding amortisation of acquired intangibles and reassessment of contingent consideration)


(26,965)

(32,060)

(59,025)

(29,196)

Research and development expenses

(19,499)

(370)

(19,869)

(16,679)

(108,754)

(33,738)

(142,492)

(101,590)

Operating profit before amortisation of acquired intangibles and reassessment of contingent consideration


52,709

(33,948)

18,761

53,524







Reassessment of contingent consideration

1,943

-

1,943

-

Amortisation of acquired intangibles

(3,321)

-

(3,321)

(2,489)

Operating profit

51,331

(33,948)

17,383

51,035

Investment income

1,117

-

1,117

782

Finance costs

(827)

-

(827)

(679)

Profit on disposal of available for sale investment prior to acquisition of subsidiary


-

-

-

2,806

Profit before taxation

3

51,621

(33,948)

17,673

53,944

Taxation

4

(12,873)

1,028

(11,845)

(13,245)

Profit for the year

38,748

(32,920)

5,828

40,699

 

Attributable to:






Equity shareholders of the Company

5,822

40,692

Non-controlling interest

6

7

5,828

40,699

 

Basic earnings per share (pence)

 

2

 

5.22p

 

36.90p

Diluted earnings per share (pence)

2

5.18p

36.57p







 






 

                                                                                                                     

 



 

Condensed Consolidated Statement of Comprehensive Income

For the year ended 31 October 2013


2013

2012

£'000

£'000

Profit for the year

 

5,828

40,699

Items that may be reclassified subsequently to profit or loss:

Currency translation differences on foreign currency net investments

2,783

(3,517)

Increase in value of available for sale investment

-

2,806

Disposal of available for sale investment prior to acquisition

-

(2,806)

Foreign exchange adjustment on available for sale investment

990

752

Foreign exchange adjustment on available for sale investment recycled to profit or loss

(1,742)

-

Gains on cash flow hedges arising during the period

183

176

Reclassification adjustments for gains on cash flow hedges included in profit

 

(176)

 

(125)

Tax relating to components of other comprehensive income

(82)

(146)

Total comprehensive income and expense in the year

7,784

37,839

 

Attributable to:



Equity shareholders of the Company

7,778

37,832

Non-controlling interest

6

7


7,784

37,839

 

 



 

Condensed Consolidated Balance Sheet

As at 31 October 2013

Non-current assets

Goodwill

Other intangible assets

Property, plant and equipment

Available for sale investments

Investment in associates

Deferred tax assets


Current assets

Inventories

Trade and other receivables

Cash and cash equivalents

Derivative financial instruments



Total assets


Current liabilities

Bank loans and overdrafts

Trade and other payables

Derivative financial instruments


Net current assets


Non-current liabilities

Deferred tax liabilities

Bank loans

Other payables



Total liabilities


Net assets

Equity share capital

 

Reserves

Own shares

Share premium account

Capital redemption reserve

Revaluation reserve

Taxation reserve

Exchange reserve

Retained earnings

Total reserves

Equity attributable to shareholders of the Company

Non-controlling interest

Total equity

 



 

Condensed Consolidated Statement of Changes in Equity














Investment in own shares

Called-up share capital

Share premium account

Capital redemption reserve

 

Revaluation reserve

 

Taxation reserve

 

Exchange reserve

 

Retained earnings

 

 

Total

Non-controlling interest

 

Total equity


£000

£000

£000

£000

£000

£000

£000

£000

£000

£000

£000

At 1 November 2012

(2,467)

5,572

37,463

908

1,308

967

11,212

157,537

212,500

34

212,534

Profit for the period

-

-

-

-

-

-

-

5,822

5,822

6

5,828

Other comprehensive income for the period

-

-

-

-

-

(82)

2,038

-

1,956

-

1,956

Total comprehensive income for the period

-

-

-

-

-

(82)

2,038

5,822

7,778

6

7,784

Shares issued during the period

-

38

2,269

-

-

-

-

-

2,307

-

2,307

Own shares acquired

(911)

-

-

-

-

-

-

-

(911)

-

(911)

Shares awarded to share scheme participants

2,170

-

-

-

-

-

-

(2,067)

103

-

103

Withdrawal of SIP matching shares

85

-

-

-

-

-

-

-

85

-

85

Debit to equity in respect of share-based compensation charges

-

-

-

-

-

-

-

(211)

(211)

-

(211)

Tax on items taken to equity

-

-

-

-

72

57

-

-

129

-

129

Dividends (note 5)

-

-

-

-

-

-

-

(23,468)

(23,468)

-

(23,468)

Transfer of amount equivalent to additional depreciation on revalued assets

-

-

-

-

(13)

-

-

13

-

-

-

At 31 October 2013

(1,123)

5,610

39,732

908

1,367

942

13,250

137,626

198,312

40

198,352



 

Condensed Consolidated Cash Flow Statement

For the year ended 31 October 2013

2013

2012

Note

£'000

£'000

Net cash inflow from operating activities

 

7

42,976

39,725

Investing activities

Interest received

1,117

782

Interest paid

(784)

(630)

Proceeds on disposal of property, plant and equipment

301

266

Purchase of property, plant and equipment

(9,021)

(6,103)

Purchase of intangible assets

(378)

(551)

Payment of contingent acquisition consideration

(155)

(7,808)

Purchase of available for sale investments

1

-

Acquisition of subsidiary undertakings, net of cash acquired

-

(14,447)

Net cash used in investing activities

(8,919)

(28,491)





Financing activities

Dividends paid

(23,468)

(21,515)

New bank loans raised

-

18,200

Repayment of borrowings

(353)

(228)

Repayment of obligations under finance leases

(12)

(28)

Own shares purchased

(911)

(71)

Own shares used to satisfy share option exercises

103

613

Issue of equity share capital

2,307

921

Net cash used in financing activities


(22,334)

(2,108)

 

Effects of foreign exchange on cash balances

 

59

 

(644)

 

Net increase in cash and cash equivalents


 

11,782

 

8,482

 

Cash and cash equivalents at the beginning of the year


 

47,591

 

39,109

 

Cash and cash equivalents at the end of the year


 

59,373

 

47,591

 

Comprising:




Cash and cash equivalents

59,373

47,591

Overdrafts

-

-

59,373

47,591

 

 

 

 



 

Notes

 

1.  Accounting policies

 

The results for the year ended 31 October 2013 have been prepared in accordance with the recognition and measurement criteria of International Accounting Standards and International Financial Reporting Standards (collectively 'IFRS') as adopted by the European Union at 31 October 2013 and the financial information contained herein is presented on a consistent basis with the IFRS accounting policies of Domino Printing Sciences plc.

 

Standards and interpretations that have become effective in the current financial year but have had no material impact on the financial statements include:

 

·      IAS 1 (amended 2011)                      Presentation of Other Comprehensive Income

·      IAS 12 (amended 2010)                    Recovery of Underlying Assets

·      Annual Improvements to IFRSs

 

The Group has not presented the balance sheet for 2011 as required by IAS 1 (revised) following the adoption of these standards and interpretations as they have had no material impact on the balance sheet for 2013, 2012 or 2011.  The 2011 balance sheet is available on the Company's website at www.domino-printing.com.

 

General information

The financial statements for the year ended 31 October 2013 were approved by the directors on 11 December 2013. The financial information contained in this statement does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 October 2012 are available on Domino's website at www.domino-printing.com and have been filed with the Registrar of Companies. Those for the year ended 31 October 2013 will be delivered following the Company's Annual General Meeting. The auditor's reports on both accounts for the year ended 31 October 2013 and 31 October 2012 were unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under section 498(2) or (3) of the Companies Act 2006 or equivalent preceding legislation.

 

Whilst the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of IFRSs, this announcement does not itself contain sufficient information to comply with IFRSs. This preliminary announcement has been prepared under the same accounting policies as the statutory accounts for the year ended 31 October 2013.

 



 

2.   Earnings per share

Basic earnings per share is calculated by dividing the profit for the year by the weighted average number of shares in issue during the year (111,838,837) less the weighted average shares in the Company purchased by the Company's Employee Benefit Trust (182,703) less the weighted average shares issued to the Company's QUEST scheme (35,867) less the weighted average number of shares held to satisfy the Group's Share Incentive Plan (33,826). The weighted average number of shares used is 111,586,441 (2012: 110,270,863).


The weighted average number of shares used in the diluted earnings per share calculation is the figure used in the basic earnings per share calculation adjusted by 860,165, being the number of shares deemed to be issued for no consideration if all share options had been exercised. The weighted average number of shares used is 112,446,606 (2012: 111,262,293). The earnings used in the diluted earnings per share calculation is the profit on ordinary activities attributable to shareholders.

 

The Group presents an alternative measure of earnings per share ('underlying earnings per share') before the post-tax effects of:

 

·      Amortisation of intangible assets arising on business combinations (2013: £2.6 million; 2012: £1.8 million).

·      The non-cash interest charge on discounted contingent consideration (2013: £0.1 million; 2012: £0.1 million).

·      The non-cash credit arising on reassessment of acquisition related contingent consideration (2013: £1.9 million; 2012: £nil).

·      Exceptional costs arising on impairment of goodwill, acquisition intangibles and available for sale investments, business restructuring and redundancies (2013: £32.9 million; 2012: £nil).

·      The exceptional profit arising on disposal of the Group's available for sale investment in Graph-Tech prior to acquisition (2013: £nil; 2012: £2.8 million).

 

The effect of the above items on basic earnings per share is presented below:

 



2013

2012

Basic earnings per share (pence)

5.22

36.90

Effect of acquired intangibles amortisation (pence)

2.28

1.61

Effect of reassessment of contingent consideration (pence)

(1.74)

-

Effect of exceptional costs (pence)

29.50

-

Effect of exceptional profits (pence)

-

(2.53)

Effect of interest charge on discounted contingent consideration (pence)

0.04

0.04

Underlying earnings per share (pence)

35.30

36.02

Diluted earnings per share (pence)

5.18

36.57

Underlying diluted earnings per share (pence)

35.03

35.70

 



 

3.   Segmental reporting

2013

2012

£'000

£'000

Revenue by location of subsidiary

Europe

179,327

175,231

Americas

71,539

66,889

Rest of World

84,807

69,942

335,673

312,062

Revenue by location of customer

Europe

137,625

128,255

Americas

83,090

76,653

Rest of World

114,958

107,154

335,673

312,062





Segment result by location of subsidiary

Europe

26,683

52,084

Americas

2,917

4,569

Rest of World

13,460

13,774

Eliminations

(5,808)

(2,713)

37,252

67,714






Central research and development

(19,869)

(16,679)

Operating profit

17,383

51,035

Add back: amortisation of acquired intangibles

3,321

2,489

Add back: exceptional items (note 10)

33,948

-

Less: reassessment of contingent consideration

(1,943)

-

Investment income

1,117

782

Finance costs excluding accounting for discounted contingent consideration

 

(784)

 

(630)

Underlying profit before taxation

53,042

53,676

Amortisation of acquired intangibles

(3,321)

(2,489)

Exceptional items (note 10)

(33,948)

-

Reassessment of contingent consideration

1,943

-

Profit on disposal of available for sale investment prior to acquisition of subsidiary

 

-

 

2,806

Interest charge on discounted contingent consideration

(43)

(49)

Profit before taxation

17,673


53,944

     

      The Group operates in three geographic segments: Europe, The Americas and Rest of World.

 

4.    Taxation

      Tax for the period is charged at a composite tax rate of 67.0 per cent (2012: 24.6 per cent).  The underlying rate (excluding the impact of the £30.3 million non-deductible impairment of the Group's investment in TEN Media and the non-taxable gain of £1.9 million arising on the reassessment of acquisition related contingent consideration) is 25.7 per cent (2012: 25.9 per cent, excluding the impact of the non-taxable profit of £2.8 million arising on the Group's investment in Graph-Tech).

 



5.   Dividends

 

2013

2012

£'000

£'000

Amounts recognised as distributions in the year:

Final dividend for the year ended 31 October 2012 of 13.39 pence per share (2011: 12.17 pence)

14,966

13,498

Interim paid of 7.60 pence per share (2012: 7.24 pence)

8,502

8,014

23,468

21,512

Distribution to non-controlling interests

-

3

23,468

21,515

 

      Dividends distributed in the year amount to 20.99 pence per share (2012: 19.41 pence). The Directors recommend a final dividend of 14.06 pence per share bringing the total dividends declared for the year to 21.66 pence per share (2012: 20.63 pence).  The final dividend will be paid on 11 April 2014, subject to approval at the Annual General Meeting, to those shareholders appearing on the Register at close of business on 7 March 2014.  The final dividend has not been included as a liability at 31 October 2013.

 

6. Share capital

 

     During the year a total of 764,661 new ordinary shares of 5 pence each were issued under the Company's Executive Option and SAYE schemes for £2,307,000.

 

7. Net cash inflow from operating activities

 

2013

2012

£'000

£'000




Operating profit

17,383

51,035


Depreciation of property, plant and equipment


5,874

5,986

Amortisation of intangible assets acquired through

business combination


3,321

2,489

Amortisation of other intangible assets

1,058

330

Share-based compensation (credits)/charges

(211)

1,731

Increase in inventories*

(1,386)

(287)

Increase in receivables*

(7,249)

(1,797)

Increase/(decrease) in payables*

7,956

(2,979)

Reassessment of contingent consideration

(1,943)

-

Impairment of available for sale investment

30,283

-

Non-cash write down of intangible assets

143

-

Other non-cash items

(289)

(143)






Net cash inflow from operating activities





before taxation

54,940

56,365

Tax paid

(11,964)

(16,640)

Net cash inflow from operating activities

42,976

39,725

 

      * Net of effect of change in exchange rates

 



8.  Related party transactions

 

     Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this statement. Transactions between the Group and its associates are immaterial and are not disclosed in this statement.

 

 

9.  Underlying profit before taxation
 
     Underlying profit before taxation is calculated as follows:

 

2013

2012

£'000

£'000

Operating profit

17,383

51,035

Amortisation of acquired intangibles

3,321

2,489

Reassessment of contingent consideration

(1,943)

-

Exceptional costs

33,948

-

Underlying operating profit

52,709

53,524

Investment income

1,117

782

Finance costs excluding accounting for discounted

contingent consideration (2013: £43,000; 2012: £49,000)

 

(784)

 

(630)

Underlying profit before tax

53,042

53,676

 

 

10. Exceptional items

 

The Group has incurred exceptional costs in the year as follows:

 


2013

2012

£'000

£'000

Impairment of available for sale investment

32,025

-

Foreign exchange adjustment on available for sale investment recycled to profit or loss

 

(1,742)

 

-

Redundancy and restructuring costs

3,665

-

33,948

-

 

 

The Group holds a 14.85 per cent stake in TEN Media LLC ('TEN Media'). TEN Media has not yet raised the new finance necessary to meet its anticipated capital needs.  While the Group has successfully demonstrated that it can meet the operational requirements of the exclusive supply arrangement, there is no certainty that TEN Media will have sufficient capital to enable it to commercialise its systems.  In light of this the Group has written down the carrying value of the investment to £nil (an impairment of £32,025,000).  The cumulative foreign exchange gain of £1,742,000 in respect of this investment has been recycled from the exchange reserve to profit or loss and is included within exceptional items.

 

The restructuring of the Group's North American, UK and European operations led to exceptional costs of £3,665,000. These organisational changes were made to improve efficiency and to re-direct investment towards areas of greater opportunity.

 

 


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