30 March 2020
�
4imprint Group plc (the "Company")
�
Publication and Posting of 2019 Annual Report and Accounts
�
The Company has published its 2019 Annual Report and Accounts, together with a Notice of Annual General Meeting and Form of Proxy and these documents have been posted to Shareholders.
�
Copies of the Annual Report and Notice of Annual General Meeting are available on the Company's website, http://investors.4imprint.com.
�
Copies of the Annual Report, Notice of Annual General Meeting and Form of Proxy have been submitted to the National Storage Mechanism and will shortly be available at www.morningstar.co.uk/uk/NSM.
�
The Annual General Meeting (the "AGM") of the Company is scheduled to be held at 11.00 on 5 May 2020 at the offices of Peel Hunt, Moor House, 120 London Wall, London EC2Y 5ET.
�
However, following the announcements by the Government requiring people to stay at home, except for certain limited reasons, social distancing and the restrictions on public gatherings, Shareholders are strongly discouraged from seeking to attend the AGM in person.� These Government and public health measures will impact the format and attendance at the AGM and may impact its location.
�
If the public health guidance remains unchanged, the AGM this year will be run as a closed meeting and Shareholders will not be able to attend in person. �The format will be purely functional in order to comply with the relevant legal requirements and likely attended only by one Director and the Company Secretary.�Accordingly, we strongly encourage all Shareholders to exercise their right to appoint a proxy by returning a completed proxy card or by voting online in advance of the meeting at www.signalshares.com. Full details on voting by proxy are contained in the Shareholder notes to the Notice of Meeting.
We will continue to monitor the situation and the latest available public health guidance, and updates about the AGM (including any requirement to change the location of the AGM) will be communicated with Shareholders before the meeting through the Corporate website https://investors.4imprint.com and via announcement on the Regulatory Information Service.
A condensed set of the financial statements for the 52 weeks ended 28 December 2019 together with information on important events that occurred during that financial period and their impact on the financial statements were contained in the Final Results RNS announcement made on 3 March 2020.� That information, together with the information set out in the appendices to this announcement, which is extracted from the Annual Report, constitute the material required by DTR 6.3.5R which is required to be communicated to the media in full unedited text through a Regulatory Information Service.� This announcement is not a substitute for reading the Annual Report.
�
In the appendices, "Group" is 4imprint Group plc and its subsidiaries, and page references are to pages in the 2019 Annual Report and Accounts.
�
For further information, please contact:
�
Emma Taylor
Company Secretary
4imprint Group plc
Tel: 020 3709 9680
E-mail: [email protected]
�
�
Appendices�
�
A.��� Statement of Directors' Responsibilities in respect of the Financial Statements
�
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.
�
Company law requires the Directors to prepare financial statements for each financial period. Under that law the Directors have prepared the Group financial statements in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union and Company financial statements in accordance with IFRSs as adopted by the European Union. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group and Company for that period.
�
In preparing the financial statements, the Directors are required to:
����������� Select suitable accounting policies and then apply them consistently
����������� State whether applicable IFRSs as adopted by the European Union have been followed for the Group financial statements and IFRSs as adopted by the European Union have been followed for the Company financial statements, subject to any material departures disclosed and explained in the financial statements
����������� Make judgments and accounting estimates that are reasonable and prudent
����������� Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue in business
�
The Directors are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
�
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation.
�
The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
�
The Directors consider that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Company's performance, business model and strategy.
�
Each of the Directors, whose names and functions are listed in the Board of Directors on pages 38 and 39, confirm that, to the best of their knowledge:
������ The Company financial statements, which have been prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Company
������ The Group financial statements, which have been prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Group
������ The Strategic Report on pages 6 to 36 and Directors' Report on pages 56 and 57 include a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces
�
Emma Taylor
Company Secretary
3 March 2020
�
�
B.� Principal risks and uncertainties
�
The list below is extracted in full and unedited from the 2019 Annual Report and Accounts, pages 22 to 26.
�
4imprint's business model means that it may be affected by a number of risks, not all of which are within its control. Outlined below are the current principal potential risks and uncertainties to the successful delivery of the Group's strategic goals. The list is not exhaustive and other, as yet unidentified, factors may have an adverse effect.
�
�
Economic and market risks
�
| Macroeconomic conditions | |
| � Description of risk The business conducts most of its operations in North America and would be affected by a downturn in general economic conditions in this region or negative effects from tension in international trade. In previous economic downturns, the promotional products market has typically softened broadly in line with the general economy. � | |
| Potential impact ������ Customer acquisition and retention could fall, impacting revenue in current and future periods. ������ The growth and profitability levels called for in the Group strategic plan may not be achieved. ������ Cash generation could be reduced broadly corresponding to a reduction in profitability. � | Link to strategy ���� Organic revenue growth ���� Cash generation and profitability |
| Mitigating activities ������ Management monitors economic and market conditions to ensure that appropriate and timely adjustments are made to marketing and other budgets. ������ The customer proposition in terms of promotions, price, value and quality of product can be adjusted to resonate with customer requirements and budgets in changing economic climates. ������ The Group's balance sheet funding policy (see page 20) aims to provide operational and financial flexibility to facilitate continued investment in the business through different economic cycles. | Direction ���� International trade tensions and political instability have increased economic volatility in the US ���� Brexit uncertainty in the UK has led to lack of business confidence ���� Potential development of COVID-19 virus into a pandemic ?Increased |
�
| Markets & competition | |
| � Description of risk The promotional products markets in which the business operates are intensely competitive. The development of buying groups and online marketplaces may allow competitors to reach a broader audience. New or disruptive business models looking to break down the prevailing distributor/supplier structure may become a threat. Private equity interest in the promotional products industry has increased in recent years, offering potential funding for existing competitors or new entrants. � | |
| Potential impact ������ Aggressive competitive activity or a disruptive new model could result in pressure on prices, margin erosion and loss of market share, impacting the financial results. ������ The Group's strategy based on achieving organic revenue growth in fragmented markets may need to be reassessed. | Link to strategy ���� Market leadership ���� Organic revenue growth ���� Cash generation and profitability |
| Mitigating activities ������ An open-minded culture and an appetite for technology are encouraged, with the aim of positioning the business at the forefront of innovation in the industry. ������ Management closely monitors competitive activity in the marketplace. ������ Price, satisfaction and service level guarantees are an integral part of the customer proposition. Customer surveys and market research are used to gauge customer satisfaction and perception, and the causes of any negative indications are investigated and addressed rapidly. | Direction ���� The competitive landscape to date has been relatively consistent in our main markets ���� No disruptive model has yet gained much traction in the industry = Unchanged |
�
| Currency exchange | |
| � Description of risk There is some exposure to currency exchange risk. Although the business trades predominantly in US dollars, it also transacts business in Canadian dollars, Sterling and Euros, leading to some currency risk on trading. In addition, head office costs, pension scheme commitments and dividends are payable in Sterling, consequently the business may be adversely impacted by movements in the Sterling/US dollar exchange rate when it repatriates cash to the UK.������������������������������������������������������� ������������������������������������������������������������������������������������������������� � | |
| Potential impact ������ The financial results of trading operations, and therefore overall profitability, may be negatively affected. ������ The financial condition and cash position of the Group may differ materially from expectations. In an extreme scenario, the Group's strategic objectives around capital structure and core dividend commitments could be disrupted. � | Link to strategy ���� Cash generation and profitability ���� Capital structure ���� Shareholder value |
| Mitigating activities ������ The Group reports its results in US dollars, minimising currency impact on reported revenue, operating profit and net assets since trading operations are concentrated mainly in North America. ������ The Group can use forward contracts to hedge anticipated cash receipts from its overseas operations, giving some certainty of amounts receivable in Sterling. | Direction ���� Political instability, interest rate policy and trade tensions (US) and Brexit concerns (UK) may lead to increased volatility in currency markets ? Increased |
�
�
Operational risks
�
| Business facility disruption | |
| � Description of risk The 4imprint business model means that operations are concentrated in centralised office and distribution facilities. The performance of the business could be adversely affected if activities at one of these facilities were to be disrupted, for example, by fire, flood, loss of power or internet/telecommunication failure. � | |
| Potential impact ����� The inability to service customer orders over any extended period would result in significant revenue loss, deterioration of customer acquisition and retention metrics and diminished return on marketing investment. ����� The Group's reputation for excellent service and reliability may be damaged. � | Link to strategy ���� Market leadership ���� Organic revenue growth ���� Cash generation and profitability |
| Mitigating activities ������ Back-up and business continuity procedures are in place to ensure that customer service disruption is minimised. This includes customer service resource based at a separate location and team members working from home. ������ Websites are cloud-based, and data is backed up immediately to off-site servers. ������ Relationships are maintained with third party embroidery contractors to provide back-up in the event of facility unavailability. | Direction ���� No significant change in the nature or likelihood of these risks = Unchanged |
| | |
| Disruption to the product supply chain or delivery service | |
| � Description of risk As a consequence of the Group's 'drop-ship' distribution model, trading operations could be interrupted if (i) the activities of a key supplier were disrupted and it was not possible to source an alternative supplier in the short term; (ii) a key supplier's own supply chain is compromised by 'force majeure' events in the country of original product manufacture, for example natural disasters, social/political unrest or pandemic; or (iii) the primary parcel delivery partner used by the business suffered significantly degraded service levels. As the Group continues to grow, the volume of orders placed with individual suppliers becomes significant. � | |
| Potential impact ������ Inability to fulfil customer orders would lead to lost revenue and a negative impact on customer acquisition and retention statistics. ������ The Group's reputation for excellent service and reliability may be damaged. � | Link to strategy ���� Market leadership ���� Organic revenue growth ���� Cash generation and profitability |
| Mitigating activities ������ A rigorous selection process is in place for key suppliers, with evaluation and monitoring of quality, production capability and capacity, ethical standards, financial stability and business continuity planning. ������ Very close relationships are maintained with key suppliers, including a detailed shared knowledge of factory locations, operations and capabilities in the country of original product manufacture, allowing swift understanding of and appropriate reaction to events. ������ Wherever possible, relationships are maintained with suitable alternative suppliers for each product category. ������ Secondary relationships are in place with alternative parcel carriers. | Direction ���� Risk inherent in increasing supplier concentration ���� Spread of Coronavirus has increased risk ? Increased |
�
| Disturbance in established marketing techniques | |
| � Description of risk The success of the business relies on its ability to attract new and retain existing customers through a variety of marketing techniques. These methods may become less effective as follows: Offline: The flow of print catalogues and sample packages would be disrupted by the incapacity of the US Postal Service to make deliveries, for example due to natural disasters or labour activism. Online: Search engines are an important source for channelling customer activity to 4imprint's websites. The efficiency of search engine marketing could be adversely affected if the search engines were to modify their algorithms or otherwise make substantial changes to their practices. In addition, the evolving landscape around data privacy legislation potentially affects our ability, both online and offline, to access and analyse customer data information. � | |
| Potential impact ������ If sustained over anything more than a short time period, an externally driven decrease in the effectiveness of key marketing techniques would cause damage to the customer file as customer acquisition and retention fall. This would affect order flow and revenue in the short term and the productivity of the customer file over a longer period, impacting growth prospects. ������ Restrictive data privacy legislation could significantly decrease the yield on our marketing activities. � | Link to strategy ���� Market leadership ���� Organic revenue growth ���� Cash generation and profitability |
| Mitigating activities ������ Offline: Developments in the US Postal Service are closely monitored through industry associations and lobbying groups. Alternative parcel carriers are continuously evaluated. ������ Online: Management stays very close to new developments and emerging platforms in the online space. Efforts are focused on anticipating changes and ensuring compliance with both the requirements of providers and applicable laws. ������ The Marketing team constantly tests and evaluates new marketing techniques and opportunities in order to broaden the overall marketing portfolio and to reduce the dominance of any one constituent element. An example is the brand marketing campaign launched during 2018. ������ Data privacy requirements are monitored closely and assessed. � | Direction ���� Successful marketing diversification continues via the successful integration of a brand component to the marketing portfolio ? Decreased |
| Reliance on key personnel | |
| � Description of risk Performance depends on the ability of the business to continue to attract, motivate and retain key staff. These individuals possess sales and marketing, merchandising, supply chain, IT, financial and general management skills that are key to the continued successful operation of the business. � | |
| Potential impact ����� The loss of key employees or inability to attract appropriate talent could adversely affect the Group's ability to meet its strategic objectives, with a consequent negative impact on future results. � | Link to strategy ���� Market leadership/revenue growth ���� Cash generation and profitability ���� Shareholder value |
| Mitigating activities ����� The business is proactive in aiming to deliver a first class working environment. In addition, competitive employment terms and incentive plans are designed with a view to attracting and retaining key personnel. ����� Succession planning. | Direction ���� The business has been able to attract and retain appropriate talent = Unchanged |
�
�
Technological risks
�
| Failure or interruption of information technology systems and infrastructure | |
| � Description of risk The business is highly dependent on the efficient functioning of its IT infrastructure. An interruption or degradation of services at any 4imprint operational facility would affect critical order processing systems and thereby compromise the ability of the business to deliver on its customer service proposition.� � | |
| Potential impact ����� In the short-term, orders would be lost and delivery deadlines missed, decreasing the efficiency of marketing investment and impacting customer acquisition and retention. ����� Revenue and profitability are directly related to order flow and would be adversely affected as a consequence of a major IT failure. ����� Depending on the severity of the incident, longer term reputational damage could result. � | Link to strategy ���� Market leadership ���� Organic revenue growth ���� Cash generation and profitability |
| Mitigating activities ������ There is significant ongoing investment in both the IT team supporting the business and the hardware and software system requirements for a stable and secure operating platform. ������ Back-up and recovery processes are in place, including immediate replication of data to an alternative site, to minimise the impact of information technology interruption. ������ Cloud-based hosting for eCommerce and other back end functionality. | Direction ���� The IT platform is mature, and performance has been efficient and resilient = Unchanged |
�
| Failure to adapt to new technological innovations | |
| � Description of risk The operating platforms of the business may not be able to respond and adapt to rapid changes in technology. If the development of websites and customer-facing applications for alternative devices and platforms are slow or ineffective the business could lose competitive edge. In addition, the development of order processing, supplier-facing and data analytics technologies could fail to deliver the improvements in speed, ease and efficiency necessary to attract and retain a productive customer base. � | |
| Potential impact ����� If the business fails to adapt to new technologies and therefore falls behind in the marketplace, it may fail to capture the number of new customers and retain existing customers at the rate required to deliver the growth rates called for in the Group's strategic plan. � | Link to strategy ���� Market leadership ���� Organic revenue growth |
| Mitigating activities ������ Management has a keen awareness of the need to keep pace with the rapidly changing and continuously evolving technological landscape. ������ An appetite for technological innovation is encouraged in the business. Sustained investment is made in the development of both outward-facing and back office systems. � | Direction ���� Innovation remains a priority = Unchanged |
�
�
| Cyber threats | |
| � Description of risk Malware, ransomware and other malicious cyber threats can lead to system failure and/or unauthorised access to and misappropriation of customer data, potentially leading to reputational damage and loss of customer confidence. This is a rapidly changing environment, with new threats emerging on an almost daily basis. � | |
| Potential impact ����� Revenue and profitability are directly related to order flow and would be adversely affected as a consequence of system compromise. ����� A significant security breach could lead to litigation and losses, with a costly rectification process. In addition, it might be damaging to the Group's reputation and brand. ����� An event of this nature might result in significant expense, impacting the Group's ability to meet its strategic objectives. � | Link to strategy ���� Cash generation and profitability ���� Shareholder value |
| Mitigating activities ������ The business employs experienced IT staff whose focus is to mitigate IT security violations. Investment in software and other resources in this area continues to be a high priority. ������ Due to the ever-evolving nature of the threat, emerging cyber risks are addressed by the IT security team on a case-by-case basis. ������ Technical and physical controls are in place to mitigate unauthorised access to customer data and there is an ongoing investment process in place to maintain and enhance the integrity and efficiency of the IT infrastructure and its security. | Direction ���� The general incidence and publicity around cyber-crime continues to increase� ? Increased |
�
�
�
�
C.� Related party transactions
�
There are no related party transactions requiring disclosure.