Turnover at Clays jumped by 25% to 70m on the back of an excellent year boosted by boy wizard Harry Potter. The Suffolk plant printed JK Rowlings much-anticipated bestseller Harry Potter and the Order of the Phoenix this summer. It was also the first full year for Clays exclusive trade and general book contract with HarperCollins. While Potter was the headline grabber, with 3.25m copies sold in the UK, Clays also printed a host of other bestsellers during the year and chairman Miles Emley said the HarperCollins work was "a big part" of the growth.
In its direct response and commercial division sales were down but profit margins improved due to a focus on higher-added-value work.
UK magazine demand was described as particularly weak during May to July, with prices overall remaining extremely competitive.
Financial print remains flat, and sales declined by a further 28% to 35m. St Ives has seen corporate finance work fall 80% over the past two years. It continues to have a strong position in report and accounts work, but has seen clients scale back their spending on high-end touches and multi-colour work.
After a number of years in the doldrums the multimedia business produced a "better performance" helped in part by capacity reductions at competitors AGI Media and CMCS. Multimedia grew 23%, and Kent point-of-sale business Displaycraft has become part of this division. It was formerly part of St Ives Direct.
Trade in the USA and Germany was particularly tough, and the groups 120.6m-turnover operation in North America posted an operating loss of 703,000 prior to exceptionals and a goodwill write-off of 2.2m which pushed it to 3.3m (2002 post-exceptional profit: 1.3m).
A new general manager has just been appointed at the loss-making German operation Johler Druck, and although there's no sign of a buyer for the business managing director Brian Edwards said Johler was "not at the stage" where closure would be the only option for the company.
Overall Emley said the group did well to make a modest improvement in both margin and profit, but he saw precious little sign of anything changing in the general outlook. Our strategy is to keep concentrating on that part of the market that requires service and quality, and when it picks up we will be there.
Increased employment costs and price deflation saw the group "squeezed at both ends", said Edwards. Finance director Ray Morley also warned of rocketing energy prices - St Ives' electricity bill has just gone up by 25%. "When companies come to their renewals they will find energy costs absolutely roaring ahead," Morley said.
St Ives has, however, been able to use its strong cash position to its advantage. "We made some changes to payment terms to suppliers and were able to negotiate some hefty cash settlement discounts on paper. We are unique in that we can and will pay," he noted.
At the year-end St Ives' net funds had almost doubled to 26.3m.
During the year the group spent 20m of the 30m earmarked for capital expenditure, and expects to spend around 30m over the coming year.
St Ives and its pension fund trustees are reviewing the options for dealing with the growing deficit on its pension scheme under the new FRS17 accounting standard. The deficit was 61.8m at valuation on 1 August. Final salary pensions are a problem for UK plcs and we have to keep it under constant review, Morley said. The scheme was closed to new entrants in April 2002.
For the first time the group provided a segmental analysis of sales (but not profit, as St Ives believes this would be detrimental to its business).
Books 70.145m +25%
Direct response and commercial 192.342m -12%
Financial 34.968m -28%
Magazines 113.163m -8%
Multimedia 26.593m +23%
St Ives share price, which hit a 52-week high of 420p last month, rose 2.5p to 390p on the day (14 October), gaining a further 11.5p to 401.5p over the next two days.
Story by Jo Francis
