Group plc
Annual
Report &
Accounts
2022
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4imprint Group plc Annual Report & Accounts 2022
Our purpose is to harness
the enduring appeal of
promotional products to
help our customers build
their brand, promote their
initiatives, achieve their
marketing goals and make
lasting connections with those
who are important to them.
With every order we are trusted to carry a distinctive logo or message
on our products, so we understand clearly that our primary aim is to
be certain to make our customers and their organisations shine.
We deliver on this trust by cultivating an authentic environment where
our people are valued and empowered to do their best work.
Our priority is to attract and retain a diverse team, each member
of which is committed to creating mutually beneficial, sustainable
outcomes for all stakeholders and the environment, in turn protecting
and strengthening the long-term interests of the Company and
our Shareholders.
OVERVIEW
01 Highlights
02 At a Glance
04 Chairman’s Statement
STRATEGIC REPORT
06 Chief Executive’s Review
09 Strategic Objectives
12 Key Performance Indicators
14 Market Position
18 Business Model
20 Sustainability
34 Financial Review
41 Principal Risks & Uncertainties
50 Stakeholder Engagement
CORPORATE GOVERNANCE
54 Corporate Governance Report
56 Board of Directors
58 Statement on Corporate
Governance
63 Nomination Committee Report
66 Audit Committee Report
71 Annual Statement by the Chair of
the Remuneration Committee
73 Remuneration Report
87 Directors’ Report
89 Statement of Directors’
Responsibilities
Independent Auditor’s Report
FINANCIAL STATEMENTS
90
100 Group Income Statement
101 Group Statement of
Comprehensive Income
102 Group Balance Sheet
103 Group Statement of Changes in
Shareholders’ Equity
104 Group Cash Flow Statement
105 Notes to the Financial Statements
131 Company Balance Sheet
132 Statement of Changes in Company
Shareholders’ Equity
133 Company Cash Flow Statement
134 Notes to the Company’s Financial
Statements
ADDITIONAL INFORMATION
142 Alternative Performance Measures
144 Five Year Financial Record
IBC Registered Office and Company
Advisers
Find out more online:
investors.4imprint.com
4imprint Group plc Annual Report and Accounts 2022
HIGHLIGHTS
Operational overview
Strong trading momentum; strategic revenue
target of $1bn surpassed and profit before tax
exceeded $100m
1,860,000 total orders processed in 2022 (2021:
1,429,000); 307,000 new customers acquired in
the year (2021: 263,000)
Brand investment driving a step change in the
productivity of the overall marketing mix
Very strong financial position, with cash and bank
deposits of $86.8m; no debt
Special dividend proposed of 200.00c per share
Good progress on ESG, including completion of
the $2m solar array project at the Oshkosh
distribution centre
Financial overview
REVENUE
$1,140.29m
+45%
2021: $787.32m
OPERATING PROFIT
PROFIT BEFORE TAX
$102.90m
+236%
2021: $30.65m
BASIC EPS
285.57c
+255%
2021: 80.46c
$103.71m
+243%
2021: $30.23m
CASH AND BANK DEPOSITS
$86.75m
+109%
2021: $41.59m
TOTAL PAID AND PROPOSED DIVIDEND PER SHARE
TOTAL PAID AND PROPOSED DIVIDEND PER SHARE
160.00c
+256%
2021: 45.00c
132.24p
+291%
2021: 33.82p
PROPOSED SPECIAL DIVIDEND PER SHARE
PROPOSED SPECIAL DIVIDEND PER SHARE
200.00c
165.38p
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01
4imprint Group plc Annual Report and Accounts 2022
AT A GLANCE
Record breaking
organic revenue
growth
We are a direct marketer of promotional
products with operations in North
America, the UK and Ireland. After two
years of pandemic-affected trading,
in 2022 the Group demonstrated its
recovery with record financial results.
Revenue exceeded our long-held strategic target of $1bn and delivered
record profit before tax of more than $100m in the year.
What we do
We make it easy for our customers to
promote their service, product or event.
Our customers know that promotional
products from 4imprint’s extensive
range along with personal, expert
service on every order will ensure that
their name – and brand – looks great in
front of their target audience.
Our objective
Our objective is to deliver market-
beating organic revenue growth
by expanding our share in the still
fragmented markets in which we
operate. We aim to establish 4imprint
as ‘the’ leading promotional products
brand within our target audience
through sustained investment in an
evolving marketing portfolio.
0202
4imprint Group plc Annual Report and Accounts 2022
Where we do it
We operate the same business model in two primary geographical markets:
NORTH AMERICA
UK & IRELAND
Most of our revenue is generated in the USA
and Canada, serviced from an office and a
distribution centre in Oshkosh, Wisconsin.
Customers in the UK and Irish
markets are serviced from an office
in Manchester, UK.
REVENUE
REVENUE
$1,120.5m
98%
$19.8m
2%
EMPLOYEES
EMPLOYEES
1,367
December 2022
45
December 2022
Five year growth
REVENUE ($m)
$1,140.3m
22
21
20
19
18
1,140.3
787.3
560.0
860.8
738.4
OPERATING PROFIT ($m)
$102.9m
102.9
22
21
20
4.0
19
18
30.7
53.6
44.3
BASIC EARNINGS PER SHARE (c)
285.57c
285.57
22
21
20
11.03
80.46
19
18
152.42
125.61
How we do it
Our business operations are focused around a highly developed direct marketing business model. Organic revenue growth is
delivered by using a wide range of data-driven, online, offline and brand-based marketing techniques to capture market share in
the large and fragmented promotional product markets that we serve.
Reaching our customers
Innovative marketing allows us
to introduce millions of potential
customers to tens of thousands
of customised products.
Looking after our customers
We have an exceptional culture
revolving around the delivery of
remarkable customer service,
and a robust satisfaction
guarantee that our customers
can rely on.
Our product range
Our merchandisers work
closely with our suppliers to
continuously update and curate
our extensive product range.
Application of technology
Our appetite for technology
delivers an attractive customer
experience, an efficient order
processing platform and
sophisticated data-driven
analytics.
03
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4imprint Group plc Annual Report and Accounts 2022
CHAIRMAN’S STATEMENT
Clarity of
strategic
direction
Overview
2022 was an outstanding year for
4imprint. Two major financial milestones
were achieved:
– We surpassed our strategic
revenue target of $1bn; and
For the first time in the
Group’s history, profit before
tax exceeded $100m.
–
Underpinning the numbers, 2022
was characterised by the resilience
and scalability of our direct marketing
business model and, above all, by the
extraordinary dedication and tenacity of
our people in providing the best possible
service to our customers in the face of
unprecedented growth in demand.
Financial performance
After a relatively quiet first quarter, strong
trading momentum was evident in the
Group’s financial performance for the
remainder of the year, prompting several
unscheduled positive market updates.
Enhanced productivity from our marketing
activities, relative stability in gross margins
and operational leverage over fixed and
semi-fixed elements of the cost base
joined together to produce a powerful
combination of growth, profitability and
cash generation for the year.
Group revenue for 2022 was $1.14bn,
an increase of $353.0m or 45% over
2021. Profit before tax for the year was
$103.7m (2021: $30.2m), resulting in
basic earnings per share of 285.57c,
(2021: 80.46c). The Group ended 2022 in
a strong financial position, with cash and
bank deposits of $86.8m (2021: $41.6m).
04
4imprint Group plc Annual Report and Accounts 2022
ESG
There have been several important
developments in 2022 in support of the
Group’s ESG objectives. We were re-
certified as a CarbonNeutral® company by
Climate Impact Partners, and the team
has worked on several additional energy
reduction initiatives, most notably the
installation of a 2,660 panel solar array
at the Oshkosh distribution centre. In
addition, there has been significant
progress in expanding and developing
Better Choices™, our sustainable
product initiative.
Dividend
The Group enters 2023 in a very strong
financial position, with cash and bank
deposits of $86.8m. In view of the Group’s
financial performance in 2022 and its likely
cash requirements in 2023, the Board
recommends a final dividend per share of
120.00c (2021: 30.00c), giving a total paid
and proposed 2022 regular dividend per
share of 160.00c (2021: 45.00c).
In addition, and consistent with both the
Group’s capital allocation framework
and its balance sheet funding guidelines,
the Board is pleased to recommend an
additional, special dividend per share of
200.00c (2021: 0.00c), to be paid in June
2023 alongside the 2022 final dividend.
“ 2022 was an
outstanding
year for
4imprint.”
Outlook
Following an extremely strong trading
performance in 2022, we enter the
2023 financial year with momentum
and confidence. Trading results in
the first few weeks of 2023 have
been encouraging.
PAUL MOODY
CHAIRMAN
14 March 2023
Strategic direction
The Group’s progress in 2022 is a direct
consequence of both the clarity of our
strategic direction and our deep-seated
cultural commitment to ‘doing the right
thing’ for all stakeholders. In particular,
we took a long-term view of the
business and its prospects throughout
the pandemic-affected years of 2020
and 2021. Notably:
– We did not deviate from our
commitment to our people.
They are the cornerstone of the
4imprint culture and are essential
to producing such impressive
financial results.
– We continued to develop and
invest in the increasingly important
brand component of our marketing
programme. This sustained strategic
commitment has given us the
flexibility we anticipated and is
clearly having a beneficial impact on
the efficiency of our marketing mix.
The Board recognises that adding more
than $350m of organic revenue in
2022 was an outstanding achievement,
particularly after a two-year period
marked by the significant adverse impact
of the pandemic. As such, following
on from its annual strategic review
in Oshkosh in early November 2022,
the Board has approved significant
incremental investment in the business
in 2023, primarily in people, in order to
consolidate gains already made and to
drive future profitable revenue growth.
In this context, the Board remains
committed to the Group’s strategy and
business model as well as confident in
the strength of its competitive position.
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05
4imprint Group plc Annual Report and Accounts 2022
CHIEF EXECUTIVE’S REVIEW
A remarkable
year for
4imprint
Performance overview
2022 was a remarkable year for 4imprint.
Guided by a clear strategic plan and
driven by the tremendous efforts of
our teammates and supplier partners,
we have emerged from the pandemic
stronger than we entered it, generating
record levels of revenue and profitability,
increased market share and excellent
progress on several important initiatives.
The first quarter of 2022 was broadly
in line with our initial expectation to
deliver another solid step forward in the
recovery of the business after two years
that were badly affected by the pandemic.
Total orders received in the first quarter
were up a respectable 7% when
measured against 2019, the last ‘normal’
comparative. However, from the start of
the second quarter through to the end
of 2022 the trading performance of the
Group improved markedly. Total orders in
that period were up over the same 2019
comparative by an aggregate of 20%.
Comparisons to the prior year are equally
impressive. In total, 1,860,000 orders
were processed in 2022, representing an
increase of 30% over 2021. Importantly,
the proportion of new customers
acquired has been very encouraging.
In 2022 we acquired 307,000 new
customers, a 17% increase over the
263,000 acquired in the prior year.
06
4imprint Group plc Annual Report and Accounts 2022
Revenue
North America
UK & Ireland
Total
Operating profit
Direct Marketing operations
Head Office costs
Total
The recovery in new customer acquisition
in both 2021 and 2022 drove robust
existing customer order counts which
had previously been hindered by the
sharp decrease in customer acquisition
activity during the worst of the pandemic
in 2020. It is reassuring that customers
acquired during the pandemic/recovery
timeframe have demonstrated typical
or even slightly improved retention
characteristics, indicating that they are
squarely within our target profile.
Average order values in 2022 were 5%
above prior year, the result of changes in
the merchandising mix as well as general
inflationary price adjustments through
the year. This led to a total increase at
the demand revenue (value of orders
received) level of 36% over 2021.
These very strong demand numbers
translated into significant gains in year-
on-year financial performance.
– Group revenue for 2022 was $1.14bn,
representing an increase of 45%
or $353.0m over 2021. It should
be noted that 2022 revenue was
boosted by a timing effect of around
$30m related to an unusually high
order backlog at the 2021 year-end.
This was caused by global and local
supply chain issues delaying orders in
process. As anticipated, this situation
largely unwound to the benefit of
2022 reported revenue as the supply
situation improved and orders
were completed.
2022
$m
1,120.52
19.77
1,140.29
2022
$m
107.91
(5.01)
2021
$m
773.71
13.61
787.32
2021
$m
34.54
(3.89)
Change
+45%
+45%
+45%
Change
+212%
+29%
102.90
30.65
+236%
–
–
In terms of profitability, the Group
delivered a step change in results.
Operating profit for 2022 of
$102.90m was 236% above the 2021
comparative of $30.65m. Clearly,
the revenue volume growth outlined
above was a key factor in driving this
very favourable profitability dynamic,
but the effect was amplified by: (i)
gross margins remaining broadly
stable in an inflationary environment;
(ii) significant gains in the productivity
of our marketing investment; and (iii)
operational gearing over the fixed and
semi-fixed elements of the cost base.
The 4imprint direct marketing
business model remains very cash
generative, with free cash flow in
the year of $63.88m (2021: $5.95m)
leading to cash and bank deposits at
the 2022 year-end of $86.8m (2021:
$41.6m).
We are convinced that the strength of
the Group’s financial performance in
2022 is a direct result of our strategic
commitment to keep investing in the
business even during a severe economic
downturn. We know that this continued
investment, primarily in people and
marketing, forms the foundation
necessary to take advantage of the
significant market share opportunity
that lies ahead.
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Operational highlights
Beyond the financial performance,
much progress was made on operational
initiatives, all set in the context of the
stresses and strains on the organisation
from delivering more than $350m of
incremental organic revenue growth in
a short space of time.
– People. Our people are crucial to our
current and future success. This was
clearly demonstrated in the context
of the very strong demand levels
seen in the business from the second
quarter of 2022 onwards. Our team
members across the entire business
were willing to go above and beyond
to deliver the best possible customer
service in the face of record order
intake volumes and an improving
but still challenging supply chain.
We have invested in remuneration
and benefit initiatives in the year,
including the full restoration of
quarterly payouts under our quarterly
‘gainshare’ and other leadership
bonus plans that had been paused
during the pandemic. In addition, in
September 2022 we paid a special
‘one-off’ bonus of $1,000 or local
equivalent to all team members in
recognition of extraordinary effort
and an attitude of mind that so clearly
reflects 4imprint’s culture and values.
So far we have been successful in
attracting, recruiting and training
the additional team members that
we need to service our further
growth aspirations.
07
4imprint Group plc Annual Report and Accounts 2022
CHIEF EXECUTIVE’S REVIEW CONTINUED
– A 2,660 panel solar array was installed
and became operational in the year at
the Oshkosh distribution centre.
There has been exciting progress in
expanding and developing our Better
Choices™ sustainable products range.
–
Looking ahead
We are proud of what our business
has achieved in 2022. Our strategy is
clear, our business model is flexible and
scalable and we see opportunities to
take more share in the markets in which
we operate.
can expand our apparel decorating
capabilities and capacity in support of
the continued growth of this category.
In terms of strategic rationale,
the parallel is the substantial in-
house embroidery operation, built
from small beginnings, that has
underpinned our significant growth
in this important category.
ESG
Even as the team worked incredibly hard
to manage the swift and sharp recovery,
excellent progress was made on our ESG
agenda in 2022.
– We maintained and renewed our
–
CarbonNeutral® business certification.
The team has worked on further energy
and waste reduction initiatives, with the
ultimate goal of moving towards clean
energy initiatives and reducing reliance
on carbon offset products.
“ Our strategy is clear, our
business model is flexible
and scalable and we see
opportunities to take more
share in the markets in which
we operate.”
–
– Marketing. Our commitment to
staying in front of our customers
during an economic downturn
was validated as the pandemic
receded. The strategic evolution of
our marketing mix in recent years
to include and increasingly invest
in a brand awareness element was
accelerated and we have used the
improved flexibility this new mix
offers to take full advantage of the
immediate market share opportunity,
at the same time as strengthening
the business for the long term. The
success of this approach to managing
our marketing budget in 2022 was
reflected in large part in our revenue
per marketing dollar KPI in the year of
$8.86, an increase of 44% over prior
year (2021: $6.17).
Supply. As anticipated, the supply
chain constraints seen in 2021
continued into the first half of 2022.
The deep relationships that we
have with our key tier 1 suppliers
again proved to be invaluable in
dealing with these situations, with
the effect that the logistics, inventory
and production labour pressures
eased considerably in the second
half of the year. In common with
most businesses, we experienced
significant inflationary pressure on
cost of product during the year. Whilst
we implemented carefully considered
price increases to help address these
increasing costs, we continued to
approach pricing thoughtfully so as
to remain very well positioned in
the market, supporting the strong
customer acquisition and retention
numbers described above.
Screen-printing. In April 2022
we completed the purchase of the
business and assets of a small, nearby
apparel screen-printing business
that had been a long-standing and
valued supplier. The assets, but more
importantly the expertise acquired
will provide the seed from which we
–
08
4imprint Group plc Annual Report and Accounts 2022
STRATEGIC OBJECTIVES
Building a commercially and
environmentally sustainable business
that delivers value to all stakeholders
OBJECTIVES
To protect and enhance the 4imprint brand
as synonymous with the principles and
values that it represents
To deliver the extraordinary customer
service required to acquire and retain the
customer relationships that support long-
term value creation
To curate and preserve a distinct and diverse
culture that develops, empowers and values
team members
To embrace environmental initiatives tailored
to achieve maximum impact in the context of
our business and operations
To maintain collaborative and mutually
beneficial relationships with our supplier
partners, grounded in clear social and
ethical expectations
To support, participate in and give back to
our local communities
KEY ENABLERS
– Relentless focus on excellence in customer service
– Culture guided by application of the 4imprint
–
Compass and ‘The Golden Rule’
Investment in environmental initiatives,
and setting of clear and measurable
performance targets
4imprint Supply Chain Code of Conduct
– Clear social and ethical policies and expectations
–
– Charitable giving programme and encouragement
of all team members to volunteer or otherwise
participate in their local communities
KPIs (SEE PAGES 12 AND 13)
– Year-over-year (YOY) revenue growth
–
24-month customer retention
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4imprint Group plc Annual Report and Accounts 2022
STRATEGIC OBJECTIVES CONTINUED
Market leadership
driving organic
revenue growth
Cash generation
and profitability
OBJECTIVES
OBJECTIVES
To establish 4imprint as ‘the’ recognised
promotional products brand within our
target audience
To be the leading direct marketer of
promotional products in the markets in
which we operate
To expand share in fragmented markets
through sustained investment in a diversified,
evolving marketing portfolio
To set challenging organic revenue targets
linked directly to the Group’s strategy
KEY ENABLERS
– Competitive advantage through continuous
development of and sustained investment in:
– People
– Marketing
– Technology
– Differentiation through operational excellence:
– Customer service
– Merchandising and supply
– Efficient processing at scale of individually
customised, time-sensitive orders
KPIs (SEE PAGES 12 AND 13)
– YOY revenue growth
– Number of orders received
–
24-month customer retention
– Revenue per marketing dollar
To deliver reliable and increasing free cash
flow over the medium to longer-term
To balance short-term profitability with
marketing investment opportunities leading
to sustainable long-term free cash flow and
EPS growth
KEY ENABLERS
– Reinvestment of cash generated from
operations into organic growth initiatives based
on multi-year revenue/return projections
– Disciplined approach to investment:
– Marketing investment based on our
assessment of both prevailing market
conditions and a combination of current and
future customer-centric metrics, including
prospecting yield curves, retention patterns
and lifetime revenue profiles
– Capital investment evaluated based on
cash payback and discounted cash flow
parameters
– Direct marketing ‘drop-ship’ business
model, facilitating efficient working capital
management
Low capital intensity
–
KPIs (SEE PAGES 12 AND 13)
– Revenue per marketing dollar
– Operating margin
– Basic earnings per share
– Cash conversion
10
4imprint Group plc Annual Report and Accounts 2022
Effective capital
structure
Shareholder
value
OBJECTIVES
OBJECTIVES
To maintain a stable and secure balance
sheet aligned with the Group’s growth
objectives
To have the flexibility to be able to continue
investing in the business through different
economic cycles
To enable the Group to act swiftly when
investment opportunities arise
To meet our legacy defined benefit pension
commitments as they fall due
KEY ENABLERS
– Conservative balance sheet funding approach
– Capital allocation priorities in line with
strategic objectives
KPIs (SEE PAGES 12 AND 13)
– Cash balance
– Return on average capital employed
– Pension asset/(deficit)
–
Total Shareholder Return (TSR)
To deliver increasing Shareholder
value through execution of the Group’s
growth strategy
KEY ENABLERS
–
Financial discipline in evaluation of investment
opportunities
– Clear priorities in capital allocation:
– Organic growth initiatives
– Regular dividend payments
– Residual legacy pension funding
– M&A opportunities
– Other Shareholder distributions
KPIs (SEE PAGES 12 AND 13)
– Basic earnings per share
– Dividends per share
–
Total Shareholder Return (TSR)
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4imprint Group plc Annual Report and Accounts 2022
KEY PERFORMANCE INDICATORS
REVENUE GROWTH ($m)
NUMBER OF ORDERS RECEIVED (000s)
$1,140.29m +45%
1,860 +30%
22
21
20
19
18
1,140.29
787.32
560.04
860.84
738.42
22
21
20
19
18
519
426
268
692
457
420
1,003
1,130
969
1,341
New
Existing
Organic revenue growth has been particularly strong in
2022. The year-on-year growth of 45% benefitted from
enhanced marketing productivity and improved supply chain
conditions. This is a key measure of progress towards our
strategic objectives.
Orders received (demand) statistics are collated on a daily,
weekly and monthly basis to evaluate performance against
targets in our operational plan for both new and existing
customers. Analysis of order patterns offers a clear and
immediate measure of operational performance.
24-MONTH CUSTOMER RETENTION (%)
REVENUE PER MARKETING DOLLAR ($)
40.8%
22
21
20
19
18
40.8
37.9
42.7
43.4
42.6
$8.86
22
21
20
19
18
8.86
6.17
6.03
5.58
5.63
The 24-month customer retention rate offers visibility as to
the broad stability and strength of the customer file. The 2022
results highlight continuing post-pandemic recovery driven
by encouraging new customer acquisition in 2021 and 2022.
The 24-month customer retention rate is expected to be fully
recovered in 2023.
Revenue per marketing dollar gives a measure of the productivity
of our investment in marketing. 2022 saw a step change in
marketing productivity driven by investment in the brand element
of the marketing mix, and the commitment to stay in front of our
customers during the pandemic.
OPERATING MARGIN (%)
9.02%
22
21
20
0.71
19
18
3.89
9.02
6.23
6.10
CASH CONVERSION (%)
90.7%
22
21
20
19
18
90.7
63.2
96.4
96.5
320.3
Operating margin percentage shows the profitability of the
Group’s trading operations. The 2022 result exceeds margins
achieved in the pre-pandemic years. This significant increase in
profitability has been driven by favourable demand, productive
marketing spend and general operational gearing.
Cash conversion measures the efficiency of the 4imprint
business model in the conversion of operating profits into
operating cash flow. 2022 saw a return to more typical cash
conversion patterns after the pandemic disruption and supply
chain challenges around the 2021 year-end.
12
4imprint Group plc Annual Report and Accounts 2022
CASH AND BANK DEPOSITS ($m)
$86.75m
86.75
22
21
20
19
18
41.59
39.77
41.14
27.48
RETURN ON AVERAGE CAPITAL EMPLOYED (ROACE) (%)
94%
41
6
22
21
20
19
18
94
86
82
Our balance sheet funding guidelines call for the business to
aim for a target cash balance at the end of each financial year.
This KPI reflects the Group’s performance in managing its cash
resources relative to its capital allocation priorities. The 2022
cash balance remains healthy.
This KPI shows the Group’s efficiency in the use of its capital
resources. It is influenced by profitability, working capital
management and productive capital investment. ROACE
has recovered closer to historical levels with the significant
improvement in profitability.
PENSION ASSET/(DEFICIT) ($m)
$1.23m
22
21
20
19
18
(12.31)
(15.02)
1.23
1.97
(3.31)
BASIC EARNINGS PER SHARE (EPS) (c)
285.57c
285.57
22
21
20
11.03
80.46
19
18
152.42
125.61
This KPI demonstrates the substantial efforts made in recent
years in the de-risking of the Group’s legacy defined benefit
pension plan. We are on target for our aim of full buyout of the
plan, with a target date of mid-2024.
EPS growth over time gives a clear indication of the financial
health of the business and is a key component of the delivery of
Shareholder value. The 255% increase in EPS in 2022 shows the
outstanding recovery since the pandemic and the year’s strong
improvement in profitability.
DIVIDENDS PER SHARE (DPS) (c)
TOTAL SHAREHOLDER RETURN (TSR) (% in year)
160c 200c
REGULAR SPECIAL
160
200
22
45
25
21
20
19
18
70
Regular
Special
54%
22
21
20
19
18
(27)
10
2
54
61
DPS provides a tangible measure of the delivery of
Shareholder value. The 2022 regular dividend is in line with
the Board’s guidelines to increase the regular dividend payment
broadly in line with EPS growth. In addition, a special dividend
of 200c has been proposed in line with the Group’s capital
allocation guidelines.
Our aim is to deliver consistent performance and attractive
TSR. The improved TSR for 2022 highlights the post pandemic
recovery, reflecting a great trading year. This emphasises the
recovery in the share price and increases in dividend payments.
13
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4imprint Group plc Annual Report and Accounts 2022
MARKET POSITION
Establishing
a leadership
position
in the markets
we serve
1414
4imprint Group plc Annual Report and Accounts 2022
“ Promotional products are
purchased by a wide range of
individuals within all types of
businesses and organisations.”
A fundamental strategic objective for
4imprint is to establish and maintain a
leadership position in the markets we
serve. We aim to establish 4imprint as
‘the’ recognised brand for promotional
products, driving our organic revenue
growth profile to significantly outpace the
overall growth rate of the promotional
products industry as a whole.
4imprint is one of the largest distributors in
the North American promotional products
industry. The leading trade bodies, PPAI
and ASI, consistently place 4imprint near
the top of their annual ‘Top 40’ distributor
rankings. The ASI annual rankings by
revenue for the 2021 financial year show
that 4imprint was the third largest
distributor in North America, with revenue
of $774m, (2020: $550m). 2022 revenue
increased significantly to $1.12bn, reflecting
a very strong recovery from the negative
effect of the pandemic on the 2020 and
2021 results. We expect to place favourably
in the 2022 rankings, however we do not
expect this information to be available until
after the date of this report. Our UK
business is much smaller, with annual
revenue in 2022 of £16m ($20m), but it
ranks consistently in that market’s top five
distributors according to industry sources.
Our proposition
Our customers can be certain that our
team and our products will meet their
expectations, every time:
– Certain delivery: It’s on time or it’s
on us. If your event is missed because
we didn’t ship on time, your order
is free.
– Certain value: If you find, within
30 days of purchase, that your order
would have cost less elsewhere, let
us know and we’ll refund double
the difference.
– Certain happiness: If you’re not
100% satisfied with your order, we’ll
pay to pick it up and rerun it or refund
your money – your choice.
Our 360° Guarantee® promises free
samples, complimentary art assistance
and personal, expert service on every
order. We aim to take away the worry,
making 4imprint the trusted right hand
minding the details every step of the way.
Whether raising awareness, sponsoring
events, acquiring customers, recruiting
new employees or supporting good
causes, our customers know that
promotional products from 4imprint will
ensure that their name – and brand – look
great in front of their target audience.
Where we do business
We operate in two primary
geographical markets:
– North America: Market size estimates
have been quite volatile over the
pandemic period, however the US
and Canadian promotional products
markets together in 2022 are
estimated to total around $25bn
in annual revenue. We serve these
markets from a centralised base in
Oshkosh, Wisconsin.
– UK & Ireland: The UK and Irish
promotional products market size
was estimated by industry sources in
2022 to be around £1.1bn ($1.4bn),
almost fully recovered from the 2019
estimate of £1.2bn ($1.5bn). Our
office serving these markets is in
Manchester, UK.
The marketplace for promotional products
is fragmented. The US industry trade body,
PPAI, has produced estimates that our
largest market, the USA, is served by just
under 26,000 distributors, of whom
fewer than 1,000 have annual revenue
of more than $2.5m. The distribution
structure is similar in the Canadian
and UK/Irish markets.
Our customers
Promotional products are purchased by a
wide range of individuals within all types of
businesses and organisations. These
products have many uses: as an integral
part of sales and marketing campaigns; for
recruitment or recognition activities; to
promote health and safety initiatives; and
for any other method of making a
connection between our customer’s
organisation and the recipient of
the item.
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We define our customer as the individual
placing the order, rather than the business
or organisation for which the individual
works or with which he/she is associated.
Our customer base is widely dispersed
geographically, by size of business/
organisation and across commercial,
governmental, educational, charitable,
religious and other segments.
Our target customer will typically be
working at an organisation with 25 or
more employees and $1m or more in
annual revenue. No single customer
comprises a material part of 4imprint’s
overall revenue.
15
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4imprint Group plc Annual Report and Accounts 2022
MARKET POSITION CONTINUED
Our products
We sell an extensive range of promotional
products – merchandise that is custom
printed with the logo or name of an
organisation with the aim of promoting
a brand, service, product or event.
Our product range comprises tens
of thousands of individual products.
Categories range from inexpensive items
such as pens, bags and drinkware to
higher value items such as embroidered
apparel, technology and full-size trade
show displays. Our aim is to enable our
customers to find the perfect product
for their promotion and their brand. This
range is carefully updated and curated by
an experienced merchandising team.
Our top ten ‘Supergroup’ product
categories by 2022 sales volume in the
North American business are set out
below. Movements from the 2021 and 2019
comparatives are provided to illustrate the
different impacts and recovery trends as
the pandemic has receded.
Supergroup
2022
2022
Rank
+/- vs.
2021
+/- vs.
2019
Apparel
Bags
Drinkware
Writing
Stationery
Outdoor
& Leisure
Trade Show
Auto, Home
& Tools
Technology
Wellness
& Safety
1
2
3
4
5
6
7
8
9
+34% +57%
+41% +31%
+41% +40%
+46%
+3%
+53% +22%
+37% +49%
+67% +17%
+43% +24%
-20%
+37%
10
-8% +36%
Product trends
In recent years we have seen increases
in the average unit price of the products
that we sell. As a general observation,
this reflects a shift towards products
with more utility, longevity and higher
perceived value for the recipient,
together with a trend away from lower
priced ‘giveaway’ products. Well-known
consumer brands have driven part of
this effect, representing 15% of overall
sales in 2022. The Drinkware, Bags
and Apparel categories in particular
are well represented with branded
promotional merchandise.
Apparel has been a large and dynamically
growing category for several years, as
demonstrated by the 57% increase in
sales volume compared to 2019. The
growth of the apparel category has been
facilitated by our substantial in-house
embroidery operation in Oshkosh, and
most recently by investment in direct to
garment and screen print capabilities.
Wellness & Safety sales volume declined
against 2021, caused principally by a fall
in demand for logoed face masks from
a peak of $19m in the pandemic year of
2020 to $2m in 2022. Interest for hand
sanitiser, particularly in smaller sizes for
individual distribution continues to run at
a favourable level compared to 2019.
The Technology category encompasses
a range of products from less expensive
simple items such as mousepads to
higher end electronic and branded
items such as Skullcandy® Bluetooth®
headphones. As demand continues to
fluctuate broadly in line with consumer
trends, we have seen a significant decline
in ‘tech’ accessories such as phone
wallets and power banks, both of which
were very popular pre-pandemic in 2018-
2019. Meanwhile, categories such as
wireless chargers, Bluetooth® speakers,
and wireless earbuds/headphones are
showing healthy growth.
It is unsurprising that the Trade Show
category has been particularly volatile
over the pandemic period, when
lockdowns and travel restrictions meant
the cancellation or postponement of most
gatherings or ‘in-person’ events. A strong
recovery has taken place starting in late
2021 and throughout 2022, with sales
volumes now exceeding 2019 levels.
Writing remains a mature category, with
2022 sales volumes only 3% higher than
in 2019.
Better Choices™
Our customers have always balanced
many factors when researching and
selecting promotional products, including
brand and identity, budget, event dates,
as well as artwork and logo requirements.
Increasingly, environmental aspects
regarding the sustainability of materials, as
well as social concerns such as workplace
culture/conditions are an important part
of the product decision matrix. These
considerations are expected to grow in
importance over the coming years.
Our Better Choices™ initiative, launched in
the first quarter of 2022, provides an easily
accessible framework to enable customers
to find their perfect product. Whether
they are beginning the sustainability
journey or are well down the path, many
of our customers share a desire to make
choices that lead to a better future. Better
Choices™ allows customers to easily
filter the 4imprint range of promotional
products to find the best match for the
values of their organisation and their
brand. Each Better Choices™ designation
is rigorously researched and is supported
by third party certification programmes
and other supplier provided information
under the broad headings of Better
Materials and Better Workplaces.
More information on the Better Choices™
programme can be found in the
Sustainability section on page 33.
1616
4imprint Group plc Annual Report and Accounts 2022
4imprint ‘Own Label’ brands
For several years we have developed and continue to
evolve a stable of ‘in-house’ brands, exclusive to 4imprint.
These products are designed to fill gaps in certain product
categories and have in many cases grown to occupy top
selling spots in their respective categories.
Crossland®
Crossland® is our ‘outdoor’ brand, including fleece jackets,
blankets, ‘beanie’ hats, vacuum mugs, backpacks and
coolers. 2022 sales of Crossland® products amounted to
$23.9m, an increase of 70% over 2019.
Refresh®
Refresh® was launched in 2017, initially concentrating on a
core line of affordable water bottles in a variety of designs
and colours, expanding to include tumblers, travel mugs
and various other metal drinkware items. 2022 sales of
$11.1m were 164% above the 2019 comparative.
Taskright®
Taskright® was launched in 2020, expanding to a sales
value of $6.7m in 2022. The brand is set up around a line
of everyday stationery products, including sticky notes,
notepads and pencils.
As well as offering the potential of above average
growth in sales volumes, the control that we have
over the development of our ‘Own Label’ products
presents us with a great opportunity to drive change at
a meaningful level, specifically in terms of transitioning
many of these products to include sustainable
attributes and thereby dovetail with our Better
Choices™ initiative. By way of example:
Better Materials and ‘Own Label’
– Crossland® garments: fleece jackets transitioning into
recycled polyester in the fourth quarter of 2022 and
into 2023. Crossland® items that have transitioned or
are in the process of transitioning already represent
30% of brand sales.
– Refresh® entry level range #1 polyethylene
–
terephthalate (PET) bottles were transitioned to
recycled materials for all coloured options,
representing 27% of brand revenue.
Taskright®. Sourcing for paper (and wood)
based products is being transitioned to Forestry
Stewardship Council (FSC) or Sustainable Forestry
Initiative (SFI) certified sourced materials in 2023.
Better Workplaces and ‘Own Label’
– We pay particularly close attention to supplier
selection as it pertains to our ‘Own Label’ brands.
Our supplier of garments under the Crossland®
brand has been an Accredited Participating Company
of the Fair Labor Association for over 10 years. An
additional supplier of drinkware, bags and stationery
was approved by the Fair Labor Association to start
their journey to accreditation in 2022. Together they
represent 75% of private label brand revenue.
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4imprint Group plc Annual Report and Accounts 2022
BUSINESS MODEL
Our business is the sale and distribution of promotional products.
Our commercial operations are built around a direct marketing
business model designed to introduce millions of potential
customers to tens of thousands of customised promotional
products. Our business model is very well-established and has
proved to be flexible and resilient through the pandemic.
KEY STRENGTHS
WHAT WE DO
Our people
–
Strong company culture
– Highly trained, long-tenured
team members
Empowered to ‘do the right thing’
–
Reaching our customers
–
Expanding and productive
customer file
– Marketing ‘engine’ able to attract
new and retain existing customers;
brand increasingly important
Long tradition of excellence in
customer service
–
Our platform
– Proprietary, scalable IT system
– Reliable and resilient
supplier network
Financial strength
Strong balance sheet
–
–
Investment in the business
– Highly cash-generative model
driving self-financed growth
18
1
4
Customer
proposition
–
–
–
Fast, easy and convenient
Expansive and relevant product range
Industry-leading customer guarantee
– Online or over the phone
– Free samples and artwork
– Remarkable customer service
– Certain delivery. It’s on time or it’s on us
– Certain value. Or we’ll refund double
the difference
– Certain happiness. If you’re not 100%
satisfied, we’ll refund or rerun your order
Application
of technology
– Websites, mobile, customer-facing
– Proprietary order processing
–
platform
Sophisticated database analytics
– Mature, scalable systems
– Efficient order processing
– Supplier integration
– Data-driven marketing
– Innovative web and back
office technology
4imprint Group plc Annual Report and Accounts 2022
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STAKEHOLDER OUTCOMES
Shareholders
Strong cash generation permits us to reinvest
in the continued growth of the business, and
to reward our Shareholders through dividend
payments and share price appreciation.
SEE PAGE 11
Customers
Promotional products work: they help our
customers achieve their marketing goals,
promote their safety initiatives and recognise
their employees, amongst many other uses.
SEE PAGE 15
Team members
We are committed to a culture that encourages
the training, development, wellbeing and
personal fulfilment of every team member.
SEE PAGES 21 TO 23
Suppliers
We have productive relationships with our
trusted supplier partners. Our suppliers can
expect to be treated in accordance with the
4imprint ‘Golden Rule’ and to be paid on time.
SEE PAGE 24
Community
Our team members are actively engaged in our
communities, including charitable giving and
volunteering activities.
SEE PAGES 23 AND 24
Pension Plan Trustee
and members
We stand firmly behind our legacy defined
benefit pension scheme obligations.
SEE PAGE 36
Details of engagement with stakeholders are on
pages 50 to 53, covering the Directors’ duties
under section 172 (1) Companies Act 2006.
19
2
Innovative
marketing
– Data-driven heritage and discipline
– Multi-faceted, evolving marketing portfolio
– Brand, search, catalogue
– New customer acquisition
– Growing customer file
– Existing customer retention
– Blue Box™
‘Drop-ship’
from suppliers
– Unrestricted access to tens
of thousands of products
Efficient delivery of orders
to short lead times
–
– Minimal investment in inventory
– Supplier holds the inventory
– Supplier prints the product
– Order shipped direct to customer
– Close relationships with suppliers
– Merchandisers ensure the
product range is continually
updated and curated
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4imprint Group plc Annual Report and Accounts 2022
SUSTAINABILITY
An authentic
approach
to corporate
responsibility
2020
4imprint Group plc Annual Report and Accounts 2022
“Our culture
and values
encourage
responsible
practice at all
levels of the
organisation.”
Our approach to sustainability
We have a long-standing, principled
approach to corporate responsibility. Our
culture and values encourage responsible
practice at all levels of the organisation
and present clear guiding principles
that drive ethical interactions with, and
outcomes for, all key stakeholders.
The Board believes that these principles
and values are entirely consistent with
our primary strategic objective (see
page 9) of building a commercially and
environmentally sustainable business that
represents the cornerstone of 4imprint’s
future success.
Our sustainability agenda focuses on
four pillars, each one built on robust and
ethical business practices:
– People and culture
–
–
–
Social and community
Ethical supply and practices
Environmental
People and culture
Our second strategic objective (see page
10) specifically identifies investment in
our people as a key driver of competitive
advantage. We are committed to a
culture that encourages the training,
development, wellbeing and participation
of every team member.
Further, our culture is based on the
‘Golden Rule’: treat others as you
would wish to be treated yourself.
This mindset is evident across the four
pillars of our sustainability agenda
through team members who go above
and beyond every day to help each other,
to provide remarkable service and to give
back to their communities because they
know and believe that it is the right thing
to do.
People first
We are in no doubt that our team members
are our most important asset. Their
extraordinary commitment during the
pandemic and subsequently through
the stress of the very strong demand
levels seen in the business from the
second quarter of 2022 onwards reflects
an attitude of mind firmly grounded in
4imprint’s culture and values.
We have not deviated from our first priority
– an overriding commitment to the health,
safety and wellbeing of all of our people.
This approach enables us not only to retain
existing team members to take care of
record demand activity, but to enhance
4imprint’s reputation in our communities,
thereby allowing us to attract new talent in
tight labour markets.
Communication and participation
A good proportion of office-based team
members are now working from home on a
permanent or hybrid basis. One implication
of this is that the previous ‘in-person’
quarterly updates on business objectives
are no longer practicable. These quarterly
meetings have therefore been replaced by
regular, detailed and informative written
updates from the CEO or UK General
Manager as well as other leaders in the
business. These updates have offered
timely information about the performance
of the business and payouts under
quarterly incentive remuneration plans as
well as providing context around important
topics such as work from home protocols.
Compensation and benefits
In 2022 we undertook a full evaluation of
pay rates across the business. Average
increases of between 6% to 9% were
awarded depending on job function and
hourly or salaried status.
All team members are eligible to participate
in a quarterly ‘gain share’ bonus plan that
is based on the achievement of tangible,
clearly communicated performance
targets. In 2022 the ‘gain share’ payouts
were at record levels in line with the
record performance of the business in
the year. Quarterly ‘leadership’ bonuses
were also paid to managers and other key
contributors. In addition, in September
2022 we paid a ‘one-off’ bonus of $1,000
or local equivalent to all team members in
recognition of their extraordinary efforts at
a crucial time for the business.
Our competitive benefits package includes
paid time off and strong medical, dental
and retirement plans. We also offer
resource aimed at personal financial
wellbeing through online classes and
access to appropriate advisers, for example
retirement planning specialists. We have
taken the opportunity to strengthen our
benefits offering as appropriate.
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4imprint Group plc Annual Report and Accounts 2022
SUSTAINABILITY CONTINUED
Diversity, Equity and Inclusion (DEI)
We have a clear approach to DEI that is
directly in accordance with the culture
and values that 4imprint has cultivated
over a period of many years. The Group’s
DEI principles can be found on our IR
website at https://investors.4imprint.com.
We understand the importance and
beneficial effect of diversity within our
Group. We believe that remarkable teams
include a wide range of unique
individuals, and that bringing these
individuals together around a shared set
of guiding principles contributes directly
to our success as a business.
We aim to foster a culture that recruits,
develops and promotes team members
regardless of background. We are
committed to the principle of equal
opportunity in employment, and no
applicant or employee receives less
favourable treatment on the grounds of
nationality, age, gender, gender identity,
marital or civil partner status, sexual
orientation, religion, race, ethnicity or
disability. Further, we do not tolerate
discrimination against or harassment of
team members or others.
Good progress has been made on DEI in
2022. Priorities have been: seeking a
wider pool of applicants for available jobs;
reworking job descriptions to eliminate
barriers and unconscious bias in the
recruitment process; and expanding our
training offering to address these topics.
We are committed to working with team
members with disabilities to find roles
or reasonable accommodations that
enable them to meet the responsibilities
of their role.
Training and development
We have always believed in the value and
benefits of personal and professional
development. In the wake of the
pandemic, many of our classes, seminars
and training sessions take place online.
Clearly this remote participation is the
most convenient and efficient method for
the contingent who are working from
home. Our training team ensures that the
online course curriculum continues to
evolve along with the business.
Diversity has been an important focus
for the training team. This has included
mandatory classes addressing issues of
social prejudice, racism, harassment, and
exclusion in the workplace. We have
received good feedback from team
members on topics such as inclusion,
empathy, and collaboration, which are
key elements in our work culture.
Other training initiatives include topics
such as financial literacy, leadership, safety
and particularly an increasing focus on
cyber security.
We encourage our team members to live
healthy lives, and this focus on wellness
aims to make healthy living easy and
convenient. We provide a number of
online yoga and exercise classes that team
members can participate in from the
convenience of their home. We have also
partnered with our Employee Assistance
Program (EAP) to offer short, on-site visits
with an EAP counsellor once per month.
The 15-minute visits are designed to get to
know EAP counsellors, find out more
about EAP, or see if you have an issue
appropriate for EAP.
Our training programmes will continue to
be offered online and in webinar format,
and we will include ‘in-person’ sessions as
appropriate. For example, the initial new
starter Customer Service Representative
training classes have reverted to being
held on-site in Oshkosh.
Customer service
training class in
progress
Gender representation
TOTAL HEADCOUNT
Permanent and temporary employees
411
1,006
Male
Female
MANAGEMENT
Employees who operate at a
senior level in the Group
37
36
Male
Female
BOARD
4imprint Group plc Board members
3
5
Male
Female
At 31 December 2022 the Group employed
a total of 1,417 team members, split
between female (1,006, or 71%) and male
(411, or 29%).
In relation to gender diversity, in November
2022 the Company took part in the FTSE
Women Leaders Review (formerly the
Hampton-Alexander Review) which
monitors gender balance in FTSE 100 and
FTSE 250 companies. In addition to
reviewing gender diversity at Board level,
the FTSE Women Leaders Review reports
on the gender diversity of senior
management and their direct reports.
22
The data showed:
–
–
The gender diversity of the Board
of 4imprint Group plc was constant
during the year, with 37.5% female
representation.
4imprint Group plc was in the top ten
best performers in the FTSE 250 for
female representation in the combined
executive committee and direct reports
category, with females comprising 51%
of that group.
Health and safety
A proactive approach to health and safety
is an important aspect of the 4imprint
workplace. Desk-based ergonomics and
best practice protocols in the office
environment along with the operation of
machinery and material handling at our
distribution centre are key areas of
emphasis in promoting a safety culture.
Incidents or near misses are closely
tracked, and a Safety Committee meets
to consider future improvements based
on experience and analysis of the data, or
to ensure that we are fully compliant with
changing regulatory requirements. In
addition, we benefit from a fresh
perspective through working closely with
external specialists and loss control
experts from our property and casualty
insurance carriers.
We have an extensive employee wellness
programme, including an on-site medical
clinic at both sites in the US operation.
We have continued to expand our health
services to include a nurse practitioner,
registered nurse, occupational therapist,
and other resources such as nutrition
and health coaches. These professionals
are available to deal with a wide range of
medical issues and needs. As well as
increasing productivity and being
cost-effective for the Company, the
wellness programme offers great
convenience and has proved very
popular with employees: basic medical
services such as COVID-19/flu shots,
blood draws or consultation with a
nurse or nurse practitioner on minor
conditions can take 15 minutes
compared to hours spent travelling to
and from attending an external medical
facility. All on-site medical services are
available for free to our team members.
Social and community
4imprint is a strong supporter of
community involvement. The health of
our business is dependent on our loyal
customers and above all on our
dedicated teammates. One of the ways
we show our appreciation to them is
through supporting causes close to their
hearts and their communities – no
matter where they are located. We
support the wellbeing of communities
and causes in the best ways we know
4imprint Group plc Annual Report and Accounts 2022
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how: by sharing our time and talents and
through the power of promotional
products to make a difference.
Community involvement and
volunteering
Being visible and lending a hand in the
community is best accomplished
through our team members volunteering
for their favourite causes. Not only is this
simply the right thing to do; it also
highlights 4imprint as a preferred
employer, strengthening our profile in
the community and attracting potential
new team members as our footprint
continues to expand.
As pandemic restrictions were gradually
lifted, 2022 provided an ‘almost back to
normal’ opportunity to return to
pre-pandemic levels of community
involvement. Each 4imprint associate
receives eight hours of paid time off
(PTO) per year for volunteering at
nonprofit organisations, schools or other
causes that are meaningful to them. In
2022, 269 associates participated in 326
volunteering events across 162
organisations, logging over 1,700 paid
volunteer hours. In addition to causes
selected by our team members, we seek
out (and often organise) additional
volunteer opportunities to encourage
more of our people to give back.
In 2022, some of those
opportunities included:
– Annual clean-up at Heckrodt Wetland
Reserve – participants planted trees,
shrubs and plants in addition to
removing invasive species.
– Assembling several light displays
for the local Celebration of Lights, a
holiday event to raise money for food
banks in the community.
– Providing warm caps, lip balm and
notepads/pens to the Police Lights
of Christmas. Team members also
helped pack snack bags that would
be handed out to those in need.
– Offering ‘mystery missions’
–
where team members travel to a
surprise location to volunteer via a
partnership with the Volunteer Fox
Cities organisation.
Stock the Hope Fridge – our
volunteers worked together to collect
funds, grocery shop, prepare and
deliver premade meals to the local
Hope Fridge, a resource for those in
the community facing food insecurity.
– Cards 4 Compassion/Crafternoon –
teammates created 350 holiday cards
in one afternoon. This event is about
brightening someone’s day.
– Annual Christmas tree decorating
at Simeanna – associates decorated
several Christmas trees at a local
retirement home.
– Oshkosh Saturday Farmers Market
– 4imprint provided bag giveaways
and other promotional products
at the summer and winter farmers
markets. This provided an opportunity
for 4imprint people to chat with
community members and discuss
hiring opportunities.
Fleece to mittens – volunteers
converted unusable apparel into hats
and mittens for local children in need.
Feed the body, Feed the Soul – an
event where volunteers package rice
meals for the needy.
–
–
– Wisconsin ‘Curd’ night – area
–
–
basketball team theme night to collect
non-perishable food.
Events with the Boys and Girls Club – a
safe place with a mission to improve
the lives of children.
‘Rock the Block’ with Habitat for
Humanity® – volunteers repair homes
in low-income neighbourhoods.
These opportunities may individually seem
small, but they are highlighted here to give
a feel for the level and depth of our
volunteer outreach which aligns directly
with 4imprint’s culture and values.
Annual clean-up at Heckrodt
Wetland Reserve
23
4imprint Group plc Annual Report and Accounts 2022
SUSTAINABILITY CONTINUED
Sponsorship
4imprint also supports the local
community through sponsorships. In 2022,
we sponsored approximately 150
organisations, totalling $240,000 in support.
Some local sponsorships include:
– Wisconsin Herd G-League basketball.
– N.E.W. Pride Alive (LGBTQ event).
– Discover Oshkosh (rebranding initiative
supporting local businesses/tourism).
– Waterfest (local concert series).
– Women’s Leadership Conference.
– Golf 4 Wishes through the Make-A-
–
Wish® Foundation.
4imprint employee’s children’s sports
teams and ‘meaningful to me’ causes.
Community involvement:
Golf 4 Wishes outing
Charitable giving
4imprint’s one by one® charitable giving
programme allows nonprofit organisations
throughout the United States, Canada and
the UK to apply for a $500 grant toward a
promotional product order. This
programme fully embodies 4imprint’s
culture, values and principles.
At inception, the programme awarded
one grant each business day. Since then,
our business has grown significantly, and
so has our one by one® programme. We
now average close to ten grants per
business day, putting us on the way
towards our goal of awarding a grant to
every certified nonprofit that applies. In
2022, 4imprint awarded over 2,500
grants for a value of $1,250,000.
We also donated over 1,350 items of
product from inventory to one by one®
applicants, businesses, team members,
troops and customers doing fundraising,
plus many benefits and charitable
contributions not only in the United States
and Canada, but also in other countries.
24
Over 700,000 pieces were shipped
through donation inventory and more
than 50 pallets of additional donations
were distributed to deserving nonprofits.
Ethical supply and practices
Supply chain
Our direct tier 1 suppliers are based in the
USA and Canada for the North American
business, and in the UK and EU for the UK/
Ireland business. Therefore, our supply
base is essentially domestic, with our
suppliers taking care of the importing/
manufacture, inventory management and
printing capabilities required to ship
thousands of orders on a daily basis.
That said, we are acutely aware that our
end-to-end supply chain is long and
complex. Depending on the products, it can
extend far beyond our domestic supply
partners across the globe to the tier 2
manufacturers of the base product and
ultimately to tier 3 suppliers of raw materials
or components. As such, our business
activities can have a significant impact at
many levels. Our intention is to make that
impact positive from a social, economic and
environmental perspective.
The direction is set by the Board in its Social
& Ethical Principles Statement which can be
found at https://investors.4imprint.com. This
statement sets broad guidelines within
which the Group should conduct its
business operations in accordance with best
practice, in compliance with relevant
legislation and respecting human rights and
ethical practices throughout our value chain.
aftermath of the pandemic has continued
to present challenges to the arrangement
and extent of our supply chain auditing
programme. We have performed a mix of
virtual and on-site audits during 2022.
Elevate continues as our lead auditing firm
for both North America and offshore.
We consider that training and education,
for our own teams and those of our
suppliers, form an important part of our
supplier-focused activities. 4imprint supply
chain professionals continue to lead the
work of our US trade association
(Promotional Products Association
International) in supply chain management,
driving education and collaboration in our
industry’s supplier network.
Underpinning all of our product supply
efforts is our aim to match remarkable
customer service with great products that
meet functional, environmental and safety
standards in each market of distribution.
Our internal supply chain compliance team
works to stay abreast of current and
developing standards as set by the
regulatory bodies and liaises with our
supplier partners to manage and validate
product testing and other quality
assurance procedures.
Ethical practices
We do not tolerate discrimination,
harassment, bullying or abuse; we comply
with wage and working condition and time
laws; we do not tolerate forced labour or
child labour; and it is our policy that all
workers have the right to form or join a
trade union and bargain collectively.
These broad principles are reinforced in
our ‘4imprint Supply Chain Code of
Conduct’. This is based on the
International Labour Organization’s
‘Declaration on Fundamental Principles
and Rights at Work’ and is fully aligned with
the Fair Labor Association’s Workplace
Code of Conduct. 4imprint team members
are actively involved in the FLA’s activities.
Our Modern Slavery Statement describes
the activities we are undertaking to
prevent slavery and human trafficking in
our business operations and supply chain,
in line with section 54 of the UK Modern
Slavery Act 2015. Our Modern Slavery
Statement and further details of our
social & ethical principles are available
at https://investors.4imprint.com/.
At the operational level, this means that
4imprint’s goal is to work with tier 1
suppliers who are diligent in managing
their sourcing practices and selecting tier
2 manufacturing facilities; and who commit
to ensuring safe working environments
where employees are adequately
compensated and respected. These
ethical sourcing expectations are
communicated and reviewed through
our document ‘4imprint Supply Chain
Responsibility and Compliance
Expectations’. Signature of this document
reaffirms the supplier’s commitment to
these principles within their own
organisation and supply base.
The monitoring and development of our
supply chain (tiers 1 & 2) continues to form
an important part of our business. The
Bribery and corruption are not tolerated
in our business operations or in our
supply chain. Our ‘Anti-bribery, financial
crime and sanctions policy’ sets out our
high standards of ethics and compliance
across all aspects of our business and
provides detailed guidance on facilitation
payments, gifts and hospitality and
relationships with third parties, as well as
on money-laundering, tax evasion, fraud
and sanctions regimes. The policy applies
to all employees and workers of 4imprint
regardless of the jurisdiction in which they
operate. That policy, together with our
employee handbooks, establishes clear
systems and controls to ensure effective
implementation. We encourage an open
and transparent culture and have a
whistleblowing policy that is
communicated to all employees.
4imprint Group plc Annual Report and Accounts 2022
Environmental
Overview
4imprint’s primary strategic objective,
(page 9) is to build a commercially and
environmentally sustainable business that
delivers value to all stakeholders. We see
climate change mitigation and other
aspects of environmental stewardship as
a fundamental part of this commitment.
As a result, we incorporate environmental
matters into our strategic decision-
making, evaluate our environmental
performance across all the activities of
the Group and search out appropriate
and innovative ways to minimise the
environmental impact of our operations.
Below are some examples of how we have
moved forward in the year on several of
our environmental initiatives; we aim to
strengthen these commitments to the
low-carbon transition in the years ahead.
Governance
The Board is responsible for strategic
oversight of the Group’s climate-related risks
and opportunities. The potential impacts of
environment-related risks on 4imprint’s
business operations are set out on pages
48 and 49 of the Strategic Report.
The Board was able to hold its annual
strategy review ‘in-person’ in Oshkosh in
early November 2022. Environmental
matters were discussed and the Board
members were particularly pleased to see
at first hand the progress made on several
initiatives, including the investment in the
solar array installation at the Oshkosh
distribution centre.
The Board has an agreed Environmental
Principles Statement which is available at
https://investors.4imprint.com. In addition,
as a Non-Executive Director, Jaz Rabadia
brings specific environmental and
sustainability expertise to the Board.
At the operational level the
environmental agenda is driven by the
Group Environmental Committee. This
Committee is chaired by a member of the
Oshkosh senior management team and is
attended by both of the Executive Directors
and other operational senior team
members from the US and UK operations.
Its remit is to manage the development
and implementation of the broad
environmental framework adopted in 2020.
The Committee continued to meet
monthly throughout 2022, and reported
to the Board at the annual strategy review.
Further interactions between the
Committee and the Board are regular but
not fixed; in order to maintain maximum
flexibility, progress on initiatives and other
updates are coordinated as required
either through the Executive Directors or
via discussions and presentations from
Committee members.
Climate change
In the context of the Group’s operations
and activities, the Group Environmental
Committee’s assessment remains that
climate change mitigation is the most
immediate and material way for 4imprint
to make a difference.
Our initial target was to be certified as a
carbon neutral business no later than
December 2022. We chose to work with
Climate Impact Partners (formerly Natural
Capital Partners) in accordance with their
CarbonNeutral® protocol covering
greenhouse gas (GHG) emissions at our
operational facilities (Scope 1 and Scope
2), and also in respect of impactful
elements of Scope 3, such as shipping of
our products to customers.
In conjunction with our carbon neutrality
ambition, we also set out our aspiration to
reach our target through prioritising a
combination of in-house efficiency
measures, renewable energy projects and
external emissions reduction initiatives,
supplemented only as needed by other
effective environmental stewardship tools.
We are proud that 4imprint achieved
CarbonNeutral® company status in
October 2021, more than a year ahead of
the target date. This certification was
renewed on 30 September 2022.
In support of its objectives, the Group
Environmental Committee has initiated or
continued several emissions reduction
projects, including:
– Completion of a major capital
investment project in the form of a
2,660 panel ground-mounted solar
array at our distribution centre in
Oshkosh, at a total project cost of
around $2m. The project began
generating electricity in September
2022 and became fully operational in
December 2022. The array is expected
to generate around 1,400 megawatt-
hours of energy annually, (enough
to power more than 40% of current
distribution centre requirements),
significantly increasing the portion
of the Group’s power requirements
generated from renewable sources
and adding resilience to the business.
Any excess electricity collected will be
fed into the local power grid.
–
– Participation in the UPS carbon
neutral shipping programme,
(Scope 3), which supports emissions
reduction projects that help mitigate
the impact of the shipment of parcels
to our customers.
Enrolment in the WPS (local utility in
Wisconsin) NatureWise renewable
energy programme. This initiative
aims to reduce our reliance on
fossil fuels by providing energy
produced from a blend of renewable
energy sources including local wind
source energy and biogas from an
agricultural waste digester. 4imprint’s
commitment makes it a Champion
Level NatureWise partner.
– Rollout of LED lighting to our office
in Manchester, UK.
In consultation with Climate Impact
Partners, and in order to enable us to
achieve our CarbonNeutral® company
certification, we have made use of
carefully selected carbon reduction
products to offset the remainder of our
carbon footprint:
– Bondhu Chula Stoves, Bangladesh.
– Rivas Wind, Nicaragua.
– Albany Water Forestland, USA.
Our broad ambition looking ahead is to
significantly increase the portion of the
Group’s energy requirements generated
from renewable sources. This will allow
us over time to realign the portfolio
of initiatives enabling us to achieve
CarbonNeutral® company certification
more towards clean energy initiatives with
less reliance on carbon offset products.
The solar power project in 2022 is a
major step in this direction, and we
intend to pursue further clean energy
initiatives in future years.
Across all of these climate change
initiatives we will be careful to ensure
relevance to 4imprint’s business
operations and culture. In addition, our
progress on carbon neutrality will give us a
platform to potentially use our influence in
our supply chain (Scope 3 downstream) by
spreading the message and promoting
similar initiatives at our tier 1 suppliers
and potentially beyond.
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4imprint Group plc Annual Report and Accounts 2022
SUSTAINABILITY CONTINUED
Environmental strategy – scenario
planning analysis
We engaged with the same firm of
sustainability consultants who helped with
our first year of TCFD reporting in 2021.
The scenario analysis project aimed to
assess the resilience of 4imprint’s strategy
across two bespoke warming scenarios,
2°C and 4°C, with qualitative scenario
analysis identifying key risks and
opportunities associated with each
warming scenario and providing strategic
outputs to inform our approach to climate,
and sustainability more generally, in our
corporate strategy.
The warming scenarios were constructed
from internationally recognised warming
and socio-economic cases, overlayed with
sector and company-specific research. Key
individuals from across the business
participated in the project, selecting relevant
climate-related risks and opportunities to
score across time horizons and scenarios in
order to assess the resilience of 4imprint’s
business model to both transitional and
physical climate risks. The implications of the
risks and opportunities were considered
alongside current and aspirational
mitigating activities.
Key headlines arising from the scenario
analysis were:
Climate focus specific to 4imprint
– As an asset-light business serving a
consumer-adjacent customer base,
transition risks are likely to have the
most material impact on 4imprint and
its business. The principal transition
risk for 4imprint relates to the
development of our product range,
which is likely to have a larger impact
than flooding, storms and other
severe weather events.
This is explored in depth in the
2ºC scenario. In this scenario there
is a marked shift in patterns of
consumption as the global economy,
–
and the consumers within it, begin to
prioritise sustainability in the products
they buy, the materials they are
produced from, and the companies
that produce them. These are
changes 4imprint has already begun
to observe, and respond to, with
the introduction of Better Choices™,
amongst other environmental
initiatives. The risks and opportunities
this poses to 4imprint will continue
to intensify as the global transition
gathers pace.
– Given 4imprint’s drop-ship model,
it has relatively low exposure to
physical risk in its direct operations.
Instead, physical risk is likely to
impact the business indirectly,
through the supply chain and the
ability to source products reliably and
without significant price increases. As
increased frequency of acute physical
impacts, such as tropical storms and
flash flooding, and chronic impacts,
such as heat stress, put strain on
global materials supply and supply
chains, 4imprint will face increasing
impact. These physical risks are
explored in more detail in the
4ºC scenario.
3.
4.
Other points of interest
1.
Climate change and the changing
customer. The way 4imprint’s
customers consume promotional
products will continue to change.
Sustainability is increasingly
influencing buying decisions in the
same way cost, colour or lead time
would traditionally. The depth of this
influence will vary between
demographics, states or geographies
and individuals, making it complex to
respond to.
Physical changes and an
increasingly volatile supply chain.
4imprint’s supply chain will be affected
by climate change. The impact of
physical effects will increase as the
2.
severity and frequency of physical
impacts increases. Small, infrequent
disruptions will have little impact on
the supply chain or material price and
availability, but frequent, more intense
events will become increasingly costly.
4imprint’s strong relationship with
suppliers and its drop-ship model will
provide some resilience to supply
chain impacts, as demonstrated
during the pandemic, but in the long
term, with many tier 1 suppliers in
high-risk states such as Florida, the
impacts will intensify.
Continued resilience through the
strength of the 4imprint brand.
4imprint’s brand and its strong
relationship with its stakeholders will
offer resilience to some of its major
climate-related risks. If decreases in
consumption reduce overall demand,
brand strength will ensure a consistent
market share. If supply chain
disruption threatens material supply,
strong supplier relationships will help
secure supply. This is underpinned by
4imprint’s commitment to continue to
operate responsibly.
Enabling informed decisions
through sustainability
transparency. The transition to a low
carbon economy poses significant
opportunity for 4imprint, most notably
in providing low carbon, sustainability-
focused products. 4imprint can
decide the extent to which it wishes
to pursue this. Conscious that it is
not coming from the background of
being a sustainable product provider,
4imprint can assist its customers
in making more informed decisions
by providing accurate sustainability
information and supply chain
transparency on its products. This
will also allow 4imprint to maintain its
position as a market leader and remain
ahead of potential product-focused
sustainability legislation.
The combinations set out in the table below were used to explore scenarios with 2°C and 4°C warming.
Description
Societal response
Basis (Pathways)
‘Middle of the road’ scenario
‘Fossil-fuelled global growth’ scenario
Imperfect efforts to reduce emissions
lead to moderate progress but
exacerbate inequalities
Global collaboration focused on protecting
the population from a changing climate
(as opposed to reducing human-induced
climate change)
Proactive
Reactive
Socio-Economic Pathway 2 /
Representative Concentration Pathway
3.4*
Socio-Economic Pathway 5 /
Representative Concentration
Pathway 8.5*
Temperature rise (2100)
Likelihood
2°C
High
* Widely recognised bases for the construction of qualitative warming scenarios.
4°C
Medium
26
4imprint Group plc Annual Report and Accounts 2022
Possible trends for 4imprint under the two scenarios are summarised below.
2°C ‘Middle of the road’ scenario
4°C ‘Fossil-fuelled global growth’ scenario
– National climate policy drives the US towards net
–
zero and the regulatory scrutiny on environmental
performance increases.
Environmental credentials of products come under
increasing scrutiny through extended regulation and
consumer preference.
– Consumers increasingly demand more sustainable
products, valuing fewer, higher-quality goods over
mass consumption.
To meet apparel demand, the market for man-made
sustainable fibres continues to grow, providing a
more sustainable alternative to traditional materials
such as cotton.
–
– Attendance at events and conferences declines as
emissions reduction efforts and carbon taxation
disincentivise air travel.
Increasing regulation and stakeholder pressure
tightens the offset market, making reliance on offsets
in corporate net zero commitments increasingly
difficult and costly.
–
– As the scenario progresses and emissions begin to
plateau, physical climate impacts are still felt, locked
in from previous decades’ emissions, and physical
climate impacts from extreme weather, flooding,
droughts and extreme heat begin to become
more costly and disruptive to business and their
supply chains.
–
–
–
–
–
In the absence of national climate policy, the
regulatory scrutiny on environmental performance
and reporting declines.
Little to no regulation is introduced to mandate the
use of sustainable materials as consumption soars.
Fossil-fuelled growth in developing nations expands
the global middle class leading to an increase
in consumerism, demand for products and
material use.
There is little improvement in energy efficiency or
clean tech, the offset market remains relatively
unchanged with supply of low-quality offsets
exceeding demand and prices remaining low.
Severe physical climate change impacts, including
flooding, drought and tropical storms, disrupt global
supply chains and material supply, leading to price
volatility and consumer frustration.
– Mass climate migration, protests and geopolitical
disruption as a result of climate change and historic
inaction become increasingly common.
A summary of high-level risks, opportunities and mitigations is set out in the table below.
Key themes: risks, opportunities & mitigations
The climate-
conscious
consumer
4imprint’s customers and their buying decisions are largely similar to those of the broader consumer market.
–
– As the global economy transitions towards a low carbon future there will be increasing changes in
consumer behaviour.
A volatile
supply chain
Opportunities
in a changing
climate
– Consumers begin to value fewer, higher-quality goods over mass consumption.
–
Sustainability of products, the materials they are produced from, and the companies that produce them,
become increasingly important considerations in buying decisions.
– As it does now, 4imprint will continue to respond to the demands of its customers.
– With an asset-light, drop-ship business model, 4imprint will face limited direct exposure to physical risk.
Instead, the impacts of physical risk will come indirectly through suppliers and the supply chain. This will
–
manifest in increased supply chain costs, increasingly volatile raw material prices and availability and
increased product lead times.
If minor and infrequent, this should have little material impact on 4imprint. However, as time progresses,
and the effects of climate change become more pronounced, the frequency and severity of these impacts
will increasingly impact 4imprint. These effects were notably worse in the 4ºC scenario.
–
–
–
–
The transition to a low carbon economy and the changes it brings will present significant opportunities
for 4imprint.
This includes pursuing low emissions sources of energy, an opportunity already being captured through
the Oshkosh solar array.
The growing demand for sustainable products will also provide significant opportunity. 4imprint can decide
the extent to which it wishes to pursue this, for example further enhancing the Better Choices™ initiative.
– Conscious that it does not have a background of being a sustainable products provider, 4imprint can
assist its customers in making more informed decisions by providing accurate sustainability information
and supply chain transparency on its products.
27
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4imprint Group plc Annual Report and Accounts 2022
SUSTAINABILITY CONTINUED
TCFD
In 2021 we made good progress in the implementation of the TCFD framework across our operations, but we also recognised
that opportunities remained for continuous improvement in our climate strategy and for enhancements to be made in future
disclosures. In 2022 we have enhanced our climate strategy and made progress in assessing risks and opportunities, most
notably in the climate scenario planning described above. As such, we consider that 4imprint’s climate reporting disclosures are
consistent with the TCFD framework.
Our updated 2022 TCFD disclosure summary is set out below:
TCFD Pillar
TCFD Disclosure
4imprint Response
Page(s)
Governance
Board’s oversight of
climate-related risks
and opportunities
Management’s role
in assessing and
managing climate-
related risks and
opportunities
CURRENT
–
The Board has ultimate responsibility and accountability for
climate-related issues
– Climate-related issues reviewed by the Board include operational
–
mitigation activities and strategic commercial activities
The Group Environmental Committee reports to the Board at least
annually and supports the development and implementation of
4imprint’s environmental framework
25
25
– Relevant experience on the Board to hold management to account
25
on environmental matters
FUTURE PRIORITIES
– Continued emphasis at Board level on shaping of climate strategy
and implications for commercial strategy
CURRENT
–
–
–
The Group Environmental Committee drives the agenda and is
responsible for implementation at the operational level
The Committee is composed of operational executives from both
US and UK operations and Executive Directors and is chaired by
a member of the Oshkosh senior management team
The strategy is aligned to our environmental framework
parameters
25
9
FUTURE PRIORITIES
– Consider implementation of ESG-linked remuneration and
inclusion of climate-related metrics at the executive level
28
4imprint Group plc Annual Report and Accounts 2022
TCFD Pillar
TCFD Disclosure
4imprint Response
Strategy
Identification of
climate-related risks
and opportunities
CURRENT
–
–
–
Sustainability is a key part of our first strategic pillar
Environmental risks are included as a primary risk category in the
Principal Risks & Uncertainties matrix, with sub-headings ‘Climate
change’ and ‘Products and market trends’
Transition risks associated with climate change are expected to be
of greatest relevance to the business in the short to medium-term,
with business operations and locations at relatively low risk from
physical climate-related events
Page(s)
9
48–49
26
– Climate change scenario planning analysis conducted in 2022,
26–27
identifying opportunities from 4imprint’s focus on carbon footprint
management and low carbon product sustainability initiatives
FUTURE PRIORITIES
– Continuous refinement and advanced granularity in the response
–
to climate-related risks over different time horizons
Improved identification of emerging physical climate risks,
particularly at tier 2 and tier 3 in the downstream supply chain
Impact of climate-
related risks and
opportunities on
business, strategy
and finance
CURRENT
–
–
The expected impacts on the business are detailed in
the ‘Environmental risks’ category in the Principal Risks &
Uncertainties matrix
Impact leading to commercial opportunities is reviewed in this
Sustainability section
– Climate change scenario planning analysis conducted in 2022,
identifying and articulating impact of risks or opportunities
48–49
26–27
26–27
FUTURE PRIORITIES
– Continuous refinement and advanced granularity in the response
to climate-related risks over different time horizons, leveraging
scenario planning analysis conducted in 2022
Further develop and test commercial opportunities such as Better
Choices™ to offer low carbon product solutions to increasingly
climate-conscious customers
–
– Produce qualitative assessment of potential financial materiality
of climate-related risks and opportunities; progress over time to
quantitative assessment
Resilience of
strategy under
various climate-
related scenarios
CURRENT
– Climate change scenario planning analysis conducted in 2022,
identifying and articulating impact of risks or opportunities and
considering business resilience
26–27
FUTURE PRIORITIES
– Consider building on qualitative scenario analysis already
performed to add quantitative scenario analysis in subsequent
years, allowing a more granular understanding of the potential
financial impacts of identified risks
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4imprint Group plc Annual Report and Accounts 2022
SUSTAINABILITY CONTINUED
TCFD Pillar
TCFD Disclosure
4imprint Response
Page(s)
Risk
management
Processes for
identifying and
assessing climate-
related risks
Processes for
managing climate-
related risks
Integration
into overall risk
management
CURRENT
– Climate-related or environmental topics are raised directly by
–
Board or Audit Committee members
The Business Risk Management Committee considers emerging
risks through an analysis and scoring process
– Group Environmental Committee discussions may be elevated to
41
41
25
Board level on an ad hoc basis
– Use of external consultants to assist with climate change planning
25–26
and analysis
FUTURE PRIORITIES
– Current risk identification processes considered appropriate given
the nature of the Group’s operations and short reporting lines
CURRENT
– Group risk management processes are set out under Principal
41
–
–
Risks & Uncertainties
The Business Risk Management Committee’s scoring and
mitigations of climate-related risks are addressed under the
‘Environmental risks’ section
The Group Environmental Committee and ultimately the Board
drive the broad strategic approach to identifying, managing and
mitigating climate-related risks, including both internal actions
to mitigate GHG emissions and actions to increase customer
awareness of products with sustainable credentials
48–49
25
FUTURE PRIORITIES
– Current risk management processes considered appropriate given
the nature of the Group’s operations and short reporting lines
– Consideration and review of relevant metrics annually to measure
and evidence progress on risk management initiatives
CURRENT
– Both climate change and sustainability-related product
trends are recognised within 4imprint’s Principal Risk &
Uncertainties framework
41
– As a result, the process for identifying and managing climate-
48–49
related risks is fully integrated into the Group’s overall
risk management
FUTURE PRIORITIES
– Current procedures considered appropriate given the Group’s
operations and short reporting lines
TCFD Pillar
TCFD Disclosure
4imprint Response
Page(s)
Metrics and
targets
Metrics to assess
climate-related risks
and opportunities
CURRENT
– GHG emissions, intensity measures and energy consumption:
31–32
year-over-year performance and analysis
– Metrics subject to third party audit coordinated by Climate
25
Impact Partners
FUTURE PRIORITIES
– Measure beneficial effect of low carbon initiatives, particularly the
solar array project
– Develop further reportable metrics including packaging, waste,
water usage, business travel and other data
30
4imprint Group plc Annual Report and Accounts 2022
TCFD Pillar
TCFD Disclosure
4imprint Response
Metrics
and targets
continued
Disclose Scope 1,
Scope 2, Scope 3
GHGs
CURRENT
– GHG emissions table covers Scope 1 and Scope 2
–
Selected Scope 3 elements include opting into the UPS carbon
neutral shipping programme that offsets the emissions from
shipping products
FUTURE PRIORITIES
–
Improvement in data gathering and disclosure of readily
addressable aspects of Scope 3
Page(s)
31
25
Targets used to
manage climate-
related risks and
opportunities
and performance
against targets
CURRENT
– Carbon neutral target achieved in 2021, recertified in 2022
– GHG emissions reporting
–
The energy generated from the solar array project is estimated at
1,400 MWh, or around 40% of the requirements of the Oshkosh
distribution centre
– Better Choices™ ‘base year’ data established
25
31–32
25
33
FUTURE PRIORITIES
–
Further develop targets, reporting and disclosure around Better
Choices™ sustainable product initiative
– Measure ‘base year’ (2023) data from Oshkosh solar array to
facilitate future reporting
– Develop targets for the proportion of renewable energy used to
defray the overall carbon footprint
Greenhouse gas emissions report
Our GHG reporting for 2022 is in line with the UK Government regulations on Streamlined Energy and Carbon Reporting introduced
in 2019, and emissions have been calculated based on the GHG Protocol Corporate Standard. The emissions data set out below
relates to the operations of the Group for the year ended 31 December 2022.
Unit
2022
2021
Change
GHG emissions
Scope 1: Direct emissions from combustion of fuel
and operation of facilities
Scope 2: Indirect emissions from purchased
and consumed electricity
Total Group emissions Scope 1 & 2
Tonnes CO2-e
Tonnes CO2-e
Tonnes CO2-e
Proportion of emissions that relate to the UK:
– Scope 1
– Scope 2
551
466
2,935
3,486
3,097
3,563
18%
-5%
-2%
0.0%
0.4%
0.0%
0.4%
Intensity measurements
Emissions by Group revenue
Emissions by employee numbers
Energy consumption
Gas
Electricity
Total
Proportion consumed in UK
Tonnes CO2-e/$m Group revenue
Tonnes CO2-e/avg. employees
3.1
2.7
4.5
3.1
-31%
-13%
kWh
kWh
kWh
2,913,353 2,552,191
4,253,561 4,552,139
7,166,914 7,104,330
0.8%
0.8%
+14%
-7%
1%
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4imprint Group plc Annual Report and Accounts 2022
SUSTAINABILITY CONTINUED
The Group’s GHG Scope 1 and 2
emissions in 2022 were in aggregate
essentially flat compared to 2021. By
far the largest energy demands at the
Oshkosh office and distribution facilities
are heating and cooling requirements
at different times of the year. These
demands can fluctuate significantly each
year depending on weather factors,
and the improved intensity metrics by
Group revenue and by headcount, whilst
encouraging, should be viewed in this
context. It is, however, worth pointing
out that there were encouraging Scope 2
electricity energy savings from two of our
recent projects:
–
The first full year of LED lighting at
the Oshkosh office contributed to a
reduction in electricity consumption
of around 111,000 kWh; and
The initial installation phase of
the solar array at the Oshkosh
distribution centre produced an
electricity saving of around 164,000
kWh. Now that this project is fully
commissioned we anticipate that the
reduction in Scope 2 emissions in
2023 will be significantly higher.
–
SMART
In September 2022 we celebrated
the fifth anniversary of our SMART
(Sustainability. Making A Renewable
Tomorrow) committee. The aim of
the SMART committee is to embed
environmental and sustainability
initiatives as part of our daily operations.
The work of the SMART committee is
supported enthusiastically throughout
the business and is responsible for a
dynamic community on our in-house
Yammer social media platform. Our team
members are happy to engage in SMART
initiatives and sustainability discussions.
Many projects and ideas have been
undertaken, varying in scope and nature,
but all with an emphasis on sustainability.
Some examples of recent SMART
activities are:
– Continuous improvements in
recycling of waste materials across
the business, diverting from landfill.
Examples are:
– Replacement of all-plastic poly
‘bubble’ mailer envelopes with a
fully recyclable padded envelope.
– Introduction of ‘eco’ bobbins
for thread in our embroidery
operation – the old plastic bobbin
casings have been replaced by a
tightly-wound new version with no
plastic consumable element.
– Replacement of poly packaging
pillows for packing items in boxes
with new packing pillows made
from potato starch.
Electronics recycling initiatives for
both team members’ personal items
(leading to a reduction of 2,300 lbs.
of greenhouse gas emissions) and for
old company IT equipment (leading
to a reduction of 17,040 lbs. of
greenhouse gas emissions).
Further rollout of motion sensors and
automation to cut down on energy
usage in our facilities.
–
–
– Rollout of LED lighting project at our
office in Manchester, UK.
– Group Yammer posts and discussions
concerning good choices and
sustainable alternatives, not just for
the business but also at home.
Members of our Group Environmental
and SMART committees are actively
engaged with the Green Masters Program
promoted by the Wisconsin Sustainable
Business Council (WSBC). The Chair of our
Environmental Committee presented at
a WSBC forum in 2022 to share details
of 4imprint’s sustainability journey and
CarbonNeutral® certification.
1.4MW solar array at Oshkosh distribution centre completed in 2022
32
4imprint Group plc Annual Report and Accounts 2022
Our products
Consistent with our corporate purpose,
our products are designed to effectively
promote our customers’ messages time
after time through repeated usage and
impressions. In other words, the most
effective promotional products are those
that have high utility and meaning for the
recipient and the quality to last.
Our products must also align with our
customers’ brand stories, each of which
is unique. As a result, offering a wide but
thoughtfully curated range of products
across many categories and with a variety
of characteristics is vital.
Our diverse range of products covers a
wide array of many different materials,
substrates, manufacturing processes and
imprinting techniques. The products that
we sell are mostly items that people use
in their everyday lives and as such are
typically available, unbranded, in retail.
Trends in retail/consumer quickly make
their way across to the business-to-
business/promotional space.
We are therefore very conscious of the
requirement to adapt to the changing
needs of our customers by helping
them find the ‘perfect product’ – and
this ‘perfect product’ increasingly comes
with sustainable characteristics.
Better Choices™
Increasingly, environmental aspects
regarding the sustainability of materials,
as well as social concerns such as
workplace culture/conditions are
an important part of the product
decision matrix. These considerations
are expected to grow significantly in
importance over the coming years. Our
Better Choices™ programme is designed
to make it easy for our customers to find
and research the promotional products
with the characteristics that are most
important to them.
Better Choices™, launched in the first
quarter of 2022, provides an easily
accessible framework to enable customers
to find their perfect product. Whether
they are beginning the sustainability
journey or are well down the path, many
of our customers share a desire to make
choices that lead to a better future.
Other standards and certifications
are also available as part of the Better
Choices™ programme including,
for example:
– Product safety, (including
children’s safety).
– Widely accepted protocols such as
technology standards.
Better Choices™ allows customers
to easily filter the 4imprint range of
promotional products to find the best
match for the values of their organisation
and their brand. Each Better Choices™
designation is rigorously researched
and is supported by third party
certification programmes and/or other
supplier provided information under
the broad headings of Better Materials
and Better Workplaces.
Better Materials highlighted
designations include:
– Products made using recycled
polyester, paper, plastic or materials
as unique as old car tyres.
– Paper and wood-based products
certified by the Forestry Stewardship
Council (FSC) as responsibly sourced.
– Apparel and bags made from organic
cotton or US-grown cotton – globally
recognised for its approach to
sustainable farming.
Better Workplaces allows customers to
find products from brands and suppliers
who are:
– An Accredited Participating Company
of the Fair Labor Association (FLA)
– known globally for protecting and
progressing workers’ rights around
the world.
– A Certified Benefit Corporation
(B Corp) – B Corps are legally bound
to consider how their actions impact
employees, suppliers, community
and the environment.
In accordance with our culture, any
Better Choices™ designation places
significant emphasis on the integrity
of the information available. In other
words, we will be vigilant and disciplined
in confirming the veracity of any ‘Eco’
claims made.
At the end of 2022, the Better Choices™
range delivered the following statistics,
which should provide a basis for
comparison in future periods:
– More than 8,300 Better Choices™
‘tags’ had been applied to products
in the overall 4imprint range, (noting
that a single product may occasionally
be ‘tagged’ twice under different
designations).
– Products with one or more Better
Choices™ ‘tags’ at the end of 2022
accounted for around $196m of
demand revenue in the year. To be
clear, it should be noted that this is
not all incremental revenue since
many products that were ‘tagged’ in
the year were already in the 4imprint
range before Better Choices™ was
launched in March 2022.
We believe that Better Choices™ will
help expand our customers’ definition
of, and ability to find, their ‘perfect
product’. Further, through Better
Choices™ we have a platform with
potential to drive positive change for
all of our stakeholders.
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4imprint Group plc Annual Report and Accounts 2022
FINANCIAL REVIEW
A step change
in financial
performance
in 2022
3434
4imprint Group plc Annual Report and Accounts 2022
Operating profit
Net finance income/(cost)
Profit before tax
Taxation
Profit for the period
2022
$m
102.90
0.80
103.70
(23.56)
80.14
2021
$m
30.65
(0.42)
30.23
(7.64)
22.59
Foreign exchange
The primary US dollar exchange rates relevant to the Group’s
2022 results were as follows:
2022
2021
Period-end
Average
Period-end
Average
Sterling
Canadian
dollars
1.20
0.74
1.24
0.77
1.35
0.79
1.38
0.80
The Group’s operating result in the period, summarising
expense by function, was as follows:
Revenue
Gross profit
Marketing costs
Selling costs
Administration and central costs
Share option charges and related
social security costs
Defined benefit pension scheme
administration costs
Operating profit
2022
$m
2021
$m
1,140.29
787.32
321.94
(128.68)
(38.64)
(50.36)
226.02
(127.53)
(32.16)
(34.73)
(0.84)
(0.61)
(0.52)
102.90
(0.34)
30.65
Operating result
Following the recovery of the business from the effects of the
pandemic in the prior year, the positive trading momentum
continued throughout 2022, resulting in record levels of demand.
This trading profile, along with an increase in average order values
and improved supply chain conditions, drove full year revenue to
$1.14bn, an increase of $0.35bn or 44.8% compared to $0.79bn
in 2021.
The gross profit percentage declined 0.5% to 28.2% (2021: 28.7%).
Persistent inflationary pressures in the challenging macroeconomic
and geopolitical environment increased product, transportation
and labour costs, which were partially offset by a considered
approach to selling price adjustments taken to maintain customer
acquisition to drive future growth.
Marketing costs reduced to 11.3% of revenue, compared to
16.2% of revenue in 2021. 2022 saw a step change in marketing
productivity driven by investment in the brand element of
marketing mix, and our commitment to staying in front of
customers during the pandemic. This has led to the revenue per
marketing dollar KPI rising to $8.86, a 43.6% increase over prior
year (2021: $6.17).
Selling, administration and central costs together increased 33.1%
to $89.00m (2021: $66.89m). This increase is attributable to
additional investment in team members, particularly in customer
service and at our operational facilities to support elevated demand
activity, and higher incentive compensation costs and bad debt
reserves in line with trading performance.
These factors, when combined together, demonstrate the financial
leverage in the business model, thereby delivering material uplifts in
both operating profit to $102.90m (2021: $30.65m) and operating
margin to 9.02% (2021: 3.89%).
The Group reports in US dollars, its primary trading currency.
It also transacts business in Canadian dollars, Sterling and Euros.
Sterling/US dollar is the exchange rate most likely to impact the
Group’s financial performance.
The primary foreign exchange considerations relevant to the
Group’s operations are as follows:
–
Translational risk in the income statement remains low with
98% of the Group’s revenue arising in US dollars, the Group’s
reporting currency. The net impact on the 2022 income
statement from trading currency movements was not
material to the Group’s results (note 21).
– Most of the constituent elements of the Group balance
–
sheet are US dollar-based. Exceptions are the Sterling-based
defined benefit pension asset and the UK cash balances,
which produced exchange losses of $0.20m and $1.21m
respectively for the year.
The Group generates cash mostly in US dollars, but its
primary applications of post-tax cash are Shareholder
dividends, pension contributions and some Head Office
costs, all of which are paid in Sterling. As such, the Group’s
cash position is sensitive to Sterling/US dollar exchange
movements. By way of example, using actual exchange rates,
the movement of Sterling against the US dollar during 2022
meant that every US$1m converted to Sterling was worth
around £89,000 more at the 2022 closing rate compared
to the 2021 closing rate.
Share option charges
A total of $0.84m (2021: $0.61m) was charged in the year
in respect of IFRS 2 ‘Share-based Payments’. This was made
up of two elements: (i) executive awards under the Deferred
Bonus Plan (DBP) and 2015 Incentive Plan; and (ii) charges in
respect of the 2019 UK SAYE and the 2021 US Employee Stock
Purchase Plan.
Current options and awards outstanding are 2,059 shares under
the UK SAYE, 89,388 shares under the 2021 US Employee Stock
Purchase Plan, and 29,633 shares under the 2015 Incentive
Plan. Awards under the DBP in respect of 2022 are anticipated
to be made in late March 2023.
Net finance income/(cost)
Net finance income for the year was $0.80m (2021: net finance
cost $0.42m). This comprises interest earned on cash deposits,
lease interest charges under IFRS 16, and the net income/
(charge) on the defined benefit pension plan assets and liabilities.
Interest income increased significantly during the year to
$1.16m (2021: $0.03m), driven by improving yields on higher
cash deposits, particularly in the US where interest rates
have been steadily raised during the year in response to
economic conditions.
35
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4imprint Group plc Annual Report and Accounts 2022
FINANCIAL REVIEW CONTINUED
Taxation
The tax charge for the year was $23.56m (2021: $7.64m), giving
an effective tax rate of 23% (2021: 25%). The charge comprises
a current tax charge of $23.99m representing tax payable on
US taxable profits; a current tax charge of $1.19m in respect of
UK profits; and a deferred tax credit of $1.62m.
The decrease in the effective tax rate is principally due to UK
tax losses utilised in the year and the recognition of a deferred
tax asset for UK tax losses that, following a review of updated
forecasts of UK taxable profits, are expected to be utilised in the
next three years. The US business also benefitted from a federal
tax credit of $0.47m in respect of its investment in a solar array
at the Oshkosh distribution centre.
Earnings per share
Basic earnings per share was 285.57c (2021: 80.46c), an increase
of 255%. This reflects the 255% increase in profit after tax, and a
weighted average number of shares in issue similar to prior year.
Dividends
Dividends are determined in US dollars and paid in Sterling,
converted at the exchange rate on the date that the dividend
is declared.
The Board has proposed a final dividend of 120.00c per share
(2021: 30.00c) which, together with the interim dividend of
40.00c per share, gives a total paid and proposed regular
dividend relating to 2022 of 160.00c per share (2021: 45.00c),
an increase of 256% compared to prior year.
The final dividend has been converted to Sterling at an
exchange rate of £1.00/$1.2093. This results in a final dividend
per share payable to Shareholders of 99.23p (2021: 22.99p),
which, combined with the interim dividend paid of 33.01p per
share, gives a total dividend per share for the year of 132.24p
(2021: 33.82p).
In addition to the interim and final dividends, the Board has also
proposed a special dividend of 200.00c per share (165.38p)
(2021: nil), which will be paid at the same time as the final
dividend in June 2023. This special dividend is non-recurring
in nature and is in accordance with the Group’s established
balance sheet funding and capital allocation policies which are
described in more detail below.
The final and special dividends, together amounting to 320.00c
per share (264.61p), will be paid on 1 June 2023 to Shareholders
on the register at the close of business on 5 May 2023.
Defined benefit pension plan
The Group sponsors a legacy UK defined benefit pension plan
(the “Plan”) which has been closed to new members and future
accrual for several years. The Plan has 118 pensioners and 210
deferred members.
At 31 December 2022, the surplus of the Plan on an IAS 19 basis
was $1.23m (2021: $1.97m). Gross Plan assets under IAS 19
were $21.52m, and liabilities were $20.29m.
36
The change in the net IAS 19 Plan position is analysed as follows:
IAS 19 surplus at 1 January 2022
Company contributions to the Plan
Defined benefit pension scheme
administration costs
Pension finance income
Re-measurement gain due to changes in
assumptions
Return on scheme assets
(excluding interest income)
Exchange loss
IAS 19 surplus at 31 December 2022
$m
1.97
4.37
(0.52)
0.07
11.91
(16.37)
(0.20)
1.23
The net IAS 19 surplus decreased by $0.74m in the year. This
was mainly the result of a fall in the Plan asset values driven by
high inflation (the assets are held in gilts, the values of which
move with inflation and interest rate expectations, and liquidity
funds), partly offset by the increase in the discount rate used to
measure the Plan liabilities. In Sterling, the net IAS 19 surplus
decreased by £0.44m in the year to a surplus of £1.02m.
The Company continues to pay regular monthly contributions
into the Plan as part of a recovery plan agreed by the Company
and the Trustee that aims towards funding on a buyout basis by
mid-2024. As the Plan moves towards becoming ‘buyout ready’,
the Company and the Trustee continue to assess options on the
timing and route to achieving this objective.
A triennial actuarial valuation of the Plan was completed in
September 2019 and this forms the basis of the 2022 IAS 19
valuation set out above. The next triennial Plan valuation is
under way and is expected to be completed in the first half
of 2023.
Business combination
On 25 April 2022, the Group acquired the trade and assets
of Fox Graphics Ltd, a private company based in Oshkosh,
Wisconsin, that specialises in screen-printing services. The
acquired screen-printing operations will enable the Group
to bring this capability in-house. With future investment the
objective is to secure the capacity to meet the anticipated
growth in demand for the apparel category.
The acquisition constitutes a business combination as defined
in IFRS 3, as the three elements of a business (input, process,
output) have been identified as having been acquired.
Accordingly, the acquisition has been accounted for using the
acquisition method.
The fair value of the consideration transferred was $1.70m and
the net identifiable assets acquired and liabilities assumed as
at the date of acquisition have been determined at $0.69m.
The resulting goodwill of $1.01m has been recognised on the
balance sheet during the period.
Further information on this acquisition is provided in note 10
to these financial statements.
4imprint Group plc Annual Report and Accounts 2022
Cash flow
The Group had cash and bank deposits of $86.75m at
31 December 2022, an increase of $45.16m against the
1 January 2022 balance of $41.59m.
Balance sheet and Shareholders’ funds
Net assets at 31 December 2022 were $140.22m, compared to
$82.97m at 1 January 2022. The balance sheet is summarised
as follows:
Cash flow in the period is summarised as follows:
Operating profit
Share option charges
Defined benefit pension scheme
administration charge
Depreciation and amortisation
Lease depreciation
Change in working capital
Capital expenditure
Underlying operating cash flow
Tax and interest
Consideration for business combination
Defined benefit pension scheme
contributions
Own share transactions
Capital element of lease payments
Exchange and other
Free cash flow
Dividends to Shareholders
Net cash inflow in the period
2022
$m
102.90
0.82
0.52
4.02
1.51
(8.44)
(8.01)
93.32
(20.06)
(1.70)
(4.37)
(0.87)
(1.23)
(1.21)
63.88
(18.72)
45.16
2021
$m
30.65
0.60
0.34
3.67
1.34
(13.76)
(3.47)
19.37
(6.82)
–
(4.59)
(0.84)
(1.12)
(0.05)
5.95
(4.13)
1.82
The Group generated underlying operating cash flow of
$93.32m (2021: $19.37m), a conversion rate of 91% of operating
profit (2021: 63%). The net working capital position, whilst
remaining elevated, has fallen significantly as a percentage of
revenue compared to the 2021 year-end reflecting the improved
supply chain conditions. Capital expenditure includes $1.82m on
a solar array at the Oshkosh distribution centre which became
fully operational in December 2022, and $2.93m on equipment
and facility build out costs in relation to the acquired screen-
printing operations.
Free cash flow improved by $57.93m to $63.88m
(2021: $5.95m). This is attributable to the excellent trading
performance during the period and is net of $1.70m of
business acquisition consideration.
The 2021 final dividend of $8.14m was paid in May 2022 and the
2022 interim dividend of $10.58m was paid in September 2022.
Non-current assets
(excluding pension asset)
Working capital
Cash and bank deposits
Lease liabilities
Pension asset
Other assets – net
Net assets
31 December
2022
$m
1 January
2022
$m
46.71
20.84
86.75
(13.75)
1.23
(1.56)
140.22
38.04
12.27
41.59
(12.09)
1.97
1.19
82.97
Shareholders’ funds increased by $57.25m since the 2021
year-end. Constituent elements of the movement were net
profit in the period of $80.14m and share option related
movements of $1.01m, net of equity dividends paid to
Shareholders $(18.72)m, own share transactions of $(0.87)m,
the after tax impact of returns on pension scheme assets and
re-measurement gains on pension obligations of $(2.70)m, and
exchange losses of $(1.61)m.
The Group had a net positive working capital balance of
$20.84m at 31 December 2022 (2021: $12.27m), reflecting the
build-up of accrued revenue and inventory on orders in process
at year-end. As a percentage of revenue, the net working capital
balance has reduced materially from the prior year-end, which
was significantly impacted by global and local supply chain issues
caused by the pandemic.
Balance sheet funding
The Board is committed to aligning the Group’s funding with its
strategic priorities. This requires a stable, secure and flexible
balance sheet through different economic cycles. The Group will
therefore typically remain ungeared and hold a positive cash
and bank deposits position.
The Board’s funding guidelines are unchanged, and aim to
provide operational and financial flexibility:
–
To facilitate continued investment in marketing, people and
technology through different economic cycles, recognising
that an economic downturn typically represents a market
share opportunity for the business.
To protect the ability of the business to act swiftly as growth
opportunities arise in accordance with the Group’s capital
allocation guidelines.
To underpin a commitment to Shareholders through the
maintenance of regular interim and final dividend payments.
To meet our pension contribution commitments as they
fall due.
–
–
–
The quantum of the cash target at each year-end will be
influenced broadly by reference to the investment requirements
of the business, and the subsequent year’s anticipated full year
ordinary dividend and pension payment obligations.
The Board will keep these guidelines under review and is
prepared to be flexible if circumstances warrant.
37
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4imprint Group plc Annual Report and Accounts 2022
FINANCIAL REVIEW CONTINUED
Capital allocation
The Board’s capital allocation framework is designed to deliver
increasing Shareholder value, driven by the execution of
the Group’s growth strategy. The Group’s capital allocation
priorities are:
– Organic growth investments
– Either capital projects or those expensed in the
income statement.
–
– Market share opportunities in existing markets.
Interim and final dividend payments
– Increasing broadly in line with earnings per share through
the cycle.
– Aim to at least maintain dividend per share in a downturn.
– Residual legacy pension funding
– In line with agreed funding schedule.
– Further de-risking initiatives, if viable.
– Mergers & acquisitions
– Not a near-term priority.
– Opportunities that would support organic growth.
– Other Shareholder distributions
– Quantified by reference to cash over and above balance
sheet funding requirement.
– Special dividends most likely method: other methods may
be considered.
In keeping with these capital allocation priorities and taking into
account both the cash-generative nature of business operations
and the Group’s investment plans for 2023 and beyond, the
Board has recommended a return to Shareholders of around
$56.1m by way of a special dividend of 200.00c per share,
payable in June 2023.
Treasury policy
The financial requirements of the Group are managed through
a centralised treasury policy. The Group operates cash pooling
arrangements for its North American operations. Forward
contracts may be taken out to buy or sell currencies relating to
specific receivables and payables as well as remittances from
overseas subsidiaries. There were no forward contracts open at
the period-end or prior period-end. The Group holds most of its
cash with its principal US and UK bankers.
The Group has a $20.0m working capital facility with its principal
US bank, JPMorgan Chase, N.A. The facility has a minimum
EBITDA test and standard debt service coverage ratio and debt
to EBITDA covenants. The interest rate is the Secured Overnight
Financing Rate (SOFR) plus 2.1%, and the facility expires on
31 May 2024. In addition, an overdraft facility of £1.0m, with an
interest rate of the Bank of England base rate plus 2.0% (or 2.0%
if higher), is available from the Group’s principal UK bank, Lloyds
Bank plc, until 31 December 2023. The Group expects these
facilities to be renewed prior to their respective expiry dates.
The Group had cash and bank deposits of $86.75m at the year-
end and has no current requirement or plans to raise additional
equity or core debt funding.
38
Estimates and judgments
The preparation of the consolidated financial statements
requires management to make judgments and estimates that
affect the application of accounting policies, the amounts
reported for assets and liabilities as at the balance sheet date
and the amounts reported for revenues and expenses during
the year.
Critical accounting judgments are those judgments, apart from
those involving estimations, that have been made in the process
of applying the Group’s accounting policies and that have
the most significant effect on the amounts recognised in the
financial statements. Key assumptions and sources of estimation
uncertainty are those that have a significant risk of resulting in
a material adjustment to the carrying amounts of the Group’s
assets and liabilities within the next financial year.
Management considers the critical accounting judgments to be
in respect of revenue and the retirement benefit asset, and key
assumptions and sources of estimation uncertainty to relate to
the valuation of the defined benefit pension plan liabilities.
A review of internal and external indications of impairment
was undertaken in accordance with IAS 36 for both the North
American and UK cash-generating units (CGU). This did not lead
to formal impairment reviews being undertaken for either CGU.
The Company has released £329k from the expected credit loss
provision on a loan to a subsidiary undertaking in its individual
financial statements.
Viability statement
In accordance with Provision 31 of the UK Corporate
Governance Code 2018, the Board has assessed the prospects
and viability of the Group.
Assessment of prospects
In making their assessment of the Group’s prospects, the
Directors have carefully considered:
–
The Group’s strategy, market position and business model,
as set out in the Strategic Report section on pages 9 to 19 of
the 2022 Annual Report.
The principal risks and uncertainties facing the Group, as
outlined in the Principal Risks & Uncertainties section on
pages 41 to 49 of the 2022 Annual Report and further
detailed below.
Information contained in this Financial Review concerning
the Group’s financial position, cash flows and liquidity.
– Regular management reporting and updates from the
–
–
Executive Directors.
– Recent detailed financial forecasts and analysis for the three-
year period to 27 December 2025.
Principal risks and uncertainties
The Directors have carefully considered the Group’s principal
risks and uncertainties in assessing the Group’s prospects, which
include strategic risks, operational risks, reputational risks, and
environmental risks. Whilst all the risks identified could have an
impact on the Group, given the prevailing external climate and
potential to impact the Group’s financial position and longer-
term viability, macroeconomic and environmental risks are
considered in further detail below.
Macroeconomic risks
Whilst the risk of a negative effect on demand for our products
from the pandemic is considered to have receded during
the year, the macroeconomic and geopolitical environment
remains challenging.
4imprint Group plc Annual Report and Accounts 2022
The ongoing uncertainty associated with the outlook for a
potential global recession and continued geopolitical unrest
poses downside risks to growth and the cost base. Inflationary
pressures (mainly in relation to product, transportation,
and labour costs) have persisted since the onset of the
pandemic although the impact on the business has to date
been successfully mitigated through appropriate and timely
adjustments to the customer proposition, the marketing mix and
expense budgets. In addition, the maintenance of high levels of
liquidity has facilitated continued investment in the business for
future growth.
Viability assessment period
In their assessment of viability, the Directors have reviewed
the assessment period and have determined that a three-year
period to 27 December 2025, in line with the Group’s rolling
strategic planning process, continues to be most appropriate.
In the context of the fast-moving nature of the business, its
markets, and the relatively short-term nature of the order book,
the Directors consider that the robustness of the strategic plan
is higher in the first three years and recognises that forecast
information beyond this period is significantly less reliable.
The operational and financial resilience of the business through
the pandemic and current economic and political uncertainty,
coupled with the strong financial position of the Group, give
the Board confidence that the strategy, competitive position,
and business model remain entirely relevant and that despite
residual uncertainty as to future market conditions, the Group
expects to be in a good position both to withstand further
economic stress and to take market share opportunities as
they arise.
The potential impacts from the current macroeconomic risks
and associated mitigating actions have been reflected in the
demand and cost assumptions of the financial forecasts used
to assess viability and going concern.
Environmental risks
As a primary strategic objective of the Group and as noted
above in the assessment of prospects, environment-related risks
and opportunities are specifically considered by the Board in
their assessment of viability and going concern.
The Group has established an appropriate governance
structure, in the form of the Group Environmental Committee
and Business Risk Management Committee, to identify new and
emerging risks related to climate change and the environment.
Environmental risks have the potential to impact the Group’s
ability to achieve its strategic objectives through damage to our
reputation, our operational facilities and those of our supplier
partners, and the failure to respond to trends and shifts in
consumer product preferences.
As detailed more fully in the Sustainability section, the
Group has proactively responded to these risks with several
initiatives. These include the achievement of CarbonNeutral®
company status, the installation of a solar panel array at our
distribution centre in Oshkosh, the introduction of our Better
Choices™ programme to make it easier for our customers to
find products with the characteristics that are most important
to them, and participation in the UPS carbon neutral shipping
programme. The flexible nature of our ‘drop-ship’ model
and close relationships maintained with key and alternative
suppliers allows for relatively rapid adjustment to episodes of
extreme weather.
Whilst governmental and societal responses to climate
change risks are still developing, and therefore all possible
future outcomes are not known, the Group has embedded
environmental matters into its strategic objectives and sees
climate change and other aspects of environmental stewardship
as a fundamental part of a commitment to build a commercially
and environmentally sustainable business that delivers value to
all stakeholders.
The cash flow impacts of our environmental initiatives are
incorporated into the financial forecasts used to assess viability
and going concern.
The Group’s business model does not rely heavily on fixed
capital, long-term contracts, or fixed external financing
arrangements.
Assessment of viability
Whilst the principal risks and uncertainties outlined on pages
41 to 49 of the 2022 Annual Report could all have an impact
on the Group’s performance, the Board considers that the key
factor that would prejudice the ongoing viability and liquidity
of the Group would be a severe downturn in demand, which
negatively impacts new customer acquisition and existing
customer retention.
The ‘base case’ three-year plan, developed for the purposes of
the Group’s strategic planning process, provides the basis for
the financial modelling used to assess viability. Over the three-
year period this ‘base case’ shows improving financial results,
an accumulating cash balance and no liquidity concerns.
Severe, but plausible, downside demand assumptions were
then determined and used to adjust the ‘base case’ forecast
to model the effects on the Group’s liquidity. These ‘downside’
scenarios assume a significant deterioration in demand patterns
during 2023, similar to those experienced in 2020 when the
pandemic started, with order volumes for the first year of the
three-year forecast period dropping back to around 70% of
2022 levels, before gradually recovering back to 2022 order
levels by 2025. Marketing and direct costs were flexed in line
with revenue, capital expenditure was moderated to reflect the
reduction in demand, and dividend payments were reduced in
line with earnings per share, but other payroll and overhead
costs remained at 2022 levels with an allowance for inflationary
increases. These ‘downside’ scenarios are intended to simulate
a severe shock to demand resulting in sustained diminished
corporate demand in a downsized promotional products market.
Even under the severe stress built into the ‘downside’ models,
the Group retains strong liquidity throughout the assessment
period. This liquidity is in the form of cash balances. In addition,
there are further mitigating actions that the Group could
take, including further cutting marketing costs and reducing
headcount, that are not reflected in the distressed forecast but
would, if required, be fully under the Group’s control.
Given the scalability of the Group’s business model, as
demonstrated over the past few years, the absence of external
financing, and low fixed or working capital requirements, a
reverse stress testing scenario has not been undertaken. The
Group has proven during the onset of the pandemic in 2020 its
ability to flex its marketing and other costs to mitigate the impact
of falls in revenue and retains flexibility to further reduce other
costs should the need arise.
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4imprint Group plc Annual Report and Accounts 2022
FINANCIAL REVIEW CONTINUED
Though the Group maintains a $20m line of credit with its US
bankers that expires on 31 May 2024 and a small overdraft
facility with its UK bankers that expires on 31 December 2023,
the modelling in both the ‘base case’ and ‘downside’ scenarios
shows the maintenance of positive cash balances throughout
the assessment period and, as such, there is no current
requirement to utilise the facilities or intention to secure any
additional facilities.
The assumptions used in the ‘base case’ and ‘downside’
scenarios and resulting financial forecasts have been reviewed
and approved by the Board. The conclusion of this review is that
the Group has significant flexibility in its variable costs, a low
fixed cost base, and enters the 2023 financial year with a strong
cash and bank deposits position of $86.8m, enabling it to remain
cash positive even under severe economic stress.
Confirmation of viability
Based on this review of the Group’s prospects and viability, the
Directors confirm that they have a reasonable expectation that
the Group will continue to operate and to meet its liabilities as
they fall due, for the next three years to 27 December 2025.
Going concern
Based on their assessment, the Directors have not identified
any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt
on the Group’s and Company’s ability to continue as a going
concern from the date the financial statements are approved
until 29 June 2024. Accordingly, they continue to adopt the
going concern basis in preparing the Group’s and Company’s
financial statements.
Non-financial reporting regulations
The table below sets out where stakeholders can find information in our Strategic Report relating to non-financial matters,
as required by sections 414CA and 414CB of the Companies Act 2006. The information found in the below pages form our
non-financial statement:
Page(s)
25 to 33
21 to 23
23 and 24
Reporting requirement
Section of the Annual Report
Environmental matters
Employees
Social matters
Human rights
Sustainability
Sustainability
Sustainability
Sustainability/Statement on Corporate Governance
24/62
Anti-corruption and anti-bribery
Sustainability
Business model
Non-financial KPIs
Principal risks
Business Model
Strategic Objectives
Principal Risks & Uncertainties
24
18 and 19
12 and 13
41 to 49
Management report
The Strategic Report is considered to form the management report for the purpose of DTR 4.1.8R.
40
4imprint Group plc Annual Report and Accounts 2022
PRINCIPAL RISKS & UNCERTAINTIES
The Board recognises that effective risk management and a
robust system of internal control are integral components of
good corporate governance and are fundamental to the long-
term sustainable success of the Group. Risk appetite, the risk
management process, and associated mitigating activities and
controls are all essential elements of the Group’s strategic and
operational planning processes.
The Board
The Board undertakes a formal review of the Group’s principal
and emerging risks at least annually, assessing them against
the Group’s risk appetite and strategic objectives. The Executive
Directors will routinely update the Board on urgent emerging
issues and principal risks where the residual risk exceeds the
Group’s risk appetite to allow the Board to determine whether
the actions being taken by management are sufficient.
Principal risks and uncertainties
Outlined in the following tables are the current principal risks
and uncertainties that would impact the successful delivery of
the Group’s strategic goals. These are consistent with those
disclosed in the prior year. The list is not exhaustive and other,
as yet unidentified, factors may have an adverse effect.
Risk appetite
4imprint’s business model means that it may be affected by
numerous risks, not all of which are within its control. The Board
seeks to take a balanced approach to the risks and uncertainties
that it faces, encouraging an appetite for measured risk-taking
that contributes to both the operational agility and innovative
culture that it believes is necessary to meet the Group’s strategic
objectives. That risk appetite is, however, tempered by risk
identification, evaluation and management.
Risk management process
The Board has ultimate responsibility for oversight and
management of risk and control across the Group. The Audit
Committee assists the Board in fulfilling its responsibilities to
maintain effective governance and oversight of the Group’s risk
management and internal controls.
Risks are identified on a top-down and bottom-up basis from
many sources, including internally, through the Board and
operational and functional management teams, and externally,
to ensure that emerging risks are considered. Risk identification
focuses on those risks which, if they occurred, have the potential
to have a material impact on the Group and the achievement
of its strategic, operational and compliance objectives. Risks are
categorised into the following groups: strategic risks; operational
risks; reputational risks; and environmental risks.
Management is responsible for evaluating each significant
risk and implementing specific risk mitigation activities and
controls with the aim of reducing the resulting residual risk to an
acceptable level, as determined in conjunction with the Group’s
risk appetite. The Business Risk Management Committee
reviews the consolidated Group risk register and the mitigating
actions and controls at regular meetings and provides updates
to the Audit Committee on a bi-annual basis. This process is
supplemented with risk and control assessments completed by
the operating locations and Group function annually.
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4imprint Group plc Annual Report and Accounts 2022
PRINCIPAL RISKS & UNCERTAINTIES CONTINUED
Strategic risks
Macroeconomic conditions
RISK AND DESCRIPTION
The Group 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.
STRATEGIC RELEVANCE
DIRECTION
Whilst concerns remain with respect to potential
new COVID-19 virus variants, the risk of a
negative effect on demand for our products
arising from the pandemic is considered to have
receded.
A challenging macroeconomic and geopolitical
environment continues to cause uncertainty
in our North American and UK markets, posing
downside risks to general economic conditions
and growth.
Persistent inflationary pressures could drive up
product, transportation and labour costs.
Unchanged
Customer acquisition and retention could fall, impacting
revenue in current and future periods.
The growth and profitability levels called for in the Group’s
strategic plan may not be achieved.
Cash generation could be reduced broadly corresponding
to a reduction in profitability.
MITIGATION
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 product range can be adjusted to resonate
with customer requirements and budgets in changing
economic climates.
The Group’s balance sheet funding policy provides
operational and financial flexibility to facilitate continued
investment in the business through different economic cycles.
Markets & competition
RISK AND DESCRIPTION
The promotional products markets in which the business operates are intensely competitive. New or disruptive business models
looking to break down our industry’s prevailing distributor/supplier structure may become a threat. Buying groups and online
marketplaces may allow smaller competitors access to improved pricing and services from suppliers. Private equity interest in the
promotional products industry has increased in recent years, offering potential funding for existing competitors or new entrants.
STRATEGIC RELEVANCE
DIRECTION
The competitive landscape to date has been
relatively consistent on the distributor side in
our main markets.
Unchanged
Aggressive competitive activity or a disruptive new model
could result in pressure on prices, margin erosion and loss
of market share, impacting the Group’s financial results.
The Group’s strategy based on achieving organic revenue
growth in fragmented markets may need to be reassessed.
Customer acquisition and retention could fall, impacting
revenue in current and future periods.
MITIGATION
Service level, price and satisfaction guarantees are an integral
part of the customer proposition. Negative or changing
customer feedback is investigated and addressed rapidly.
Customers are surveyed regularly to monitor changing
customer interests and perceptions.
Merchandising and supply chain teams have extensive
experience in rapidly adapting the product range to meet
evolving consumer demand.
Our aim is to position the business at the forefront of
innovation in the industry, driven by an open-minded culture
that is customer-focused, embraces collaborative supplier
relationships, and has an appetite for technology.
Management closely monitors competitive activity in the
marketplace including periodic market research studies.
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4imprint Group plc Annual Report and Accounts 2022
Effectiveness of key marketing techniques and brand development
RISK AND DESCRIPTION
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:
–
TV/Video/Brand: Fluctuations in available inventory may cause the price of this technique to increase beyond our
acceptable thresholds. The evolving nature of how consumers access this type of content could change our ability to
effectively access our audience.
– 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.
– 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. Pandemic conditions that lead to increased levels of
people working from remote locations may diminish the effectiveness of this technique.
The evolving landscape around consumer data privacy preferences and data privacy legislation potentially affects all marketing
techniques if it compromises our ability to access and analyse customer information or results in any adverse impacts to our
brand image and reputation.
STRATEGIC RELEVANCE
DIRECTION
Marketing diversification continues via the
successful integration of a brand component to
the marketing portfolio.
The trend towards ‘work-from-home’, accelerated
by the COVID-19 pandemic, has negatively
impacted response rates for print catalogues.
This has resulted in a successful redeployment of
offline/print budget towards further investment
in brand and online marketing.
The business has significantly reduced the
amount of data it shares, increasingly relying
on first party data.
Unchanged
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 in future years.
Restrictive data privacy legislation or changes in consumer
demands around data privacy could decrease the yield on
our marketing activities and might increase compliance costs
and the possibility of lawsuits.
MITIGATION
TV/Video/Brand: Given that this is the newest element of
our marketing portfolio, our utilisation of this technique is still
at a relatively early stage of its development, allowing for a
high degree of flexibility.
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.
Offline: Developments in the US Postal Service are closely
monitored through industry associations and lobbying
groups. Alternative parcel carriers are continuously evaluated.
Data privacy requirements and consumer data preferences
are monitored closely and assessed.
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4imprint Group plc Annual Report and Accounts 2022
PRINCIPAL RISKS & UNCERTAINTIES CONTINUED
Operational risks
Business facility disruption
RISK AND DESCRIPTION
The 4imprint business model means that operations are concentrated in centralised office, distribution and production facilities.
The performance of the business could be adversely affected if activities at one of these facilities were to be disrupted, for
example, by pandemic, fire, flood, loss of power or internet/telecommunication failure.
STRATEGIC RELEVANCE
DIRECTION
Whilst concerns remain with respect to potential
new COVID-19 virus variants, the risk of potential
shutdown of one or all of our facilities from
a return to ‘lockdown’ type restrictions is
considered to have receded.
Decreased
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.
A significant portion of our apparel orders are embroidered
in-house at our distribution centre, therefore disruption at
this facility would impact our ability to fulfil these orders.
The Group’s reputation for excellent service and reliability
may be damaged.
MITIGATION
Back-up and business continuity infrastructure is in place to
ensure the risk of customer service disruption is minimised.
Websites are cloud-based, and data is backed up
continuously to off-site servers.
Relationships are maintained with third party embroidery
contractors to provide an element of back-up in the event of
facility unavailability.
Our recently acquired screen-printing operations have been
located separately to our existing distribution centre to
diversify the risk of disruption to our facilities.
A significant proportion of our office and customer service
staff can work from home, mitigating some risk should offices
become unavailable.
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4imprint Group plc Annual Report and Accounts 2022
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Domestic supply and delivery
RISK AND DESCRIPTION
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.
STRATEGIC RELEVANCE
DIRECTION
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, leading to potential erosion of the value
built up in the 4imprint brand.
MITIGATION
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 the supply end
of the value chain, 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.
The significant growth in demand experienced
during the year has led to increased volumes
being placed with certain individual suppliers.
This has led to an increase in the inherent
risk of supplier concentration, although the
Group continues to manage this risk through
relationships with alternative suppliers.
The disruption to global and local supply chains,
initially caused by the impact of the pandemic,
continues to persist. The lessening impact from
COVID-19 on the Group’s ability to fulfil customer
orders on a timely basis has been offset with
ongoing challenges in the recruitment of staff by
both the Group and our supply partners, the risk
of strikes at our parcel delivery partners, and
elevated order levels experienced during the period.
Whilst the residual risk continues to remain
elevated, it is considered to have stabilised in
comparison to the prior year.
Unchanged
Failure or interruption of information technology systems
and infrastructure
RISK AND DESCRIPTION
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.
STRATEGIC RELEVANCE
DIRECTION
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.
The IT platform is mature, and performance has
been efficient and resilient, including through
the COVID-19 pandemic and more recently with
higher levels of staff working from home.
The rollout of our home working computer
solution is now complete, enabling the vast
majority of our office-based team members to
work from home.
MITIGATION
Unchanged
There is continuous 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 elements of back-
office functionality.
IT infrastructure in place to support working from home for
our office-based team members.
45
4imprint Group plc Annual Report and Accounts 2022
PRINCIPAL RISKS & UNCERTAINTIES CONTINUED
Reputational risks
Cyber threats
RISK AND DESCRIPTION
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.
STRATEGIC RELEVANCE
DIRECTION
The expected frequency, sophistication and
publicity around cyber crime continues to
increase. Accordingly, a high residual risk
assessment continues to be maintained.
Unchanged
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.
MITIGATION
The business employs experienced IT staff whose focus is to
identify and mitigate IT security vulnerabilities.
Investment in software and other resources in this area
continues to be a high priority.
Technical and physical controls are in place to mitigate
unauthorised access to customer data and there is an
ongoing investment process to maintain and enhance the
integrity and efficiency of the IT infrastructure and its security.
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.
Third party cyber security consultants are employed as and
when appropriate.
46
4imprint Group plc Annual Report and Accounts 2022
Supply chain compliance & ethics
RISK AND DESCRIPTION
Our business model relies on direct (tier 1) and indirect (tier 2 & 3) relationships with suppliers located both within our primary
markets and at overseas locations. 4imprint has for many years had very high ethical expectations for supply chain compliance,
but there is always a risk that our wider supply chain partners may, from time to time, not comply with our standards or
applicable local laws.
STRATEGIC RELEVANCE
DIRECTION
Significant or continuing non-compliance with such standards
and laws could result in serious damage to our reputation
and brand image.
This could have an adverse effect on our ability to acquire
and retain customers and therefore our longer-term revenue
prospects and financial condition.
Our supplier compliance programme is
well established.
Whilst visits to, and audits of, both domestic and
overseas suppliers have increased since the start
of the COVID-19 pandemic, challenges in visiting
certain locations continue to persist.
MITIGATION
Unchanged
Key tier 1 suppliers must commit to cascading our ethical
sourcing expectations down to their tier 2 and tier 3 supply
chain partners.
Specifically, we require our suppliers to comply with our
supplier compliance documentation, including the ‘4imprint
Supply Chain Code of Conduct’ and the ‘4imprint Factory &
Product Compliance Expectations’ document.
We are active in promoting audit coverage of our supply
chain at many levels, and in ensuring that product safety and
testing protocols are adequate and up to date.
Legal, regulatory and compliance
RISK AND DESCRIPTION
We are subject to, and must comply with, extensive laws and regulations, particularly in our primary US market. An example is
data privacy legislation.
STRATEGIC RELEVANCE
DIRECTION
If we or our employees, suppliers and other partners fail
to comply with any of these laws or regulations, such failure
could subject us to fines, sanctions or other penalties
that could negatively affect our brand, reputation and
financial condition.
Obligations continue to be complied with
and monitored.
Unchanged
MITIGATION
Consultation with subject matter experts, specialist external
legal advisers and Government agencies as appropriate.
US General Counsel recruited during 2022.
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4imprint Group plc Annual Report and Accounts 2022
PRINCIPAL RISKS & UNCERTAINTIES CONTINUED
Environmental risks
Climate change
RISK AND DESCRIPTION
Climate change potentially affects our operations, facilities, supply chain, team members, communities and our customers
in a variety of ways. As such, it presents a multitude of risks to the business and threatens our ability to achieve our
strategic objectives.
STRATEGIC RELEVANCE
DIRECTION
There remains a global sense of urgency in
relation to climate change. As such, the risks
in this area remain elevated, albeit they are
considered stable over the period.
Unchanged
Extreme weather-related events that impact our customers
and/or our suppliers can have ‘episodic’ negative impact on
revenue, customer acquisition and retention, and they can
also cause increases to our product and distribution costs.
Some of our suppliers are located in geographic areas that
are subject to increased risk of these events.
Further, if the business is not seen to be taking deliberate
and tangible actions to reduce its GHG emissions, the
Group’s reputation and brand may be damaged.
MITIGATION
The flexible nature of our ‘drop-ship’ model allows for
relatively rapid adjustment to episodes of extreme weather.
The business has very low customer concentration which
helps mitigate an element of the risk as well.
The business became ‘carbon neutral’ in 2021 in respect of
Scopes 1 and 2 and meaningful elements of Scope 3, a year
earlier than originally targeted.
Our solar array project at the Oshkosh distribution centre
became fully operational during 2022, significantly increasing
the portion of the Group’s power requirements generated
from renewable sources.
Management is actively monitoring and measuring progress
towards further environmental goals, most notably further
GHG reductions in Scopes 1 and 2 and meaningful elements
of Scope 3.
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4imprint Group plc Annual Report and Accounts 2022
Products and market trends
RISK AND DESCRIPTION
The transition to a low carbon economy may lead to changing product trends or consumer preferences that render certain
products undesirable or obsolete whilst increasing demand for others.
STRATEGIC RELEVANCE
DIRECTION
Failure to anticipate accurately, and respond to, trends
The transition to a low carbon economy is driving
and shifts in consumer preferences by adjusting the mix
of existing product offers may lead to lower demand for
our products, impacting our market position and ability to
generate revenue growth.
MITIGATION
Our merchandising teams actively collaborate with our
suppliers to continuously curate our range of products to
adapt to and meet the needs and tastes of our customers.
Our Better Choices™ initiative has been launched to highlight
promotional products that have sustainable attributes, giving
our customers the ability to research product attributes and
supplier standards and certifications related to sustainability,
environmental impact, workplace culture and more.
changes in consumer preferences towards
sustainable products.
However, the fact that most of the products in
our broad range are also sold unbranded in the
retail setting, and with the launch of our Better
Choices™ initiative, the pace of the transition
towards sustainable choices is likely to remain
quite manageable.
Decreased
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4imprint Group plc Annual Report and Accounts 2022
STAKEHOLDER ENGAGEMENT
The following disclosure
describes how the Directors
have had regard to the
matters set out in section
172 (1) (a) to (f) and forms the
Directors’ statement required
under section 414CZA of the
Companies Act 2006.
Section 172 Statement
4imprint’s key stakeholders and outcomes are set out along
with our Business Model on pages 18 and 19. Our Board
members understand and embrace the responsibility of
balancing the interests of this wide stakeholder base. A
strong and distinctive culture encouraging responsible
practice has been deeply embedded at all levels of
our business for many years (see page 21). Our team
members observe clear guiding principles that drive ethical
interactions with, and generate positive outcomes for, our
key stakeholders.
The Board of 4imprint sets the tone by monitoring, nurturing
and reaffirming these principles, and demonstrating, through
its discussions and actions, that the interests of stakeholders
are central to its decision-making. Within this framework, the
Directors discharge their duties by monitoring and assessing
stakeholder interests in two primary ways:
(i) Regular information flow from the
Executive Directors.
The Executive Directors are directly involved in day-to-day
business operations as a result of a flat organisational
structure and a business model conducted from
centralised facilities. The Non-Executive Board members
receive regular written and verbal business updates from
the Executive Directors via monthly reports, face-to-face
at regular Board meetings and between Board meetings
as required.
(ii) Direct engagement of Board members.
Directors are expected, where appropriate, to engage
directly with, or on behalf of, stakeholders. In particular,
the Chairman, Senior Independent Director, Board
Committee Chairs and ‘Employee Voice’ Director seek to
understand the needs and priorities of each stakeholder
group and are encouraged to engage independently with
stakeholders depending on subject matter and context.
The Directors consider the interests of each of our key
stakeholder groups when considering their duties under
S172 and take into account the information gathered
through engagement with these stakeholders when
determining the Group’s strategies and key decisions
(see page 62).
A summary of our stakeholder engagement activities,
(together with the issues and factors the Directors have
considered in respect of our stakeholders in complying with
section 172 (1) (a) to (f)) is set out in the following tables.
50
Team members
WHAT’S IMPORTANT
Investment in our people is a key driver of our competitive
advantage (see Strategic Objectives on page 10). We can
only deliver a remarkable customer experience if we
have exceptional team members who subscribe to our
principles and values. We engage with our team members
to ensure that we are fostering a safe, diverse and
inclusive environment that they are happy to work in and
a culture that they identify with. See pages 21 to 23 for
further discussion on people and culture.
ENGAGEMENT
– Open and honest culture involving regular
communications/updates with team members, whether
in-person, via our in-house social media platform or by
email/video call for team members working from home
– Competitive, merit-based compensation, excellent benefits
package and opportunity for an easily understood, results-
based bonus
– Ability to participate in the Group’s success through bonus
plans and share ownership (ESPP and SAYE plans)
– Wide range of training and development opportunities
–
–
available for team members (see Sustainability on page 22)
The Executive Directors are based at the Oshkosh site and
have regular interaction with team members, including
regular updates from the CEO
Site visits by Chairman and NEDs, as appropriate, usually
including an annual two-day visit and strategy review in
Oshkosh (see page 55)
DECISIONS, ACTIONS AND OUTCOMES
– Re-affirmed the Board’s commitment to a people-led
approach, prioritising the welfare, health and safety of
our team members
– Conducted an extensive, externally facilitated employee
survey, leading to further investment in and
development of enhanced work from home capabilities
– Development and cultivation of 4imprint culture and
working environment in accordance with DEI principles
(see pages 21 to 23)
– Re-calibration of productivity-based pay matrices in
2022 and competitive pay raises for other positions
– Continuing good participation rates in US employee
share ownership (ESPP) plan
– Regular input from the NED with responsibility
for championing the interests of team members
(‘Employee Voice’)
Low staff turnover rates; a good result in the context of
very tight labour markets
–
– Paid a one-off bonus of $1,000 to every team member
in recognition of their above and beyond contribution
throughout 2022 but particularly during periods
of very strong order intake and acute stress in the
second half of the year
4imprint Group plc Annual Report and Accounts 2022
Customers
Suppliers
WHAT’S IMPORTANT
WHAT’S IMPORTANT
Our purpose (see inside front cover) revolves around
providing relevant, quality promotional products to
our customers to help them convey their message.
Our customers rely on us to make them and their
organisations look good.
ENGAGEMENT
–
Emphasis on providing remarkable customer service
within a culture of continuous improvement (see
page 3)
– Guiding each customer to their ‘perfect product’;
product quality, safety, price and range development
(see page 15)
– Regular customer surveys
– Periodic extensive customer market research projects
Team members empowered to make decisions in the
–
customer’s interest, and managers (up to and including
CEO) available to address customer concerns
– Responsible use and security of personal data
DECISIONS, ACTIONS AND OUTCOMES
– Continued development of the marketing mix,
including additional investment in brand marketing,
to resonate with shifts in customer perceptions
and requirements
– Ongoing development of a curated, easy-to-access
range of products allowing customers to make
informed decisions over what they purchase (see
pages 16 and 17)
– Renewed focus on service quality; this was particularly
important in the second half of 2022 given the
stresses caused by the very strong order intake
levels experienced
– Continued focus on ethical sourcing and product
safety/compliance (see page 24)
– Ongoing development of the Better Choices™
range highlighting promotional products that have
sustainable attributes, giving our customers the
ability to research product features and supplier
standards and certifications related to sustainability,
environmental impact, workplace culture and more
(see page 33)
Our suppliers are integral to the ‘drop-ship’ pillar of our
business model, allowing us to provide the remarkable
customer service and efficient, on-time delivery of
great products that meet the functional, safety and
environmental requirements that are essential to the
success of the business. Our supplier relationships are
discussed in more detail on page 24.
ENGAGEMENT
– Regular meetings, information sharing and site visits
–
–
with our tier 1 domestic suppliers
Supplier agreements and expectation setting
4imprint Social & Ethical Principles Statement and
Modern Slavery Statement
4imprint Supply Chain Code of Conduct
–
– Cooperation with suppliers in marketing campaigns
DECISIONS, ACTIONS AND OUTCOMES
– Worked closely with our suppliers to maintain the
supply of products to service the extremely strong
demand seen in the second half of 2022
Focus on product range development in the context
of a rapidly changing product mix, including further
development of exclusive and ‘own-brand’ products
– Retained and delivered on our commitment to paying
–
–
all suppliers promptly to terms
4imprint’s Social & Ethical Principles Statement was
updated and reissued in 2022
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4imprint Group plc Annual Report and Accounts 2022
STAKEHOLDER ENGAGEMENT CONTINUED
Community
Pension Plan Trustee
and members
WHAT’S IMPORTANT
WHAT’S IMPORTANT
Most of our team members live locally to our primary
4imprint facilities, so it is clearly in our interests to have
a positive influence in our local communities. This begins
with stable and competitively remunerated employment,
extending to involvement in many community activities.
Our community involvement initiatives are described
more fully on pages 23 and 24.
ENGAGEMENT
– Paid time off work for our team members to
–
volunteer for a local charity or non-profit organisation
Support for and sponsorship of many local
organisations, events and good causes
– Donations of promotional products for events
one by one® charitable giving programme
–
DECISIONS, ACTIONS AND OUTCOMES
Impact of 4imprint volunteers in the community
–
– Charitable donations – over 2,500 one by one®
charitable grants made in 2022
– Using the power of promotional products to spread
–
the message
4imprint’s profile and reputation in the local
community enhanced, improving our ability to attract
and retain high-quality, locally-based team members
in very tight labour markets
The Group sponsors a legacy defined benefit pension
plan (the “Plan”). We are fully committed to satisfying our
pension obligations in full, with the aim of full funding
and complete de-risking of the remaining liability (see
page 36).
ENGAGEMENT
– Regular interaction with the Trustee of the Plan
– Regular advice from our own pension consultants
– Periodic evaluation of Plan funding
DECISIONS, ACTIONS AND OUTCOMES
– Board updates on Plan funding level and pension
matters generally
– Contributions paid into the Plan at the level agreed
with the Trustee throughout 2022
– Plan funding level on target to support well-
established and agreed ‘endgame’ for the Plan,
leading to full funding on a buyout basis by mid-2024
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4imprint Group plc Annual Report and Accounts 2022
The Strategic Report was
approved by the Board on
14 March 2023.
KEVIN LYONS-TARR
CHIEF EXECUTIVE OFFICER
DAVID SEEKINGS
CHIEF FINANCIAL OFFICER
Shareholders
WHAT’S IMPORTANT
We aim to attract Shareholders whose requirements
are aligned with our strategic objectives, and who are
interested in a long-term holding in our Company.
This involves a good understanding of our strategic
objectives, our business model and our culture.
ENGAGEMENT
Our key Shareholder engagement activities are:
– Annual Report and Accounts
–
Investor Relations website
– Annual General Meeting (AGM)
– Results announcements, investor roadshows and
periodic trading/performance updates (CEO and CFO)
– Meetings and calls throughout the year with
existing and potential investors, including ESG/
Compliance departments
– Meetings with the Chairman, NEDs and Company
Secretary as required
DECISIONS, ACTIONS AND OUTCOMES
–
–
Frequent communication and active governance at
Board level
Timely communications to the market of strong
financial performance including two unscheduled
RNS market updates during 2022
–
– Detailed Board review and re-affirmation of organic
growth strategy and evolution of the marketing
portfolio including expanding investment in
brand advertising
Shareholder register and investor relations activity
regularly reviewed by the Board
Emphasis on culture, ethics and sustainability in
Board discussions
Interim and final dividend payments increased in line
with trading performance
Special dividend proposed in line with the Group’s
balance sheet funding and capital allocation policies
–
–
–
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53
4imprint Group plc Annual Report and Accounts 2022
CORPORATE GOVERNANCE REPORT
A sustainable,
growing business
reflecting our
identity and
values
Chairman’s introduction
On behalf of the
Board of 4imprint
Group plc, I am
pleased to introduce
the 2022 Corporate
Governance Report.
5454
4imprint Group plc Annual Report and Accounts 2022
The Board remains committed to strong and appropriate
corporate governance, supporting the principles and
provisions contained in the UK Corporate Governance
Code 2018 (the “Code”). I am pleased to confirm that in
the 2022 financial year, 4imprint Group plc has complied
with the Code in full.
This Corporate Governance
Report contains:
– Details of the Board of Directors
The Statement on Corporate
–
Governance
The Report of the Nomination
Committee
The Report of the Audit Committee
The Report of the Remuneration
Committee
The Directors’ Report
–
–
–
–
During 2022 the Board has prioritised
supporting the leadership team in
dealing with the challenges posed by
the rapid recovery in demand during
the year, as the adverse impacts of
the pandemic lessened, leading to
the delivery of an exceptionally strong
2022 financial performance. Significant
time has been devoted to discussion
on how best to bolster the resources
and infrastructure required for the
Group’s operations to scale efficiently
to the next level. Concurrently, we
have remained cognisant of our
governance responsibilities.
In November 2022 the Board held
its annual strategy review and Board
meeting at the 4imprint facilities in
Oshkosh, Wisconsin. For the newer Board
members this was their first in-person
visit to the US business, and the first visit
for all UK Board members since before
the pandemic.
The Board members were impressed to
see the progress that had been made in
expanding the activities at the Oshkosh
distribution centre and to review the
plans for the newly acquired screen-
printing business.
This visit also presented an opportunity
for the Board to experience and
understand more about the Group’s
ESG initiatives, from the solar array
project at the distribution centre, which
was commissioned during the year,
to smaller scale initiatives within the
facilities. Additionally, the Board has
continued to support management
in prioritising the interests of team
members, a key element of the 4imprint
culture. The Board fully endorsed the
executives’ recommendation to make a
‘special bonus’ payment in September
2022, to recognise and reward team
members for their extraordinary efforts
in helping to achieve the outstanding
performance for 2022.
Further details on ESG can be found in
the Sustainability section on pages 20 to
33 of the Strategic Review.
I am extremely proud of the Board’s work
in 2022 in support of the executive and
leadership teams in transitioning the
business from post-pandemic recovery
to the delivery of unprecedented order,
revenue and profit growth by the
close of the year. My fellow Directors
have maintained diligent corporate
governance standards throughout the
year, and I would like to thank them
for their continued commitment and
contribution to 4imprint.
PAUL MOODY
CHAIRMAN
14 March 2023
55
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4imprint Group plc Annual Report and Accounts 2022
BOARD OF DIRECTORS
PAUL MOODY
NON-EXECUTIVE CHAIRMAN
KEVIN LYONS-TARR
CHIEF EXECUTIVE OFFICER
Appointed as a Non-Executive Director in February 2016
and became Non-Executive Chairman in December 2016.
Paul currently serves on the Board of Card Factory plc as
Non-Executive Chairman. He was previously Non-Executive
Chairman of Johnson Service Group plc and a Non-Executive
Director of Pets at Home Group plc. Paul has extensive
public company experience spending 17 years at Britvic plc,
including the last eight years as Chief Executive. Prior to that,
he held a number of senior appointments in sales and HR,
with companies including Grand Metropolitan plc and Mars.
Appointed as Executive Director in June 2012
and became Chief Executive Officer in March 2015.
Based in Oshkosh, Wisconsin, Kevin has been with the
business since 1991, serving in several capacities, including
Chief Information Officer and Chief Operating Officer. He
was appointed President of the Direct Marketing business
in 2004 and has led its substantial growth since then.
DAVID SEEKINGS
CHIEF FINANCIAL OFFICER
JOHN GIBNEY n n n
INDEPENDENT NON-EXECUTIVE DIRECTOR
C
C
Appointed as Chief Financial Officer in March 2015.
David is a Chartered Accountant, having trained and
qualified with KPMG. David has been with the 4imprint
Group since 1996, initially as Group Financial Controller,
moving to the USA in 2000 to become Chief Financial Officer
of 4imprint Direct Marketing, based in Oshkosh, Wisconsin.
Appointed as a Non-Executive Director in March 2021.
John currently serves as a Non-Executive Director and
Chair of the Audit Committee at C&C Group plc. John is a
Chartered Accountant who has extensive public company
experience, having served for 17 years as Chief Financial
Officer of Britvic plc, a leading European soft drinks
business, where he was responsible for finance, legal,
estates, risk management, quality, safety and environment
and procurement. Prior to joining Britvic, John was Senior
Corporate Finance & Planning Manager for Bass plc, and
prior to that role, Finance Director and subsequently Deputy
Managing Director of Gala Clubs. John has previously been
a Non-Executive Director and Chair of the Audit Committee
at PureCircle PLC and Dairy Crest PLC.
56
4imprint Group plc Annual Report and Accounts 2022
Committees:
n Audit Committee
n Nomination Committee
n Remuneration Committee
n Chair
C
CHARLES BRADY n n n
SENIOR INDEPENDENT NON-EXECUTIVE DIRECTOR
C
C
CHRISTINA (TINA) SOUTHALL n n n
C
INDEPENDENT NON-EXECUTIVE DIRECTOR
Appointed as a Non-Executive Director in June 2015.
Charles is a solicitor and was the founder and Managing
Director of Central Law Training Limited which, during his
leadership between 1987 and 2002, became the largest
provider of post-qualification legal training in the UK.
Wilmington plc, a company listed on the London Stock
Exchange, acquired Central Law Training in 1999. Charles
remained with the business becoming Chief Executive of
Wilmington plc in 2002, a post which he held until 2014.
Charles has also served as a Non-Executive Director of both
Hatton Blue Limited, a start-up IT company, and the PPA
(Professional Publishers Association).
Appointed as a Non-Executive Director in May 2019.
Tina is the Chair of the Bally’s Foundation in the UK and
the former Executive Vice President – People for Bally
Interactive, a NYSE listed company operating some of the
world’s biggest casinos, iGaming and sports media sites.
Prior to this, Tina held executive sales and marketing roles
at Vodafone Group Plc, culminating in her appointment as
Regional Director, Northern Europe for Vodafone Global
Enterprise, and she served as a long-standing Trustee
of The Vodafone Foundation. Prior to joining Vodafone,
Tina held senior positions at Avis Europe and at the RAC.
LINDSAY BEARDSELL
INDEPENDENT NON-EXECUTIVE DIRECTOR
JAZ RABADIA
INDEPENDENT NON-EXECUTIVE DIRECTOR
Appointed as a Non-Executive Director in September 2021.
Lindsay is currently Executive Vice President and General
Counsel at Tate & Lyle plc, the global supplier of food and
beverage ingredients, which she joined in 2018. In addition
to her extensive legal and governance background, Lindsay
brings a breadth of commercial experience, both in the UK
and internationally, having previously worked as General
Counsel at Ladbrokes Coral plc, SuperGroup plc and
Gazprom Energy Group. She is a graduate of European
Law from the University of Warwick.
Appointed as a Non-Executive Director in September 2021.
Jaz is a Chartered Energy Manager with over 15 years
of experience in energy, recycling and sustainability
roles. She is currently Head of Responsible Business and
Sustainability at Just Eat Takeaway.com, an online food
order and delivery service, which she joined in December
2021. Prior to this she was Director of Energy, Sustainability
and Social Impact at WeWork and she has also held senior
positions at Starbucks Coffee Company and Sainsbury’s
Supermarkets Ltd. In 2015 Jaz was awarded an MBE for
services to sustainability in the energy management sector
and promoting diversity amongst young people in the
STEM sectors.
57
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4imprint Group plc Annual Report and Accounts 2022
STATEMENT ON CORPORATE GOVERNANCE
Statement of compliance with the UK Corporate
Governance Code
The Board supports the principles and provisions of the UK
Corporate Governance Code 2018 (the “Code”). The Code sets out
guidance on how companies should be directed and controlled to
follow good governance practice. Companies listed in the UK are
required to disclose how they have applied the main principles
and whether they have complied with the Code’s provisions
throughout the financial year. Where the provisions have not
been complied with, companies must provide an explanation.
For the year ended 31 December 2022, the Board considers
that the Company has complied with the provisions of the Code.
The 2018 Code is publicly available on the FRC website.
Role of the Board
The primary responsibility of the Board is to promote the long-
term success of the Company and to look after the interests
of all of its stakeholders. The Board has responsibility for
the management, direction and performance of the Group
and is committed to delivering the Group’s strategy through
meaningful engagement with all stakeholder groups.
The Board is also responsible for determining risk appetite,
establishing procedures to manage risk and overseeing the
Group’s internal control framework. This involves undertaking
appropriate assessments of the Group’s emerging and principal
risks, monitoring the Group’s risk management and internal
control systems and reviewing their effectiveness. The Board
is assisted in fulfilling these responsibilities by the Audit
Committee and the Business Risk Management Committee.
The aim of these procedures is to manage and mitigate the risk
of any failure to meet business targets and can only provide
reasonable and not complete assurance against such failures.
The Board is the decision-making body for all matters material
to the Group’s finances, strategy and reputation. The powers
of the Company’s Directors, as well as the rules relating to
the appointment and removal of Directors, are set out in the
Company’s Articles of Association, which can be found on
the Company’s website at https://investors.4imprint.com/
governance/company-documents/.
The Chairman is responsible for leadership of the Board and
ensuring its effectiveness. The Chairman promotes a culture
of openness and debate, ensuring that each Board member
is given opportunity to contribute their views to each topic
under discussion.
Board composition and structure
As at the date of this report, the Board comprised eight
members, namely the Independent Non-Executive Chairman,
five Independent Non-Executive Directors and two Executive
Directors, being the Group Chief Executive Officer and the
Group Chief Financial Officer. The biographies of the Directors
can be found on pages 56 and 57.
The Board is satisfied that there is sufficient balance between
Executive and Non-Executive Directors on the Board to ensure
that no one individual has unfettered decision-making powers
and that the Board has the appropriate balance of skills,
experience, independence and knowledge of the Group to
enable it to discharge its duties and responsibilities effectively.
Having undertaken a review of the Non-Executive Directors’
outside commitments, the Board is satisfied that all Non-
Executive Directors have sufficient time available to allocate to
the Company in order to discharge their duties effectively.
58
The role of the Non-Executive Directors includes: assisting
in the development of strategy; monitoring the integrity of
financial information and systems of risk management; reviewing
the performance of management including the alignment of
performance with Company culture and values; assisting the
Company in engaging effectively with all its stakeholders; and
determining the appointment, removal and remuneration of
Executive Directors.
The current Non-Executive Directors have letters of appointment
for three years from 1 February 2022 for Paul Moody, 8 May
2022 for Tina Southall, 8 March 2021 for John Gibney, 11 June
2021 for Charles Brady, and 1 September 2021 for Lindsay
Beardsell and Jaz Rabadia. These letters are available for
inspection by any person at the Company’s registered office
during normal business hours and also at the Annual General
Meeting (AGM).
Operation of the Board
The Board has a formal schedule of matters reserved for its
decision. This schedule was updated during 2020 to reflect
the recommendations of the FRC’s Guidance on Board
Effectiveness and the requirements of the Code. The schedule
was re-considered and approved by the Board at its meeting
on 13 December 2022.
The schedule of matters reserved for the Board includes, but
is not limited to:
– Considering and approving the Group’s purpose, values
and strategic aims and objectives.
– Overseeing the Group’s operations, management
and performance.
– Approving any changes to the Group’s capital, corporate
or management structures.
– Approving Interim and Final results announcements and
the Annual Report and Accounts.
– Approval of dividend policy, declaration of interim dividend
and recommendation of final dividend.
– Maintaining a sound system of internal control and
risk management.
– Approval of major capital expenditure and
–
commercial agreements.
Ensuring effective communications with Shareholders and
the market.
– Overseeing Board structure, membership and continuity.
– Determining the Remuneration Policy for Directors,
Company Secretary and senior executives.
– Approving delegation of authority to Board Committees and
–
executive management.
Ensuring that appropriate corporate governance procedures
are in place.
– Approval of Group policies and statements.
– Review and approval of any other matter likely to have a
material impact on the Group.
The Board delegates other specific responsibilities to its
principal Committees the Audit Committee, the Nomination
Committee and the Remuneration Committee. The details of the
Board Committees and their activities are set out on pages 63
to 86.
The Board is ultimately responsible for oversight of the
Group’s environmental initiatives and climate-related risks and
opportunities, including oversight of the Group Environmental
Committee. Further details regarding governance in this area are
given in the Sustainability section on page 25.
4imprint Group plc Annual Report and Accounts 2022
The Board delegates day-to-day management of the Group to
the Executive Directors. Detailed management accounts and
operational reports are distributed to the Board on a monthly
basis, in addition to information prepared for presentation at
regular Board meetings.
The Board has at least six scheduled meetings per year
and additional Board meetings are convened as and when
required. In 2022 the Board had eight regular meetings and
two supplementary meetings. The supplementary meetings
were convened at short notice to address the need to make two
unscheduled Trading Updates (in May and July 2022) as a result
of strong trading performance meaning that financial forecasts
for the full year were above analysts’ consensus.
Board and Committee meetings have predominantly been
held in person at the 4imprint London office during 2022 with
the UK-based Directors physically present. The November
2022 Strategy Day and Board meeting was held at the offices
of 4imprint Inc, Oshkosh, Wisconsin, with all Board members
physically present.
A table detailing the number of Board and Committee meetings
held during the period and attendance by Directors at those
meetings is set out below:
Number of meetings in 2022
P. Moody
K. Lyons-Tarr
D. Seekings
L. Beardsell
C. Brady
J. Gibney
J. Rabadia
C. Southall
* By invitation.
Scheduled
Board
meetings
Supplementary
Board
meetings
Audit
Committee
meetings
Nomination
Committee
meetings
Remuneration
Committee
meetings(i)
8
8
8
8
8
8
8
8
8
2
2
2
2
1
1
2
1
1
2
2*
2*
2*
2*
2
2
2*
2
2
2*
2*
2*
2*
2
2
2*
2
2
2*
2*
2*
2*
2
2
2*
2
(i) None of the Executive Directors were present at the time at which the Remuneration Committee considered and made decisions regarding the remuneration of the
Executive Directors.
All Board and Committee meetings are minuted by the Company
Secretary and these minutes are formally approved at the
following Board meeting. Board minutes contain details of the
Directors’ decision-making processes and any concerns raised
by Directors.
Board Committees
The Board has three permanent Committees being the Audit
Committee, the Nomination Committee and the Remuneration
Committee. Other than the Committee members, further
participants may attend by invitation of the Committee. Each
Committee’s roles and responsibilities are set out in formal
terms of reference which were re-considered and approved by
the Board at its meeting on 13 December 2022. Reports from
each of these Committees are provided on pages 63 to 86.
Board information and support
The Chairman, in conjunction with the Company Secretary,
ensures that the Board receives accurate, timely and clear
information. In advance of each meeting, the Board receives
an agenda for the meeting, minutes of the previous meeting,
detailed financial information on the performance of the
business and items for discussion. This enables the Directors to
make informed decisions on the corporate and business issues
under consideration. Additionally, all Directors have access to
senior management should they require additional information
on the items to be discussed.
The Company provides resources, as appropriate, to enable
Directors to update their skills and knowledge, including an
induction programme for new Directors joining the Board.
Independent professional advice is available to all Directors as
required, at the Company’s expense. All Directors have access
to the advice and services of the Company Secretary and may
address issues to the Senior Independent Non-Executive
Director, if required. The Non-Executive Directors meet from
time to time without the Executive Directors being present.
Directors’ conflicts of interest
The Companies Act 2006 codifies the duty of the Directors to
avoid a situation in which they have, or could have, an interest
that conflicts, or may possibly conflict, with the interests of the
Company. A Director will not be in breach of that duty if the
relevant matter has been authorised in accordance with the
Articles of Association by the other Directors. Each Director
has confirmed that they are aware of the need to notify the
Company of any potential conflict of interest.
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59
4imprint Group plc Annual Report and Accounts 2022
STATEMENT ON CORPORATE GOVERNANCE CONTINUED
Board activities in 2022
Strategy
– Consideration, challenge and approval of the Group’s
continuing organic growth strategy.
– Discussion of potential future strategic targets now
that the long-standing target of $1bn in Group revenue
has been achieved.
– Consideration of the infrastructure and people
investment requirements of a large and rapidly
growing business.
– Consideration and approval of the continued re-
shaping of the marketing portfolio and expanding
investment in brand advertising.
– Consideration of the interest of all team members,
including support of work from home and hybrid
working arrangements.
– Consideration of environmental initiatives to support
the Group’s CarbonNeutral® status and reduce reliance
on carbon offset products.
Finance
– Review and approval of full year and half year results.
– Review and approval of 2023 budget and three-year
plan including scenario planning.
– Consideration and approval of unscheduled RNS
market updates to ensure strong in-year financial
performance communicated to the market as timely
and appropriate.
– Approval of dividends paid in 2022.
Throughout the period ending 31 December 2022 and in
accordance with provision 28 of the Code, the Board has carried
out a robust assessment of the principal risks and uncertainties
and the possible longer-term emerging risks facing the Group,
including those that would threaten its business model, future
performance, solvency or liquidity. This is described in the
Principal Risks & Uncertainties section on pages 41 to 49.
The Board has assessed the future prospects of the Group in
accordance with provision 31 of the Code. Based on the results
of this analysis, the Board has a reasonable expectation that
the Group will be able to continue in operation and meet its
liabilities as they fall due over the three-year period of their
assessment. Details of the assessment performed by the Board,
including an assessment of those risks most likely to impact the
Group’s future prospects and viability, have been set out on
pages 38 to 40.
Board Effectiveness Review
The Code requires the Board to conduct an external evaluation
of the performance and effectiveness of the Board and its
Committees every three years. During 2022 an external
independent Board Effectiveness Review (the “Review”) was
undertaken, led by Trusted Advisors Partnership Ltd (TAP). The
Review included a bespoke detailed questionnaire, completed by
each Board member and the Company Secretary, with the aim
of identifying and weighting the themes, activities and priorities
that merited further discussion. This was followed up with
qualitative one-to-one interviews with each Director.
60
Governance
– Review and discussion of Company culture as working
from home and hybrid working arrangements evolve,
including reports from the Employee-Voice NED.
– Oversight of Group environmental initiatives.
–
– Review of Group’s key corporate policies and
External Board Effectiveness Review.
procedures, matters reserved for the Board and
Terms of Reference of Committees.
– Annual Board visit to principal business in Oshkosh.
Risk management
– Review of principal risks and uncertainties.
– Regular review of Group risk matrix and internal
control procedures, including reports from the Group
Business Risk Management Committee.
– Regular review of longer-term emerging risks.
– Development of ‘SOX-equivalent’ process and control
documentation to address the potential requirements
of BEIS proposals.
– Oversight and review of initiatives to deal with
increasing cyber security risks.
TAP presented their conclusions and recommendations to the
Board for discussion at the September 2022 Board meeting,
which were then considered as part of the setting of new Board
objectives for 2023.
The Review identified the following areas of strength:
–
The Board operates to a highly effective standard in all areas
that were under review. There is a healthy balance between
a harmonious, collegial and supportive Board, and one that
is prepared and confident to provide challenge and scrutiny
to executive management.
The Board remains confident that it is working to a
commonly understood purpose, vision and strategy that has
delivered success in accelerating the return of the business
to pre-pandemic levels of growth.
The Board composition is well balanced with a cohort of
experienced, capable and engaged Non-Executive Directors
who are able and willing to fulfil their responsibilities. The
more recent Non-Executive Director appointments have
brought in subject matter experts in governance, regulation
and ESG, in addition to satisfying an ambition for the Board
to become increasingly diverse.
The Board is constructive, respectful, and allows for open
and honest discussion and debate. There is strong evidence
of healthy knowledge sharing.
The Board Committees are well chaired, experienced and
operate effectively.
–
–
–
–
4imprint Group plc Annual Report and Accounts 2022
Taking into account the feedback from the Review, the Board set the following collective objectives in January 2023 for the year
ahead. These objectives are subject to regular review:
2023 Objectives
Commentary
Strategic priorities
Provide leadership and mentoring to support the Executive Directors and management to realise
the key strategic priorities for 2023 including:
• Oversight of the continuing organic growth of the business through increasing market share.
• Further evolving the marketing mix and continuing the investment in brand advertising.
• Continued development of the business infrastructure and talent required to support significant
further growth, whilst maintaining or enhancing the 4imprint culture.
• Regularly reviewing the Group’s longer-term strategic options in anticipation of changes
to investor composition, the Group’s ambition for growth, evolving regulation and further
unanticipated changes to market fundamentals.
Succession planning
• Support the further development of plans for internal successor candidates for Executive
Director roles.
• Support the Executive Directors as they seek to expand the depth and breadth of experience of
the management team to address gaps identified and meet the evolving needs and priorities of
the growing business.
• Support senior management as they expand and develop their teams to deal with the growth of
the business and anticipated additional regulatory requirements.
Internal controls
and corporate
governance reform
readiness
• Continue to support management in the development of systems and reporting mechanisms
that will be necessary to address the governance responsibilities likely to be required under the
evolving BEIS proposals.
• Regular review of the requirement for Internal Audit and what form this might take (see page 70).
ESG
Provide support and challenge to management in the following key areas:
• The continuation of ESG initiatives, including the development of a range of products with
verified sustainability characteristics.
• Evolution of the very strong culture and values of our Group.
• The development of a net zero emissions target and further ESG-related KPI measurements.
In addition to the external evaluation, the Board reflected on the achievement of the objectives adopted for 2022 as a result of the
previous year’s internal evaluation.
2022 Objectives
Commentary
Succession
planning and senior
management team
engagement
• Development plans have been discussed for potential internal successor candidates for the
Executive Directors. Additional resource has been added to release time for potential internal
candidates to build their broader Company knowledge and address knowledge/skill gaps.
• The Board visit to Oshkosh in November 2022 allowed the NED group to engage face-to-face with
senior management, enhancing their perception of the talent strength and depth in the Group.
ESG focus and
initiatives
• The Board has overseen continued progress in relation to developing and executing its
sustainability strategy.
• The solar array at the Oshkosh distribution centre is now fully operational and is likely to
generate over 40% of the site’s electricity requirements.
• The Board endorsed senior management’s plans to consider further decarbonisation initiatives
resulting in reduced reliance on carbon offset products to maintain CarbonNeutral® status.
• The range of products offered through the Better Choices™ programme has been expanded
throughout 2022 and will continue as demand for products with verified sustainability
credentials gains momentum.
BEIS (UK Government
corporate reform
proposals) planning
• The Board has supported management in preparing for the increased governance
responsibilities likely to be required under the BEIS proposals.
• Detailed documentation of processes and controls is under way in both the UK and US.
• Regular discussion and updates on developing aspects of likely corporate governance reform.
Post-pandemic
recovery
• Throughout 2022, Board members were closely and regularly engaged in supporting the
Executive Team as they sought to manage the challenges arising from the post-pandemic surge
in demand. This resulted in additional Board meetings to discuss the rapid improvement in the
financial results, resulting in two unscheduled RNS trading updates in the year.
61
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4imprint Group plc Annual Report and Accounts 2022
STATEMENT ON CORPORATE GOVERNANCE CONTINUED
In December 2022 the Senior Independent Director undertook
an assessment of the performance of the Chairman throughout
2022. This assessment took the form of individual interviews
between the Senior Independent Director and each Board
member, excluding the Chairman, and the feedback from
the assessment was presented in a report to the Board and
discussed at its December 2022 meeting. The feedback on the
Chairman was positive and complimentary with Board members
being fully satisfied with his performance during 2022.
Corporate Governance Policies
The following Corporate Governance Policies were reconsidered
and approved by the Board at a meeting on 13 December 2022.
– Anti-bribery, Financial Crime and Sanctions Policy.
– Disclosure Policy.
– Dealing Policy and Code.
– Whistleblowing Policy.
– Competition Compliance Policy.
In addition, the following Company Statements were
reconsidered and approved by the Board at a meeting on
18 January 2023. Copies of these statements can be found on
our IR website at http://investors.4imprint.com.
–
–
– Diversity, Equity and Inclusion Principles Statement.
– Modern Slavery Statement in respect of the financial year
Environmental Principles Statement.
Social & Ethical Principles Statement.
ended 31 December 2022.
The Board is committed to guarding against any form of
modern slavery or human trafficking taking place in any part
of its business operations or in the Group’s supply chains. In
accordance with section 54(1) of the Modern Slavery Act 2015,
our slavery and human trafficking statement is published
annually on the Company’s website and can be found at
https://investors.4imprint.com/modern-slavery-statement/.
Engagement with stakeholders
The Board is committed to its responsibilities to all of its
stakeholders, including Shareholders, team members,
customers, suppliers, the communities in which it operates
and the Pension Plan Trustee and members, and strives to
ensure effective engagement with, and encourage participation
from, each of these groups. The Directors are mindful of these
responsibilities and consider them as part of their decision-
making process. The Companies Act 2006 s172 statement on
pages 50 to 53 sets out how the Board has engaged with these
different stakeholder groups.
62
4imprint Group plc Annual Report and Accounts 2022
NOMINATION COMMITTEE REPORT
Members and attendance
Tina Southall (Chair)
Charles Brady
John Gibney
2/2
2/2
2/2
Chair’s overview
As Chair of the Nomination Committee (the “Committee”),
I am pleased to present my report for 2022. The focus of the
Committee in 2022 has been the continuing induction process
for the newer Non-Executive Directors who were recruited in
2021 and on the further development of succession planning
for the Executive Directors.
2022 HIGHLIGHTS
Continued the induction process for the newer
Non-Executive Directors including a visit to the Oshkosh
site and engagement with members of the senior
management team.
Reviewed and discussed plans to strengthen senior
management resource in the context of rapid growth of
the business in 2022, including the recruitment of a US
General Counsel.
Developed plans and actions for succession planning for the
Executive Directors and senior management team.
Reviewed diversity, equity and inclusion (DEI) initiatives in
the year.
2023 PRIORITIES
Continue to support the Executive Directors as they seek to
strengthen further the skills, experience and balance of the
senior management team.
Develop further opportunities for Board engagement with
members of the senior management team to allow for more
informed talent planning.
Implement actions for succession planning for the Executive
Directors and senior management team.
Support the further development of specific DEI initiatives.
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4imprint Group plc Annual Report and Accounts 2022
NOMINATION COMMITTEE REPORT CONTINUED
Responsibilities of the Nomination Committee
The responsibilities of the Nomination Committee include:
– Reviewing the structure, size and composition (including
the skills, knowledge, experience and diversity) of the Board
and making recommendations to the Board with regard to
any changes.
Ensuring plans are in place for orderly succession to Board
and senior management positions and overseeing the
development of a diverse pipeline for succession.
Identifying and nominating candidates for the approval of
the Board to fill Board vacancies as and when they arise.
–
–
– Making recommendations to the Board concerning
membership of the Audit and Remuneration Committees,
and any other Board Committees as appropriate, in
consultation with the Chair of those Committees.
The Nomination Committee ensures that Directors are
appointed to the Board on merit, against objective criteria and
with due regard to ensuring that the Board shows a balance of
skills, knowledge and experience. The Nomination Committee
has terms of reference which were considered and approved by
the Board at its meeting on 13 December 2022. These terms of
reference are available for inspection on the Company’s website.
Composition of the Nomination Committee
I have chaired the Nomination Committee since 18 May 2021,
and I am an Independent Non-Executive Director. The other
members of the Committee during the period were Charles
Brady, the Senior Independent Non-Executive Director;
and John Gibney, an Independent Non-Executive Director.
Paul Moody, the Non-Executive Chairman of the Company, is
usually invited to attend formal meetings of the Committee, as
are the other Non-Executive Directors, Lindsay Beardsell and
Jaz Rabadia. Executive Directors may also be invited to attend
meetings of the Nomination Committee. The Company Secretary
also attends the meetings.
Meetings of the Nomination Committee
The Nomination Committee meets as frequently as is required
to fulfil its duties. During the period ended 31 December 2022
there were two meetings of the Nomination Committee. Details
on attendance of meetings of the Nomination Committee are
set out in the Statement on Corporate Governance, found on
page 59.
Main activities of the Nomination Committee during
the period ended 31 December 2022
The Nomination Committee’s principal activities during the
year included:
– Continuing the induction process for the Non-Executive
Directors who were appointed in 2021, including a visit to
the Oshkosh site and face-to-face meetings with the senior
management team.
– Reviewing the membership of the Board’s Committees,
including the approach of inviting all Non-Executive Directors
to all Committee meetings.
– Reviewing with the Executive Directors a specific plan for
succession planning, including initiatives to enable the
development of potential internal candidates for future
appointments to the Board.
– Reviewing and discussing with the Executive Directors a
specific plan to strengthen the senior management team
in the context of the rapid growth of the business in 2022.
This included recruitment to fill skills gaps, for example the
recruitment of a US General Counsel in June 2022, and to
allow other senior employees to diversify their roles and
experience. The Committee is dedicated to ensuring that
an effective succession plan is maintained in respect of the
Company’s Directors and for the senior management team.
– Review and discussion of the Company’s Diversity, Equity and
Inclusion initiatives in the year to support the DEI strategy
(see page 22 for details).
– Participation in the external Board Effectiveness Review
undertaken in 2022 (see pages 60 and 61 for details).
Induction process for Non-Executive Directors
During the year the Committee has overseen the continuing
induction process for the three newer Non-Executive Directors
who were appointed in 2021. This included a visit to the
Oshkosh site featuring a tour of the distribution centre and
presentations from and face-to-face meetings with members
of the senior management team.
In addition, throughout the year the majority of Board and
Committee meetings have been held in the 4imprint Head Office
in London, with the UK-based Directors attending in person.
This has facilitated discussions between Board members and
the Company Secretary; meetings with the external auditor
and other professional advisers; and ongoing mentorship from
the Chairman.
Diversity Policy
The Committee supports the Code provision that boards should
consider the benefits of diversity, including gender and ethnicity,
when making appointments and is committed to ensuring
diversity, not just at Board level, but also across the Group’s
senior management.
The Committee understands the importance and beneficial
effect of diversity within the workforce and aims to foster a
culture that recruits, develops and promotes team members at
all levels regardless of background. The Group is committed to
promoting the principle of equal opportunity and to combatting
discrimination throughout its workforce as well as in senior
management, and no applicant or employee receives less
favourable treatment on the grounds of nationality, age, gender,
gender identity, sexual orientation, religion, race, ethnicity or
disability. The Group recognises its responsibility to disabled
persons and endeavours to assist them to make their full
contribution at work.
In relation to gender diversity, at the date of this report, the
Board is 37.5% female (three women out of eight Board
members). In November 2022 the Company took part in the
FTSE Women Leaders Review (formerly the Hampton-Alexander
Review) which monitors gender balance in FTSE 100 and FTSE
250 companies. In addition to reviewing gender diversity at
Board level, the FTSE Women Leaders Review reports on the
gender diversity of the senior management team and their direct
reports. Based on data as at 31 October 2022, 50.7% of the
senior management team including direct reports were female
(52.2% based on data at 31 October 2021).
64
4imprint Group plc Annual Report and Accounts 2022
Independence of Directors
The Code states that at least half the members of the boards
of public companies in the FTSE 350, excluding the chairman,
should be independent non-executive directors, meaning
that those directors should be independent in character and
judgment, and free from relationships or circumstances which
are likely to affect, or could appear to affect, their judgment.
The Independent Non-Executive Directors play a key role in
ensuring the maintenance of high business standards, assist
in the formation of strategy and provide a constructive and
experienced perspective. The Board considers that Paul Moody,
Lindsay Beardsell, Charles Brady, John Gibney, Jaz Rabadia
and Tina Southall are independent for the purposes of the
Code. The Board reviews the independence of Non-Executive
Directors on an ongoing basis and manages a succession plan
which considers the balance of skills of the Board, the tenure
of existing Non-Executive Directors and the Company’s strategy
and Diversity, Equity and Inclusion Principles.
TINA SOUTHALL
CHAIR OF THE NOMINATION COMMITTEE
14 March 2023
In November 2022, the Company also took part in the Parker
Review which monitors ethnic diversity at Board level in FTSE
100 and FTSE 250 companies. The Committee is pleased to
report that the Company has met the recommendation of the
Parker Review that by 2024, FTSE 250 companies should have
at least one director from a minority ethnic group.
The Committee’s aim as regards the composition of the Board is
that it should have a balance of experience, skills and knowledge
to enable each Director and the Board to discharge their duties
effectively. The Committee agrees that it is appropriate that it
should seek to have diversity on its Board; however, it does not
consider that this can be best achieved by establishing specific
quotas and appointments will continue to be made based on
merit, with diversity in mind.
More information about the Company’s people and culture can
be found in the Sustainability section on pages 21 to 23.
Appointment and replacement of Directors
Directors may be appointed by the Company by ordinary
resolution or by the Board. A Director appointed by the Board
holds office only until the next AGM and is then eligible for
election by the Shareholders.
At every AGM of the Company, all Directors put themselves
forward for re-election. The office of Director shall be vacated if
he or she: (a) resigns or offers to resign and the Board resolves
to accept such offer; (b) is, or has been, suffering from mental
ill health; (c) becomes bankrupt or compounds with creditors
generally; (d) is prohibited by law from being a Director; (e)
ceases to be a Director by virtue of the provisions of the
Companies Act; or (f) is removed from office pursuant to the
Articles of Association.
All Non-Executive Directors have written letters of appointment.
The terms and conditions for the appointment of Non-Executive
Directors are available for inspection at the Company’s
registered address (during normal working hours) on request.
Full biographies of each Director can be found on pages 56 and
57. Each Director named therein will be seeking re-election at
the 2023 AGM. The Board is satisfied that, having been subject
to a recent performance evaluation in relation to the fulfilment
of their s172 duty, each Director seeking re-election continues
to be an effective member of the Board.
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4imprint Group plc Annual Report and Accounts 2022
AUDIT COMMITTEE REPORT
2022 HIGHLIGHTS
Considered the impact of macroeconomic and
environmental risks and related disclosures across the
Annual Report and Accounts, including the potential impact
on viability, going concern, and the financial statements.
Monitored the Group’s approach to, and management of,
risks related to any potential cyber security threats.
Monitored the impact from the unprecedented growth
experienced during the year on the Group’s risk and
control environment.
Monitored proposals being recommended by the
Department of Business, Energy & Industrial Strategy (BEIS)
on corporate reform.
Monitored progress on the Group’s review of its internal
controls over financial reporting (ICFR) and IT general
controls (ITGCs).
Reviewed the requirement for an internal audit function for
the Group with the Board. This review concluded that it is
now the right time to establish an internal audit function,
recognising both the continued growth and evolution of
the Group, and the additional governance requirements
resulting from the proposed BEIS corporate reforms.
2023 PRIORITIES
Review senior management’s assessment of the impact
of the regulations arising from the proposed BEIS
corporate reforms.
Consider the approach to achieving compliance
with the proposed BEIS corporate reforms by the
required deadlines.
Continue to monitor progress on the review of ICFR
and ITGCs.
Oversee the development of a Group audit and assurance
policy in accordance with the BEIS reforms, including
the assessment of the Group’s assurance needs and the
establishment of a Group internal audit function.
Members and attendance
John Gibney (Chair)
Charles Brady
Tina Southall
2/2
2/2
2/2
Chair’s overview
As Chair of the Audit Committee (the “Committee”), I am
pleased to present the Committee’s report for the year ended
31 December 2022. The purpose of this report is to describe
the work undertaken by the Committee and explain how it has
discharged its responsibilities throughout the year.
Whilst the 2022 reporting landscape continues to be
characterised by challenging macroeconomic conditions
(geopolitical uncertainty has exacerbated the economic
uncertainty created by the pandemic), it has also been a year of
unprecedented growth for the Group. Accordingly, the focus of
the Committee has been on monitoring the impact from these
factors on the Group’s processes, operations, risk and controls,
the audit process and ensuring that our external reporting
remains fair, balanced and understandable.
The Committee has also continued its oversight of the Group’s
risk management systems and effectiveness of internal controls
and is pleased that the Group has commenced a review of
its ICFR and ITGCs ahead of the implementation of the BEIS
corporate reforms.
66
Responsibilities of the Audit Committee
The Audit Committee is responsible for monitoring the
integrity of the financial statements, maintaining an appropriate
relationship with the Group’s external auditor, overseeing
and assessing the effectiveness of the audit process and
reviewing the Group’s internal controls and risk management
systems. It assists the Board in seeking to ensure the integrity
of the financial and non-financial information supplied to
Shareholders and that such information presents a fair,
balanced and understandable assessment of the Group’s
performance and position.
The Audit Committee has terms of reference which were
considered and approved by the Board of the Company at its
meeting on 13 December 2022. These terms of reference are
available for inspection on the Company’s website.
The Board considers that the Audit Committee members have
an understanding of the following areas:
–
The principles of, and developments in, financial reporting,
including the applicable accounting standards and
statements of recommended practice.
Key aspects of the Group’s operations including corporate
policies and the Group’s internal control environment.
–
– Matters which may influence the presentation of the
financial statements.
The principles of, and developments in, company law, sector-
specific laws and other relevant corporate legislation.
The role of internal and external auditing and risk
management.
The regulatory framework for the Group’s businesses.
–
–
–
The Committee reviews the effectiveness, objectivity and
independence of the external auditor and also considers
the scope of their work and fees paid for audit and non-
audit services.
Composition of the Audit Committee
I am an Independent Non-Executive Director and I have
chaired the Audit Committee since May 2021. I am a Chartered
Accountant and was Chief Financial Officer of Britvic plc for 17
years. The Board is of the view that I have recent and relevant
financial knowledge and experience derived in particular
from recent roles as Non-Executive Director and Chair of the
Audit Committee at PureCircle PLC and Dairy Crest PLC. I also
currently serve as a Non-Executive Director and Chair of the
Audit Committee at C&C Group plc.
The other members of the Committee during the period were
Charles Brady and Tina Southall, both Independent Non-
Executive Directors. The Company Secretary attends meetings
of the Audit Committee and the Chairman, other Non-Executive
Directors and the Chief Financial Officer are normally invited
to attend meetings of the Audit Committee as are, from time
to time, the Chief Executive Officer and the Group Financial
Controller. The external audit partner also attends meetings
that consider the auditor’s planning report, the half year results
announcement, full year results announcement and the Annual
Report and Accounts.
4imprint Group plc Annual Report and Accounts 2022
How the Audit Committee discharges its
responsibilities
The Committee has unrestricted access to Company documents
and information, as well as to employees of the Company and
the external auditor. Members of the Committee may, in pursuit
of their duties, take independent professional advice on any
matter, at the Company’s expense. The Audit Committee Chair
reports the outcome of Audit Committee meetings to the Board.
The Audit Committee meets at least twice each year and has
an agenda linked to events in the Group’s financial calendar,
the Audit Committee’s priority focus areas, and any emerging
regulatory or business issues. The Audit Committee met twice
during 2022.
In order to fulfil its terms of reference, the Audit Committee
receives and reviews presentations and reports from the
Group’s senior management and the external auditor.
Main activities of the Committee in regard to the
period ended 31 December 2022
In regard to the period ended 31 December 2022, the Audit
Committee’s business has included the following items:
–
Ensuring the integrity of the half year and full year results
announcements and the Annual Report and Accounts.
– Assessing the principal judgmental accounting matters
affecting the Group based on reports from both the Group’s
management and the external auditor, in particular the
key judgments and estimation uncertainties relating to
the current geopolitical and economic environment (and
associated supply chain stresses, inflationary pressures,
slowing growth, rising interest rates, and constraints in
the labour market), and impact of environmental risks on
viability, going concern and the financial statements.
– Reviewing the Annual Report and Accounts to ensure
that, taken as a whole, the document is fair, balanced
and understandable.
– Maintaining an appropriate relationship between the Group
and its external auditors and ensuring effectiveness of the
external audit.
– Challenging the scenarios considered and severe but
–
plausible stress testing performed in assessing the viability of
the Group.
Ensuring appropriate risk management and internal control
systems are in place, including the consideration of current
and emerging risks in relation to the prevailing environment.
– Considering the requirement for an internal audit function.
– Monitoring announcements on the BEIS audit and corporate
reform proposals and progress on the review of ICFR
and ITGCs.
– Monitoring the continued development of the Group’s
approach to managing cyber security threats.
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4imprint Group plc Annual Report and Accounts 2022
AUDIT COMMITTEE REPORT CONTINUED
Financial reporting and significant financial judgments
The Committee assesses whether suitable accounting policies
have been adopted and whether management has made
appropriate estimates and judgments. Where necessary the
Committee discusses accounting policies, judgments and
estimates with management.
The Committee also reviews reports by the external auditor on
the full year results which highlight any issues arising from the
work undertaken in respect of the year-end audit.
Specific areas of audit and accounting estimates reviewed by
the Committee were:
Impact of uncertain macroeconomic conditions
The impact of the uncertain macroeconomic conditions has
required careful consideration in the preparation of the
financial statements.
The Committee has reviewed the material assumptions in
the forecast financial performance and cash flows of the
Group that underpin management estimates, as well as the
critical accounting judgments and disclosures in relation to
going concern, viability, adequacy of provisions and potential
impairments, and is satisfied that they are appropriate.
Supplier rebates
As in previous years, the businesses accrued rebates due
from key suppliers based on agreed fixed rates relating to the
volumes of goods purchased in a calendar year. The Committee
does not consider the Group’s rebates to be highly complex as:
they are volume-related; agreement periods are coterminous
with the Group’s accounting period; there are written
agreements in place with suppliers; and historically rebates
have been collected. However, as the rebates are material
to the results for the period, they require continued focus
and consideration.
The Committee has discussed, with management and the
external auditor, any estimates made in accruing supplier
rebates and the collectability of these amounts. The Committee
is satisfied that the amounts accrued are appropriate and
are recoverable.
Expected credit loss provision on unbilled
accrued revenue
Stress in the supply chain and the strong recovery of the
business in the prior year led to an elevated level of open orders
and unbilled revenue accrual at the year-end. It is common for
a customer order to include several different product lines.
Individual order lines are separately priced, have separately
agreed delivery dates, and are capable of being used or enjoyed
by the customer on their own, separately from any other
order lines included in the overall customer order. The Group,
therefore, considers each order line to constitute a separate
performance obligation. However, it is the policy not to invoice
a customer until all items on the order have been delivered.
Whilst disruption to the supply chain has lessened in the current
year, the exceptional growth in orders and ongoing challenges
in the recruitment of staff by both the Group and our supplier
partners has meant that the unbilled revenue accrual at the
year-end of $18m remains material (2021: $28m).
Annual Report and Accounts and results
announcements
During the period, the Audit Committee formally reviewed draft
half and full year results announcements and the Annual Report
and Accounts. These reviews considered:
–
The accounting principles, policies and practices adopted
in the Group’s financial statements and proposed changes
to them.
Significant accounting issues and areas of judgment
and complexity.
The integrity of the financial and non-financial information.
–
–
The Committee was satisfied with management’s presentation
of the 2022 half and full year results announcements and
the Annual Report and Accounts for the period ended
31 December 2022.
The external auditor confirmed to the Committee that they
were not aware of any material misstatements identified during
their audit.
After reviewing the presentation from management and
following discussions with the external auditor, the Committee
is satisfied that:
–
The financial statements appropriately address the
critical judgments and key estimates both in respect of
the amounts reported and the related disclosures in the
financial statements.
The processes used for determining the value of the assets
and liabilities have been appropriately reviewed, challenged
and are sufficiently robust.
The Annual Report and Accounts taken as a whole are fair,
balanced and understandable and provide the information
necessary for Shareholders to assess the Group’s position
and performance, business model and strategy and should
be recommended to the Board.
–
–
In arriving at the conclusion that the Annual Report and
Accounts were fair, balanced and understandable the
Committee considered:
–
Feedback provided by Shareholders on the Group’s 2021
Annual Report and Accounts and trading updates, and
information received by the Board throughout the period.
– Climate-related disclosures, including those in relation to the
TCFD reporting requirements.
The processes underpinning the compilation of the
Annual Report and Accounts and the Group’s reporting
governance framework.
The use and disclosure of alternative performance measures
and its belief that these measures are necessary to aid users’
understanding of the business.
The reviews and findings of the Group’s external auditor.
–
–
–
As necessary, the Audit Committee holds private meetings with
the external auditor to review key issues within their spheres of
interest and responsibility.
68
Management have made assumptions as to the level of
expected credit loss provision required, based upon actual
experience from the prior and current years, and knowledge
of the customer, terms of payment and ageing of the
accrual. The Committee has discussed, with management
and the external auditor, any estimates made in calculating
the provision. The Committee is satisfied that the amounts
provided are appropriate.
External audit
The Audit Committee is responsible for the development,
implementation and monitoring of the Group’s policy on
external audit, overseeing relations with the external auditor
and making recommendations to the Board on appointment
or reappointment of the external auditor.
The Company complies with the Statutory Audit Services
for Large Companies Market Investigation (Mandatory
Uses of Competitive Tender Process and Audit Committee
Responsibilities) Order 2014 and undertook a competitive
tender process in 2018, described in the 2018 Annual Report
and Accounts. Following this process Ernst & Young LLP was
appointed as the Group’s external auditor at the 2019 AGM for
the financial year commencing 30 December 2018. Chris Voogd
has been the partner in charge of the audit since that date. It
is the intention of the Committee that the Company tender the
external audit at least every ten years.
The Group’s policy on external audit prohibits certain types of
non-audit work from being performed by the external auditor,
particularly in cases where the external auditor’s objectivity
and independence would be put at risk. Before any significant
non-audit work is commissioned, the nature and extent of such
work is considered, initially by the Chief Financial Officer and the
Company Secretary, to determine if such work would put at risk
the external auditor’s objectivity and independence. This process
includes discussion with the audit partner at Ernst & Young LLP.
The matter is then referred to the Audit Committee for approval,
prior to commissioning.
Details of fees paid to the auditor in respect of audit services are
shown in note 2 to the consolidated financial statements.
To fulfil its responsibility regarding the independence of the
existing external auditor, the Audit Committee reviewed:
– Changes and rotation of external audit team members in
the audit plan for the current year.
– A report from the external auditor describing their
arrangements to identify, report and manage any conflicts
of interest.
– Whether or not the level of challenge to matters of significant
audit risk and the degree of professional scepticism applied
by the auditor were appropriate.
The nature and extent of non-audit services, if any, provided
by the external auditor.
–
4imprint Group plc Annual Report and Accounts 2022
To assess the effectiveness of the external auditor, the Audit
Committee considered:
–
The relevant skills and experience of the audit partner and
team and their knowledge of the business.
The auditor’s planning report detailing scope of the audit,
materiality, identification of areas of audit risk, audit team
members and audit timelines.
The engagement with senior management in planning
the audit.
Execution of the audit plan.
Feedback from senior management and the auditors
about the audit process.
–
–
–
–
To fulfil its responsibility for oversight of the external audit
process, the Audit Committee reviewed:
–
The terms, areas of responsibility, associated duties and
scope of the audit as set out in the external auditor’s
engagement letter for the forthcoming year.
The external auditor’s overall work plan for the
forthcoming year.
The external auditor’s fee proposal.
The major issues that arose during the course of the audit
and their resolution.
Key accounting and audit judgments.
The nature and level of any errors identified during the
external audit.
–
–
–
–
–
– Recommendations made by the external auditor
in their management letters and the adequacy of
management’s response.
Based upon its reviews, the Committee has recommended
the reappointment of Ernst & Young LLP, as external auditor,
to the Board.
Risk management and internal control
The Audit Committee is required to assist the Board to fulfil its
responsibilities relating to the adequacy and effectiveness of
the control environment and the Group’s compliance with the
Corporate Governance Code. To fulfil these duties, the Audit
Committee reviewed:
– Reports from the Business Risk Management Committee
on the systems and effectiveness of internal controls and
risk management.
The external auditor’s review of internal controls and audit
highlights memoranda.
–
The Business Risk Management Committee is now well
established and met three times during 2022. Key topics of
discussion included the Group’s principal risks and uncertainties,
the effectiveness of mitigating activities and key controls,
emerging risks, the categorisation and disclosure of risks in
results announcements and the Annual Report and Accounts,
and the BEIS corporate reform proposals. Please refer to the
Principal Risks & Uncertainties section of the Strategic Report on
pages 41 to 49 for further information.
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4imprint Group plc Annual Report and Accounts 2022
AUDIT COMMITTEE REPORT CONTINUED
The internal controls extend to the financial reporting process
and the preparation of the consolidated financial statements.
The basis of preparation of the consolidated financial
statements is set out on pages 105 and 106.
The internal control process will continue to be monitored and
reviewed by the Board, which will, where necessary, ensure
improvements are implemented. During the period the Audit
Committee has undertaken a review of the effectiveness
of internal controls and systems. No material matters
were identified.
The 2023 AGM will provide an opportunity for Shareholders
to ask questions on this report, matters within the scope of
the Audit Committee’s responsibilities and any significant
matters brought to the Audit Committee’s attention by the
external auditor.
JOHN GIBNEY
CHAIR OF THE AUDIT COMMITTEE
14 March 2023
In anticipation of the BEIS corporate reforms becoming effective,
the Group has commenced a review of its ICFR and ITGCs.
The first phase of the project to review and update process
documentation and develop risk and control matrices is now
well progressed and will be completed in 2023, alongside
the remediation of any identified gaps and consideration of
assurance requirements and potential testing programme.
The establishment of a separate internal audit function has
not been considered necessary to date due to reasons which
have previously been stated: the present nature of the business
model and structure of the Group with one main operating site;
stable operating and financial systems; the close involvement
of the Executive Directors in the day-to-day running of the
business; regular review by senior management of detailed
management information; other self-monitoring; no history of
significant control breakdown or fraud; and, when considered
necessary, external advice. However, given the growth of the
Group during 2022 and the additional requirements arising
from the proposed BEIS corporate reforms, this matter was
reconsidered during 2022 by the Audit Committee and Board.
This review concluded that it is now the appropriate time to
establish a Group internal audit function. The nature of this
function and how it is best resourced will be considered during
2023, taking into account further detail on the governance
changes as they become available.
The Group has a Whistleblowing Policy (which is also available
on the Company’s website), containing arrangements for the
US General Counsel or the Company Secretary to receive, in
confidence, complaints on accounting, risk issues, internal
controls, auditing issues and related matters for reporting to
the Audit Committee as appropriate.
The control system of the Group is intended to manage rather
than eliminate the risk of failure to meet the Group’s objectives
and any such system can only provide reasonable and not
absolute assurances against material misstatement or loss. The
effectiveness of the control system including financial, operating,
compliance and risk management is reviewed by the Board at
least annually.
Additionally, through the management process outlined in the
Statement on Corporate Governance on pages 58 to 62, the
Group operates a continuous process of identifying, evaluating
and managing the significant risks faced by each business and
the Group as a whole. This process, which has been in place
throughout 2022 and up to the date of the approval of this
Annual Report, complies with the FRC guidance and includes
the following:
– A defined organisational structure with appropriate
delegation of authority.
–
Formal authorisation procedures for all investments.
– Clear responsibilities on the part of management for the
maintenance of good financial controls and the production
and review of detailed, accurate and timely financial
management information.
The control of financial risks through clear
authorisation levels.
Identification of operational risks and the development of
mitigation plans by senior management.
–
–
– Regular reviews of both forward-looking business plans and
historic performance.
– Regular reports to the Board from the Executive Directors.
70
4imprint Group plc Annual Report and Accounts 2022
ANNUAL STATEMENT BY THE CHAIR OF THE
REMUNERATION COMMITTEE
2022 HIGHLIGHTS
Members and attendance
Monitored our remuneration strategy in the context of
business developments and the challenges faced by the
senior management and all team members in coping with
the rapid recovery in demand during 2022.
Charles Brady (Chair)
John Gibney
Tina Southall
2/2
2/2
2/2
Supported the payment of a one-off special bonus in
September 2022 to all team members excluding the
Executive Directors.
Monitored governance, regulatory and investor
developments on executive compensation matters.
Considered broader employee pay and conditions.
2023 PRIORITIES
Set bonus targets for 2023 and review business
performance against these targets during the year.
Continue to consider employee pay at all levels of
the organisation.
Continue to monitor governance, regulatory and investor
developments on executive compensation.
Commence the process to develop a new Remuneration
Policy for consideration by Shareholders at the 2024 AGM.
KEY REMUNERATION PRINCIPLES
The Committee’s long-held view regarding remuneration is that
it should be:
Competitive when compared to organisations of a similar
size, complexity, and type.
Linked to the long-term strategy of the Group.
Clear, easy to understand and motivational.
Structured to not promote unacceptable behaviour or
encourage unacceptable risk-taking.
Structured to avoid reward for failure.
Chair’s overview
On behalf of the Remuneration Committee (the “Committee”)
I am pleased to present the Directors’ Remuneration Report
for the year ended 31 December 2022. The report contains:
–
This Annual Statement which summarises the remuneration
decisions made during the year and the context in which
these decisions have been taken.
– A copy of the Remuneration Policy approved by
–
Shareholders at the AGM in 2021.
The Remuneration Report for the year ended 31 December
2022 (see pages 73 to 86), which details how our
Remuneration Policy was implemented in the year ended
31 December 2022 and how we intend to implement our
Remuneration Policy in 2023.
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4imprint Group plc Annual Report and Accounts 2022
ANNUAL STATEMENT BY THE CHAIR OF THE
REMUNERATION COMMITTEE CONTINUED
Business context for executive remuneration
After a relatively quiet first quarter in 2022, the Group
experienced very strong trading for the remainder of the year,
leading to the most successful financial results in the Group’s
history. This unprecedented level of rapid growth presented
significant challenges for the Executive Directors and the senior
management team, particularly in scaling up the resources and
infrastructure needed to operate as a much larger business.
Committee decisions and undertakings for 2023
Implementation of the Remuneration Policy in 2023
At its meeting in January 2023, the Committee awarded the Chief
Executive Officer and the Chief Financial Officer a 6.8% increase
in basic annual salary with effect from 1 January 2023. This is
the first increase in the Executive Directors’ base salary since
1 January 2020 and is in line with the increase applied to the
remuneration of salaried employees across the business.
For 2022 the financial results of the business included:
– Group revenue up by 45%.
–
–
–
Increase in operating profit of 236%.
Increase in basic earnings per share of 255%.
2022 interim dividend paid; final dividend declared
supplemented by declaration of a special dividend.
– Continued investment in marketing and people to position
the business well for future growth.
– Retaining a strong financial position and good liquidity with
cash and bank deposits at the year-end of $86.8m.
In relation to the annual bonus plan, specific performance
targets for 2023 have been set by the Committee with reference
to the 2023 budgets and targets approved by the Board. As at
January 2023, the Committee was confident that the targets set
were appropriately stretching.
The Group does not operate a long-term incentive plan.
During 2023 the Committee will commence the process to
develop a new Remuneration Policy for consideration by
Shareholders at the 2024 AGM.
Decisions on executive remuneration during 2022 have been
made in the context of the factors outlined above.
Conclusion
I look forward to receiving your support at the upcoming AGM.
CHARLES BRADY
CHAIR OF THE REMUNERATION COMMITTEE
14 March 2023
Committee decisions and undertakings in 2022
Rewarding performance
At its meeting in January 2022, the Remuneration Committee
agreed to the Executive Directors’ request that they receive
no base salary increase with effect from 1 January 2022.
However, the Committee approved the reintroduction of an
annual bonus plan for 2022 and set performance targets based
on the 2022 budget approved by the Board. As at January
2022, the Committee was confident that the targets set were
appropriately stretching.
As it became clear that the pace of recovery in 2022 was much
faster than initial expectations, the business has been keen
to reward the extraordinary efforts of all team members in
coping with this unprecedented level of demand. Pay rises for
the wider workforce (excluding the Executive Directors and
senior management team) were implemented during 2022 in
order to attract and retain associates in a tight labour market
and to provide an element of catch up due to wages not being
increased during the pandemic. Average pay for the wider
workforce has increased by more than 7% during 2022.
The financial success of the business in 2022 has meant that
there have been regular payments to team members under
the quarterly ‘gain share’ bonus plan. In addition, in September
2022 a one-off special bonus of $1,000 per team member
(excluding the Executive Directors) was paid in recognition of
the extraordinary efforts during the year in dealing with the
challenges posed by the unprecedented level of demand.
In this context, it is fitting that the annual bonus plan for the
Executive Directors and senior management team has paid a
maximum bonus of 100% of salary to participants as a reward
for the remarkable achievements of 2022.
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4imprint Group plc Annual Report and Accounts 2022
REMUNERATION REPORT
This report sets out the information required by the Companies
Act 2006, Schedule 8 of the Large and Medium-sized Companies
and Groups (Accounts and Reports) (Amendment) Regulations
2013, Listing Rules of the Financial Conduct Authority and the UK
Corporate Governance Code 2018. This report is unaudited except
where otherwise stated. An ordinary resolution to approve this
report will be put to the AGM on 24 May 2023.
The Remuneration Policy approved by Shareholders at the 2021 AGM has also been included for reference.
Remuneration governance
Remuneration Committee composition
The Remuneration Committee is comprised solely of Independent Non-Executive Directors. The members of the Committee during
the period were Charles Brady (Chair of the Committee and the Senior Independent Non-Executive Director), John Gibney and
Christina Southall. The Company Secretary also attends the meetings. The Committee meets at least twice a year and may invite
other attendees as it sees fit. There were two Remuneration Committee meetings in 2022. Attendance at Committee meetings in
2022 is shown in the table on page 59.
Remuneration Committee responsibilities
The responsibilities of the Remuneration Committee include:
– Determining the policy for Directors’ remuneration and setting remuneration for the Company’s Chairman, Executive Directors,
–
senior management, and the Company Secretary, in accordance with the Principles and Provisions of the Code.
Establishing remuneration schemes that promote long-term shareholding by Executive Directors that support alignment with
long-term Shareholder interests.
– Designing remuneration policies and practices to support the strategy and promote long-term sustainable success, with
executive remuneration aligned to Company purpose and values, clearly linked to the successful delivery of the Company’s
long-term strategy.
To determine the targets for any performance-related bonus and share incentive plans operated for Executive Directors and
senior management.
–
The Remuneration Committee has terms of reference which were reconsidered and approved by the Board of the Company at its
meeting on 13 December 2022. These terms of reference are available for inspection on the Company’s website.
The remuneration of Non-Executive Directors is determined by the Non-Executive Chairman of the Board and the Executive Directors.
In exercising its responsibilities and carrying out key decisions, the Remuneration Committee is mindful of the size and structure
of the Company’s businesses. It regularly assesses the remuneration of Executive Directors and senior management in the context
of the remuneration of the wider workforce and of the Company’s actual and projected growth and profitability. The Remuneration
Committee also considers the value generated for Shareholders, and engages, as appropriate, with Shareholders and other
stakeholders to explain and discuss existing policy and future decision-making.
Willis Towers Watson are engaged as remuneration consultants to the Committee. Fees paid to Willis Towers Watson during 2022
were £6,892 (2021: £31,500).
Directors’ Remuneration Policy
The Company has a well-established and clear Remuneration Policy which includes a simple and transparent approach to both
fixed and variable pay. The Remuneration Policy is structured to focus on incentivisation and to avoid reward for failure and is
designed not to promote unacceptable behaviour or encourage unacceptable risk-taking, in line with the Company’s culture and
purpose. The Committee has responsibility for reviewing the Remuneration Policy on an ongoing basis with a view to ensuring that
it appropriately reflects the Company’s strategy.
The current Directors’ Remuneration Policy was approved at the Company’s AGM on 18 May 2021 and can be found on the corporate
website at https://investors.4imprint.com/governance/company-documents/.
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4imprint Group plc Annual Report and Accounts 2022
REMUNERATION REPORT CONTINUED
Remuneration policy
The following section sets out an overview of 4imprint Group plc’s Directors’ Remuneration Policy (the “Policy”)
which was approved by Shareholders at the 2021 AGM.
Principles of Policy
The Committee is made up entirely of independent Non-Executive Directors to avoid any conflicts of interest and no individual is
present at a Committee meeting where their own remuneration is discussed. The Committee ensures that it is kept up to date with
published guidance from investors and shareholder representative bodies and current market practice, so that it can bear these
factors in mind when formulating, and making decisions in connection with, the Policy.
The guiding principles underlying the Policy are:
i.
remuneration should be competitive when compared to remuneration in organisations of similar size and complexity in the
relevant external market, without paying more than is necessary;
ii. subject to satisfying (i) above, remuneration should be considered in the context of wider employee pay and conditions and
Shareholder views;
iii. packages should be structured so that remuneration is aligned to both the strategy of the Company and long-term growth in
Shareholder value;
iv. each element of the remuneration package should be clear, easy to understand and motivating;
v.
the overall package should be designed to take account of the performance of the business, to respond to regulatory changes
but not to promote undesirable behaviour or to encourage unacceptable risk-taking; and
vi. packages should be structured to avoid reward for failure.
Executive Director Policy Table
Element and purpose Opportunity
Operation
Performance measures
Base salaries are reviewed
annually; however, increases are
not automatic.
Base salary adjustments reflect
various factors, including increases
for other employees across the
4imprint business; individual and
Company performance; changes
in role and responsibilities; and
pay at companies of a similar size
and complexity in the relevant
external market.
Base salaries should be
competitive when compared to
similar roles at organisations of a
similar size and complexity in the
relevant external market.
Base salary increases are also
considered in the context
of the value of the total
remuneration package.
Executive Director retirement
benefits are limited to the
opportunity offered to the local
workforce. This is currently capped
at 5% of base salary per annum.
Base salary
Enables 4imprint to
attract and retain
executive talent
Retirement
benefits
To provide a
competitive level of
retirement benefit in
order to attract and
retain executive talent
74
Not applicable.
Base salary increases will not
normally exceed the average
increase awarded to the
wider workforce.
However, in exceptional
circumstances salary increases
may exceed this level.
Not applicable.
Executive Directors are eligible
either: (i) to participate in local
Company pension arrangements;
or (ii) subject to the discretion
of the Committee, to receive
a salary supplement in lieu of
pension contributions (which is
not taken into account as salary
for calculation of annual bonus,
or other benefits).
4imprint Group plc Annual Report and Accounts 2022
Element and purpose Opportunity
Operation
Performance measures
Other benefits
To maintain
competitiveness
in attracting and
retaining talent
Deferred Annual
Bonus Scheme
(DABS)*
To encourage share
ownership and
to incentivise and
reward strong annual
performance
Benefit values are set at an
appropriate level taking into
account market practice.
The Committee reserves the
discretion to approve a higher
level of benefits if it is considered
by the Committee to be necessary,
appropriate and in the best
interests of the Company and its
stakeholders. For example, this
may include additional benefits
to cover the cost of relocation or
insurance premiums.
The ongoing maximum potential
annual bonus opportunity is 100%
of base salary.
However, the Policy provides
the Committee with an overall
maximum of 150% of base
salary for use in future years,
for example, in a recruitment
scenario, or in order to maintain
the competitiveness of the
bonus relative to the market
taking into account Company
and individual performance and
the potential value of the rest of
the remuneration package. See
Recruitment Policy for further details.
The award for on-target
performance is 50% of base
salary where awards are made in
line with the ongoing maximum
opportunity of 100% of salary.
Where the overall maximum
of 150% is employed, the on-
target bonus opportunity may be
increased to 50% of the maximum,
being 75% of base salary.
Typical benefits may include: (i)
company car or car allowance
paid in cash; (ii) private medical
insurance for the executive and
his/her family; (iii) life assurance
of up to four times base
salary; (iv) income protection
insurance; and (v) access to
independent professional advice
when necessary.
Other benefits may also be offered
in line with those offered to other
employees, such as paid holiday.
The benefits offering may differ
to reflect the market practice of
the country of employment or
domicile of the individual Director.
50% of the annual bonus is
delivered in cash.
50% of the annual bonus is
deferred into share awards
(generally nil cost options,
conditional share awards or
other forms to meet regulatory
or business needs) for five years
following the date of grant. See
Leaver Policy for exceptions to
this rule.
Cash bonus and deferred share
awards are typically allocated to
participants following the audit of
the Annual Report and Accounts
in the March following the
performance period.
The number of nil cost options
or conditional share awards
is based on the share price
on 31 December of the
financial year to which annual
performance relates.
The cash bonus and deferred
share awards are subject to
clawback and malus provisions.
* The Deferred Annual Bonus Scheme (DABS) has been renamed the Deferred Bonus Plan (DBP).
Not applicable.
Performance may be
assessed using financial
and non-financial
measures.
Financial performance
measures may include:
profitability; revenue
growth; cash generation;
or other financial metrics
that are aligned to
the business strategy.
Financial objectives
generally account for the
majority of the annual
bonus performance
assessment.
Non-financial corporate
objectives may also
be used, such as
environmental, social and
governance (ESG) metrics
to the extent that they
align with the Board’s
strategy and are deemed
to enhance prospective
long-term growth in
Shareholder value.
Performance measures
and targets are generally
set at the start of the
financial year to reflect
the Group’s strategic
priorities. Further details
can be found in the Annual
Report on Remuneration.
Once awarded, the
deferred component of
the annual award will
not be subject to further
performance targets.
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4imprint Group plc Annual Report and Accounts 2022
REMUNERATION REPORT CONTINUED
Element and purpose Opportunity
Operation
Performance measures
Share plans
To encourage
employee share
ownership and
reward long-term
value creation
Share ownership
guidelines
Provides alignment
with Shareholders
whilst encouraging
sustainable, long-term
value creation
Employees (including Executive
Directors) may save an agreed
monthly amount, and options are
normally granted at a discount
of up to 20% to the current
share price.
Savings are capped at an agreed
monthly contribution rate, and the
option price is set at the outset
of the plan.
Executive Directors are expected
to maintain a holding of shares in
the Company of at least 200% of
annual base salary.
Executive Directors are
also expected to maintain a
shareholding of at least 200% of
base salary for one year following
cessation of employment, reduced
to a holding of at least 100% of
base salary for the second year
following cessation. See Leaver
Policy for further details.
Not applicable.
Periodic employee share option
plans open to all employees are
operated in the 4imprint Group.
These take the form of HMRC
approved Sharesave plans in
the UK, and equivalent plans in
the USA.
Not applicable.
At least 50% of any vested
share awards (net of tax) from
incentive arrangements are
expected to be held in order to
accumulate the recommended
personal shareholding.
Executive Directors will have
until their fifth annual bonus
share award grant to accumulate
their shareholding.
The post-employment
shareholding guideline
will be enforced through
contractual means.
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4imprint Group plc Annual Report and Accounts 2022
Notes to the Policy Table
Remuneration
Committee
discretion
Malus and
clawback
Discretion to
amend the future
operation of
the DBP
Minor
amendments to
the Policy and
remuneration
under previous
arrangements
Performance
measures
When assessing incentive plan results and performance, the Committee retains the discretion
to reduce (including to nil) incentive pay-out levels if it is considered appropriate in exceptional
circumstances, for example, in the context of a significant health and safety failure, or an exceptional
negative event significantly impacting employees or Shareholders.
Malus and clawback provisions apply to both cash and deferred share elements of the DBP.
Malus includes the reduction (including to nil) of in-year and/or future year bonus amounts; and the
forfeiture or withholding of unvested deferred share awards and clawback involves the recovery of
annual bonus amounts that have been paid. Clawback may apply to cash bonus payments made up to
two years after the relevant payment date and for deferred share awards that vested up to five years
from the relevant grant date. These provisions may be invoked by the Committee if it deems this to be
appropriate in the context of one or more ‘trigger’ events. These include:
• material misstatement (including omission) in the Company’s accounts
• the bonus/award was based on an error, or inaccurate or misleading information
• serious misconduct
• corporate failure
• serious reputational damage
In the event of a variation in share capital or other event that may affect the share price, the number of
shares subject to an award may be adjusted.
Minor changes may be made to the Policy for regulatory or administrative purposes without seeking
further Shareholder approval for such an amendment.
The Committee may make payments notwithstanding that they are not within the current Policy if they
were agreed before:
• the Company’s first Remuneration Policy, subject to binding Shareholder approval, came into effect;
• the Policy came into effect (provided they are in line with the Remuneration Policy at the time of
agreement); or
• promotion (of the individual to which the payment relates) to the Board of Directors.
The Committee has selected financial measures as the primary method of determining performance,
as these metrics directly affect Shareholder value. The Committee, when setting the relevant targets,
takes into account the Company’s business plan and internal and external forecasts for the business.
Strategic performance conditions are set in line with the Company’s business plan and strategic
priorities. At the end of the performance period, the Committee will review performance against targets
and may adjust formulaic outcomes for reasons such as (but not limited to) disposals, acquisitions and
changes in accounting treatment, if it is considered necessary for a fair outcome in the context of wider
Company performance. Where discretion is exercised the rationale and adjustment will be disclosed in
the relevant Annual Report.
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4imprint Group plc Annual Report and Accounts 2022
REMUNERATION REPORT CONTINUED
Executive Director service contracts
Executive Directors have rolling service contracts, notice periods are twelve months from the Company and six months from the
Executive Director. Any new Executive Director would be appointed on similar terms. The Executive Directors’ service contracts are
available for inspection at the Company’s registered office.
Executive Director Recruitment Policy
The following guidelines are followed by the Committee when considering the pay and employment terms for a new
Executive Director:
–
–
The Committee aims to pay no more than is necessary to secure the right talent for the business.
The ongoing Remuneration Policy for any new Executive Director will align to the Remuneration Policy for Executive Directors as
set out in this Policy.
– Base salaries are set at a market rate in order to attract the appropriate person. Factors to be taken into account include: the
–
individual’s previous salary and remuneration package; the skills and experience of the individual; the salary of the previous role
incumbent; and pay at organisations of similar size, complexity and sector in the relevant external market.
Special arrangements may be made for a new Executive Director in order to secure their appointment. These may include:
– The Committee may choose to provide additional compensation for incentive awards forfeited by the executive upon joining
4imprint. In such cases, we would seek to apply similar conditions to forfeited awards including performance conditions;
vesting and holding periods; and form of award. Any ‘buyout’ payment will be reduced by an equivalent amount in the event
the Executive Director’s former employer pays a portion of the remuneration that was deemed foregone. Where possible,
existing incentive plans will be used to satisfy such awards; however, in the event that this is not appropriate, the Committee
retains the right to use the Listing Rules exemption for the purposes of a ‘buyout’ award.
– An increased award limit exists under the DBP of 150% of base salary which may be used upon recruitment of a new
Executive Director.
– For external and internal appointments, the Committee may agree that the Company will meet certain relocation expenses
and legal fees that it considers to be appropriate. Assistance will be subject to reasonable clawback for service of less than
12 months.
Corporate events
Upon a takeover, unvested deferred share awards under the DBP would normally vest in full immediately. Awards may be exchanged
to the extent that an offer to exchange awards for new awards is made and accepted by the award holder.
Executive Director Leaver Policy
Element/provision
Policy
Contractual
notice period
and loss of office
compensation
Treatment of
bonuses
• Twelve months’ notice from the Company and six months from the Executive Director.
• Executive Directors may be required to work during their notice period or take ‘gardening leave’.
Payments in lieu of notice may also be made.
• Contractual non-competition payments may be made on a monthly basis for the twelve months
following termination of employment subject to mitigation.
• Contractual termination payments for Executive Directors include base salary, retirement and
other benefits.
• Normally, an Executive Director may, at the Committee’s discretion, receive a bonus for the year in
which the Executive Director leaves, although US-based Executive Directors are entitled to continue
to participate in the bonus plan up to the date of termination of employment (subject to the
satisfaction of performance requirements). Any such bonus award may be paid in such proportions
of cash or shares as the Committee may determine.
• For ‘good leavers’ unvested deferred share awards will normally continue to vest as if the Executive
Director had not left, with the Committee retaining the discretion to accelerate the vesting of awards
where the Committee considers it appropriate (for example, if the Executive Director dies or has
a terminal illness). Good leaver reasons are defined as: injury; ill health; disability; redundancy;
retirement (as agreed by the Company); the company or business for which the Executive Director
works being sold out of the 4imprint Group; death; or such other circumstances as the Committee
may determine.
• Leavers for any other reason would result in no bonus being paid, and any unvested deferred share
awards would lapse.
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4imprint Group plc Annual Report and Accounts 2022
Consideration of employee conditions in the wider Group
The Board (and therefore each Committee member) receives a report for its consideration at its meeting in January in respect of
current salary levels, bonus entitlements, annual pay review and bonus proposals. This is accompanied by a verbal update from
the CEO. In combination, this annual update enables the Committee to take into account conditions in the wider workforce when
considering executive pay actions.
In addition, we have a dedicated Non-Executive Director who is responsible for championing the interests of team members (our
‘Employee Voice’) and who reports back to the Board on initiatives such as the employee engagement survey results.
The remuneration package available to Executive Directors under the Policy is broadly in line with the remuneration package afforded
to our other employees. All employees (including Executive Directors) are entitled to participate in the Company’s Sharesave plans in
the same way. Employees may receive discretionary bonuses based on their performance, although in the case of Executive Directors
and other members of senior management, part of any bonus earned is deferred into awards of the Company’s shares. A three-year
deferral period applies to awards for senior management and a five-year deferral period applies to awards for Executive Directors.
More information about how we engage with our team members can be found on page 50 of the Annual Report.
Consideration of Shareholder views
The Committee actively seeks and listens to Shareholder views on 4imprint’s executive remuneration arrangements on an ongoing
basis. In developing this Policy, the Committee undertook a significant consultation with Shareholders and carefully considered the
varied views put forward.
Non-Executive Director remuneration
Element and
purpose
Fees are aimed at attracting and retaining high-quality and experienced Non-Executive Directors, with
fee levels reflecting the time commitments and responsibilities of the roles.
Non-Executive Directors are paid a basic fee which is delivered in cash. Additional fees are not paid for
Committee chairmanship and membership.
Operation
Fee levels are reviewed periodically by the Board to maintain competitiveness relative to other listed
companies of a similar size, complexity and type.
Non-Executive Directors do not participate in any incentive schemes and do not receive a pension.
Opportunity
Fees payable to Non-Executive Directors cannot exceed the maximum that is set out in the Company’s
Articles of Association. The Company does not adopt a quantitative approach to pay positioning
and exercises judgment as to what it considers to be reasonable in all the circumstances as
regards quantum.
Non-Executive Director letters of appointment
Non-Executive Directors are generally appointed for a period of three years, subject to annual re-election. Non-Executive Directors’
appointments may be terminated without notice by either party.
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4imprint Group plc Annual Report and Accounts 2022
REMUNERATION REPORT CONTINUED
Annual report on remuneration
Directors’ remuneration – single total figure (audited information)
Apart from Kevin Lyons-Tarr and David Seekings, Directors are paid in Sterling. It is therefore considered more appropriate to present
the Directors’ remuneration in Sterling. The US dollar remuneration amounts for Kevin Lyons-Tarr and David Seekings are disclosed
separately below:
Base
salary
£
Benefits
£
Annual
bonus
£
Long-term
incentives
£
Pension
£
Total
£
Fixed
pay
£
Variable
pay
£
K. Lyons-Tarr
2022
2021
D. Seekings
2022
2021
P. Moody
2022
2021
L. Beardsell (i)
2022
2021
C. Brady
2022
2021
J. Gibney (ii)
2022
2021
J. Rabadia (i)
2022
2021
C. Southall
2022
2021
414,367
372,463
9,280
6,499
409,640
–
276,245
248,309
15,307
17,286
273,094
–
150,000
150,000
45,000
15,000
45,000
45,000
45,000
36,865
45,000
15,000
45,000
45,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
9,867
7,352
843,154
386,314
433,514
386,314
409,640
–
9,802
8,392
574,448
273,987
301,354
273,987
273,094
–
–
–
–
–
–
–
–
–
–
–
–
–
150,000
150,000
150,000
150,000
45,000
15,000
45,000
15,000
45,000
45,000
45,000
45,000
45,000
36,865
45,000
36,865
45,000
15,000
45,000
15,000
45,000
45,000
45,000
45,000
–
–
–
–
–
–
–
–
–
–
–
–
(i) Lindsay Beardsell and Jaz Rabadia joined the Board on 1 September 2021.
(ii) John Gibney joined the Board on 8 March 2021.
Kevin Lyons-Tarr and David Seekings US dollar remuneration
Base
salary
$
Benefits
$
Annual
bonus
$
Long-term
incentives
$
Pension
$
Total
$
Fixed
pay
$
Variable
pay
$
512,323
512,323
11,474
8,940
506,479
–
341,549
341,549
18,926
23,777
337,653
–
–
–
–
–
12,200 1,042,476
531,376
10,113
535,997
531,376
506,479
–
12,119
11,543
710,247
376,869
372,594
376,869
337,653
–
K. Lyons-Tarr
2022
2021
D. Seekings
2022
2021
80
4imprint Group plc Annual Report and Accounts 2022
Salaries
The Chief Executive Officer and the Chief Financial Officer received no increase in basic annual salary during 2022.
Pension and benefits
The Executive Directors’ pension benefits are the same as that offered to the wider workforce. Benefits include medical insurance,
life assurance and income protection.
Short and long-term incentives: Deferred Bonus Plan (DBP)
The Executive Directors participate in a single variable incentive plan through which they may receive an annual bonus, half of which
is paid in cash and half of which is deferred into shares through the award of conditional share awards (the DBP). The deferral period
for shares awarded to Executive Directors is five years from date of award.
The rules of the DBP were approved by Shareholders at the AGM on 18 May 2021. These rules replaced the rules of the 2015
Incentive Plan which were approved by Shareholders in April 2011 for a ten-year period. The DBP (previously called the Deferred
Annual Bonus Scheme or “DABS”) operates in substantially the same way as the 2015 Incentive Plan.
No annual bonus scheme was in place for 2021 due to the significant uncertainty around the timing and scale of the economic
recovery post COVID-19, meaning that it was not possible to set meaningful bonus targets at the start of 2021. At its meeting in
January 2022, the Remuneration Committee approved the re-introduction of the annual bonus scheme. Specific performance targets
were set by the Committee with reference to the 2022 budget which had been approved by the Board in December 2021.
Operation of the DBP
Bonus outcomes under the DBP are variable and depend on the achievement of stretching and robust performance targets based on
the financial results of the Group’s North American business. This basis of measurement is considered to be appropriate given that:
–
–
The North American business comprises 98% of the revenue of the Group and substantially all of its operating profit; and
It enables direct alignment of the incentive remuneration of the Executive Directors with that of the US-based management team.
Rationale for metric selection
The measures used to assess the performance of the Executive Directors were chosen specifically to align directly with the Group’s
strategic objectives (see pages 9 to 11). These objectives can be summarised as:
–
–
Expansion of market share in large, fragmented, and attractive markets through organic revenue growth; and
Investment in primarily marketing-based initiatives designed to maximise growth potential up to the point at which this
investment no longer produces an acceptable return.
Accordingly, the Committee agreed the following performance measures as most likely to incentivise an optimum outcome in
alignment with the Group’s strategic priorities:
– Revenue growth. This is the primary driver in meeting the Group’s market share expansion targets and as such serves as the
most heavily weighted measure in calculating incentive remuneration outcomes.
– Operating profit. The inclusion of this measure ensures that the marketing investment to build a strong and growing customer
file is accompanied by an appropriate financial return.
Bonus outturn under each performance measure is contingent on the performance of the other given the key role that both
measures play in ensuring an appropriate balance designed to meet 4imprint’s strategic priorities.
Target setting process and outcomes
The specific bonus targets for 2022 were set by the Committee at its meeting in January 2022, with reference to the 2022 budget
approved by the Board. As at January 2022, the Committee was confident that the targets set were appropriately stretching.
The bonus measures and targets are inter-related, and as such are best expressed in the matrix format set out below.
2022 Plan
Revenue target (millions)
Op. profit $45m minimum
Op. profit $43m minimum
Op. profit $41m minimum
Revenue growth vs 2021
Table shows bonus outcome as a % of base salary.
$842
30%
20%
10%
10%
$870
40%
30%
20%
14%
$895
$903
50%
40%
30%
17%
70%
50%
40%
18%
$910
90%
70%
50%
19%
$918
100%
90%
60%
20%
$926
100%
100%
80%
21%
For the avoidance of doubt:
If operating profit was below $41m no bonus would have been payable regardless of revenue performance.
–
–
If revenue growth was below 10% no bonus would have been payable regardless of operating profit performance.
– Budgeted revenue growth of 17% and operating profit of $45m would have resulted in the Executive Directors earning
an on-target bonus of 50% of base salary, with lower and higher combinations of the two measures producing outcomes
ranging from 10% of base salary for threshold performance to 100% of base salary for maximum performance.
81
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4imprint Group plc Annual Report and Accounts 2022
REMUNERATION REPORT CONTINUED
For 2022, the revenue growth and operating profit performance of the North American business significantly exceeded the amounts
necessary, per the performance grid, for bonuses of 100% of base salary to be awarded to the Executive Directors.
Accordingly at the January 2023 Remuneration Committee meeting, the Committee approved the maximum bonus award to the
Executive Directors of 100% of base salary, payable 50% in cash and 50% in the form of conditional share awards with a vesting
period of five years. The Committee had no requirement to exercise its discretion to alter the amount of bonus payable.
Bonus targets in respect of 2023 performance are not disclosed for reasons of commercial sensitivity but will be disclosed
retrospectively in next year’s Remuneration Report.
Statement of Directors’ shareholdings and share interests (audited information)
Details of the beneficial interests in the number of ordinary shares held in the Company by each Director and their connected
persons are set out below:
Kevin Lyons-Tarr
David Seekings
Paul Moody
Lindsay Beardsell
Charles Brady
John Gibney
Jaz Rabadia
Tina Southall
Holding at
31 December 2022
Holding at
1 January 2022
265,909
186,779
9,500
–
2,000
3,000
–
3,000
265,909
186,779
9,500
–
2,000
3,000
–
3,000
The value of each of the Executive Directors’ shareholdings at the year-end exceeds the 200% of base salary shareholding
requirement. The shareholdings included in the table above are not subject to any further performance conditions.
There has been no change in the Directors’ interests in the share capital of the Company from 1 January 2023 to the date of this report.
Movement in scheme interests during the financial year (audited information)
During the period there were no changes to the Executive Directors’ interests in share schemes. No bonus targets were set for 2021,
due to the uncertainty around the impact of the pandemic on the financial results of the business, so no awards of conditional shares
were made in 2022 in respect of 2021 performance.
In accordance with the rules of the DBP, the intention is to issue deferred shares in 2023 in respect of the 2022 bonus awards.
Directors’ interests in share schemes
Details of share options and conditional share awards held by the Directors are set out below:
Holding at
1 Jan
2022
Granted
during the
year
Exercised
Holding at
31 Dec
2022
Date
of grant
Share price
at date
of grant
Exercise
price
Exercisable
From
To
K. Lyons-Tarr
US ESPP
2015 Incentive Plan
D. Seekings
US ESPP
2015 Incentive Plan
516
10,196
722
6,797
–
–
–
–
–
–
–
–
516 17 May 2021
10,196 28 Mar 2019
£23.00
£24.00
722 17 May 2021
6,797 28 Mar 2019
£23.00
£24.00
$27.61
25 July 2023
25 July 2023
nil 28 Mar 2024 28 Mar 2024
$27.61
25 July 2023
25 July 2023
nil 28 Mar 2024 28 Mar 2024
Gains made on exercise of options in the period were nil for Kevin Lyons-Tarr and nil for David Seekings (2021: £111,270 for
Kevin Lyons-Tarr and £74,172 for David Seekings).
During 2022 the middle-market value of the share price ranged from £22.40 to £44.80 and was £42.75 at the close of business
on 31 December 2022.
Details of share options granted by 4imprint Group plc as at 31 December 2022 are given in note 22.
None of the terms and conditions of the share options were varied during the period. The performance criteria for all Directors’
options were consistent with the Remuneration Policy. Once an award has vested, the exercise of share options is unconditional,
subject to the Rules of the option grant.
82
4imprint Group plc Annual Report and Accounts 2022
Payments to past Directors
There were no payments to past Directors during the period.
Payments for loss of office
There were no payments for loss of office made during the period.
Performance graph and table
Total Shareholder Return
The graph below illustrates the Company’s Total Shareholder Return performance relative to the FTSE 250 Index of which the
Company is a constituent. The graph shows performance of a hypothetical £100 invested over the period.
2,000
1,500
1,000
500
0
Dec
2012
— 4imprint Group plc — FTSE 250
Dec
2013
Dec
2014
Dec
2015
Dec
2016
Dec
2017
Dec
2018
Dec
2019
Dec
2020
Dec
2021
Dec
2022
Total remuneration of Executive Chairman/Chief Executive Officer
2013
£’000
2014
£’000
1,380
1,380
180
180
2015
£’000
326
45
371
2016
£’000
481
2017
£’000
564
2018
£’000
738
2019
£’000
603*
2020
£’000
422
2021
£’000
386
2022
£’000
843
481
564
738
603
422
386
843
n/a
100
60
40
50
100
50*
n/a
n/a
100
K. Lyons-Tarr
J.W. Poulter
Total remuneration
Annual variable award
Percentage versus
max opportunity (%)
Long-term incentive
Vesting rate (%)
66.70
–
–
–
–
–
–
–
–
–
* In March 2020, Kevin Lyons-Tarr waived his conditional share awards in respect of 2019.
Kevin Lyons-Tarr was appointed Group Chief Executive Officer on 31 March 2015. Prior to that, the Executive Chairman, John Poulter,
fulfilled the role.
Relative importance of spend on pay
The table below shows the Group’s actual spend on pay relative to dividends:
Wages and salaries
Dividends paid
2022
$m
77.75
18.72
2021
$m
Percentage
change
59.62
4.13
30%
353%
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4imprint Group plc Annual Report and Accounts 2022
REMUNERATION REPORT CONTINUED
Percentage change in remuneration of Directors and employees
The table below shows the percentage change in remuneration of each of the Directors and the Company’s employees as a whole
between 2022 and 2021.
Average pay based on all employees
Kevin Lyons-Tarr
David Seekings
Paul Moody
Lindsay Beardsell
Charles Brady
John Gibney
Jaz Rabadia
Tina Southall
Salary
Bonus
7%
0%
0%
0%
0%
0%
0%
0%
0%
n/a
n/a
n/a
–
–
–
–
–
–
Taxable
benefits
-12%
28%
-20%
–
–
–
–
–
–
Average pay based on all employees increased in the year as wage and salary increases were implemented to attract and retain
associates in a competitive US labour market and there was an element of catch up following a period of minimal increases
throughout 2020 and the first half of 2021.
Kevin Lyons-Tarr and David Seekings received no bonus payments in 2021 and have received their maximum bonus award in respect
of 2022. Employees received minimal bonus payments in 2021 and received quarterly payments from the all employee gain share
bonus scheme in 2022. Accordingly, the calculated percentage increase figure in relation to bonuses is anomalous.
CEO pay ratio
Year
2022
2022
2021
2021
2020
2020
Country
Method
25th percentile
pay ratio
UK
US
UK
US
UK
US
A
A
A
A
A
A
18.0 : 1
12.4 : 1
24.4 : 1
17.7 : 1
33.5 : 1
25.2 : 1
Median
pay ratio
12.8 : 1
10.5 : 1
18.4 : 1
14.5 : 1
26.5 : 1
19.9 : 1
75th percentile
pay ratio
9.5 : 1
7.5 : 1
12.9 : 1
10.6 : 1
19.0 : 1
14.7 : 1
The data in the table above has been calculated using Option A which provides a comparison of the Company’s full-time equivalent
total remuneration for all employees against the CEO’s total remuneration. As the CEO is US-based and the Group has just 50
UK employees (2021: 45) compared with 1,274 US employees (2021: 1,162), the calculations are shown for both the UK and US
employee populations.
The data set included all employees who received base salary during the year ended 31 December 2022 and were still employed at
that date. Where appropriate, remuneration has been annualised to reflect the full-time equivalent amount, for example for part-time
employees and new starters in the year.
The calculations were carried out by identifying the 25th, 50th and 75th percentile employee, based on total remuneration for
the 2022 financial year. The calculation of total remuneration includes base pay and bonuses, benefits and employer pension
contributions paid in the financial year. In the US data set, owing to the difficulty in compiling the data for each individual, medical and
life cover benefits have been excluded from total remuneration. No other remuneration items have been omitted.
The Committee notes the limited availability of comparable pay ratios across companies and sectors given the range of business
models and employee population profiles that exist.
84
4imprint Group plc Annual Report and Accounts 2022
Gender pay gap
The tables below show the gender pay gap as at April 2022. As 4imprint has less than 250 employees in the UK it is not required by
the regulations to publish gender pay gap data. However, the Company believes it would be good practice to provide this data and
has published data for both the US and UK businesses separately.
Gender pay gap in hourly pay
As at April 2022
4imprint US
4imprint UK
As at April 2021
4imprint US
4imprint UK
No. of men
No. of women
322
12
852
29
No. of men
No. of women
280
15
786
31
Mean
average
%
10.92
42.10
Mean
average
%
16.65
38.41
Median
average
%
1.16
12.01
Median
average
%
4.96
15.09
The mean pay gap is the difference in the average hourly pay for women compared to men. In 4imprint US, men’s mean pay is
10.92% higher than women’s mean pay (2021 – 16.65% higher). In 4imprint UK, men’s mean pay is 42.1% higher than women’s mean
pay (2021 – 38.41% higher). This is due to the higher representation of men in more senior roles in the employee group in the UK.
The median pay gap represents the difference in hourly pay between the salary mid-point average of women and men. In 4imprint
US, the median hourly pay is 1.16% higher for men than for women in 2022 (2021 – 4.96% higher). In 4imprint UK, the median hourly
pay is 12.01% higher for men than for women in 2022 (2021 – 15.09% higher for men).
Gender pay gap – bonus pay
Employees receiving a bonus
Year to April 2022
4imprint US
4imprint UK
Year to April 2021
4imprint US
4imprint UK
Gender pay gap in bonus pay
Year to April 2022
4imprint US
4imprint UK
Year to April 2021
4imprint US
4imprint UK
Male
%
93.48
8.33
Male
%
1.79
0.00
Mean
average
%
65.83
100.00
Mean
average
%
91.05
0
Female
%
95.31
0.00
Female
%
0.25
0.00
Median
average
%
0
0
Median
average
%
16.17
0
No. of men
No. of women
273
1
812
0
No. of men
No. of women
5
0
2
0
In the UK, no bonuses were paid in the year to 5 April 2022. The bonuses shown above relate to the exercise of share options
in May 2021 and March 2022 by one member of the UK senior management team. The effect of this is to render the UK data on
bonuses anomalous.
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4imprint Group plc Annual Report and Accounts 2022
REMUNERATION REPORT CONTINUED
4imprint US
4imprint UK
25%
29%
24%
32%
75%
Lower quartile
30%
71%
Lower middle quartile
10%
76%
Upper middle quartile
50%
68%
Upper quartile
27%
■ Male ■ Female
70%
90%
50%
73%
This is the proportion of men and women in each pay quartile. Each quartile represents 294 employees of 4imprint US and 10
employees of 4imprint UK.
Statement of voting at general meetings
Votes cast by proxy and in the meeting in respect of Directors’ remuneration were as follows:
Resolution
AGM
Votes for
% for
Votes against
% against
Votes withheld
(abstentions)
Approval of Remuneration Report
2022 24,162,559
96.40
903,584
Approval of Remuneration Policy
2021 21,870,335
94.94
1,164,452
3.60
5.06
1,318
380,941
Implementation of Policy in 2023
At its meeting in January 2023, the Committee awarded the Chief Executive Officer and the Chief Financial Officer a 6.8% increase in
basic annual salary with effect from 1 January 2023. This is the first increase in Executive Directors’ base salary since 1 January 2020
and is in line with the increase applied to the remuneration of salaried employees across the business.
In addition, the Committee approved an increase of 5% in the Chairman’s annual fee to £157,500 with effect from 1 January 2023.
In relation to the annual bonus scheme for the Executive Directors and senior management team, specific performance targets
for 2023 have been set by the Committee with reference to the 2023 budget approved by the Board. The bonus plan variables,
consisting of revenue growth percentage and operating profit performance of the North American business, remain unchanged, but
the targets are not disclosed in this report for commercial reasons. As at January 2023, the Committee was confident that the targets
set were appropriately stretching.
CHARLES BRADY
CHAIR OF THE REMUNERATION COMMITTEE
14 March 2023
86
DIRECTORS’ REPORT
The Directors present their report and the audited
consolidated and Company financial statements for the period
ended 31 December 2022. The Company’s Statement on
Corporate Governance is included in the Corporate Governance
section on pages 58 to 62 of this Annual Report. The Statement
on Corporate Governance forms part of the Directors’ Report
and is incorporated into it by cross-reference.
4imprint Group plc (registered number 177991) is a public
limited company incorporated in England and Wales, domiciled
in the UK and listed on the London Stock Exchange. It is limited
by shares. Its registered office is 25 Southampton Buildings,
London WC2A 1AL.
Dividends
Dividends are declared in US dollars and paid in Sterling,
converted at the exchange rate at the time the dividend
is declared.
An interim dividend of 40.00c (33.01p) per ordinary share was
paid on 16 September 2022. The Directors recommend a final
dividend of 120.00c (99.23p) per share and a special dividend
of 200.00c (165.38p) per share. The proposed final and special
dividends, if approved, will be paid on 1 June 2023 in respect of
shares registered at close of business on 5 May 2023.
The total distribution paid and recommended for 2022 on
the ordinary shares is $101.1m (2021: $12.5m) or 360.00c
per share (2021: 45.00c).
Cross-reference to Strategic Report
The Strategic Report is set out on pages 6 to 53 of the Annual
Report. It includes the Chief Executive’s Review and Financial
Review, which contain information and disclosures concerning
the Group’s financial performance and position, future
prospects, key performance indicators, TCFD reporting, principal
risks and uncertainties, risk management objectives and policies,
going concern and viability. The Board regularly considers the
Company’s approach to its risk management objectives and
policies and reviews the Company’s risk management processes.
The Board concluded that the current risk management
processes are appropriate for the nature of the business
and current Group structure. Details of the Company’s risk
management processes are set out on page 41.
In addition, the Sustainability section, which is included
within the Strategic Report, contains information in respect
of the Group’s approach to social and ethical responsibility,
the environment, health and safety, employee welfare and
diversity, equity and inclusion. These policies and practices
demonstrate the importance which the Directors place
on fostering the Group’s relationships with its employees,
customers and suppliers.
These elements of the Strategic Report are incorporated into
the Directors’ Report by cross-reference.
Directors
The names and biographical details of the present Directors,
their Committee memberships, independence status and
identification of the Senior Independent Director are given on
pages 56 and 57. The Directors served throughout the period
ended 31 December 2022 and up to the date of signing of these
financial statements.
4imprint Group plc Annual Report and Accounts 2022
The interests of the Directors in the shares of the Company are
shown on page 82.
None of the Directors, nor their associated companies, nor any
members of their families, had any interest either during or at
the end of the period ended 31 December 2022 in any contract
with the Company or its subsidiaries requiring disclosure under
sections 197, 198, 200, 201 and 203 of the Companies Act 2006.
Share capital
The Group’s objective for managing capital is described in
note 21.
The Company has a single class of share capital which is
divided into ordinary shares of 386/13p each. The shares are
in registered form.
Rights and obligations attaching to shares
Subject to applicable statutes and other Shareholders’ rights,
shares may be issued with such rights and restrictions as the
Company may by ordinary resolution decide, or, if there is
no such resolution or in so far as it does not make specific
provision, as the Board may decide. At each Annual General
Meeting (AGM), the Company seeks annual Shareholder
authority for the Company’s Directors to allot shares, in certain
circumstances, for cash. Currently, there are no such restrictions
in place over the issued share capital of the Company, other
than those required by law or regulation.
Relations with Shareholders
Substantial interests
At 31 December 2022 the Company had received notification of
the following interests in voting rights pursuant to the Disclosure
and Transparency Rules:
Baillie Gifford & Co
BlackRock, Inc.
Montanaro Asset Management Limited
abrdn plc
JPMorgan Asset Management
Holdings Inc.
Mawer Investment Management
Date
notified
% of share
capital(i)
16.09.22
16.05.22
09.09.22
07.07.22
10.95%
9.84%
6.99%
6.03%
01.08.22
13.05.22
5.09%
4.37%
(i) Percentages are shown as a percentage of the Company’s issued
share capital when the Company was notified of the change in holding.
Copies of these, along with historic notifications received and any
notifications received since 14 March 2023, can be found on our website
at https://investors.4imprint.com/investors/regulatory-news/.
The Board places a high value on its relations with its investors
and consults with Shareholders in connection with specific
issues where it considers it appropriate. The Group, principally
through the Chief Executive Officer and Chief Financial
Officer, has regular dialogue and meetings with institutional
Shareholders, fund managers and analysts. Subject always to
the constraints regarding sensitive information, discussions
cover a wide range of issues, including strategy, performance,
management and ESG.
The Board considers it important to understand the views
of Shareholders, in particular any issues which concern them.
The Senior Independent Non-Executive Director is available to
meet major Shareholders if they so wish.
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Political donations
No political donations were made in the period ending
31 December 2022 or prior period.
Annual General Meeting
Notice of the AGM is set out in a separate document. Items of
special business to be considered at the AGM are described in
detail in the Notice of the AGM and the notes on the business to
be conducted.
Independent auditor
On the recommendation of the Audit Committee, a resolution
to reappoint Ernst & Young LLP (EY) as independent external
auditor will be proposed at the 2023 AGM, together with a
resolution granting the Directors the authority to determine
EY’s remuneration.
Directors’ statement as to disclosure of information
to independent auditor
In the case of each of the persons who are Directors of the
Company at the date this report was approved:
–
So far as each of the Directors is aware, there is no relevant
audit information (as defined in the Companies Act 2006) of
which the Company’s auditor is unaware.
Each of the Directors has taken all of the steps that he or
she ought to have taken as a Director to make himself or
herself aware of any relevant audit information (as defined)
and to establish that the Company’s auditor is aware of
that information.
–
Approved by the Board and signed on its behalf by
EMMA TAYLOR
COMPANY SECRETARY
14 March 2023
4imprint Group plc Annual Report and Accounts 2022
DIRECTORS’ REPORT CONTINUED
Qualifying third party indemnity provisions
Qualifying third party indemnity agreements have been signed
by the Company in respect of Kevin Lyons-Tarr, David Seekings,
Paul Moody, Lindsay Beardsell, Charles Brady, John Gibney, Jaz
Rabadia and Tina Southall with effect from the date of their
respective appointments to the Board of Directors.
Shares held in trust for employee share schemes
The trustees of the 4imprint 2012 Employee Benefit Trust may
vote or abstain from voting on shares held in the trust in any
way they consider appropriate.
Significant agreements
There are no agreements containing provisions entitling a
counterparty to exercise termination or other rights in the event
of a change of control.
Remuneration Report
Details of the procedures and guidelines used by the
Remuneration Committee in determining remuneration are
outlined in its report on pages 73 and 74.
Purchase of own shares
Following approval at the 2022 AGM of Resolution 18, the
Company is authorised, generally and without conditions, to
make market purchases, as defined in the Companies Acts, of
its ordinary shares of 386/13p subject to the provisions set out
in such Resolution. This authority applies from 24 May 2022
until the earlier of the end of the 2023 AGM or 24 August 2023
unless previously cancelled or varied by the Company in a
general meeting. No such cancellation or variation has taken
place. During the period, no shares have been purchased by the
Company, but the Employee Benefit Trust purchased 35,000
(2021: 22,500) ordinary shares.
Waiver of dividends
The dividend income in respect of the 22,860 shares (2021:
22,488 shares) held in the 4imprint 2012 Employee Benefit Trust
has been waived at the date of this report.
Going concern
The going concern statement is on page 40.
Environment and sustainability
The Board recognises its obligations to protect the environment
and is committed both to achieving required environmental
standards across all the activities of the Group and to minimising
its environmental impact. Further information about the Group’s
environmental and sustainability policy, together with TCFD
reporting disclosures and climate change scenario analysis is set
out in the Sustainability section on pages 25 to 33.
Greenhouse gas emissions report
Details regarding the Group’s carbon emissions, energy
consumption and energy efficiency are included in the Strategic
Report on pages 31 and 32.
Methodology
All of the emission sources required under the Companies Act
2006 (Strategic Report and Directors’ Report) Regulations 2013
for Scope 1 and Scope 2 emissions have been reported.
The emission factors used were from the UK Government’s GHG
Conversion Factors for Company Reporting 2022 for UK entities
and EPA conversion factors for US entities.
88
4imprint Group plc Annual Report and Accounts 2022
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
United Kingdom law and regulations.
Company law requires the Directors to prepare financial
statements for each financial period. Under that law the
Directors have elected to prepare the Group and Company
financial statements in accordance with UK-adopted
International Accounting Standards (IFRSs). 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 the Company and of the profit or
loss of the Group for that period.
In preparing the financial statements, the Directors are
required to:
–
Select suitable accounting policies in accordance with IAS 8
‘Accounting Policies, Changes in Accounting Estimates and
Errors’ and then apply them consistently.
– Make judgments and accounting estimates that are
reasonable and prudent.
– Present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information.
– Provide additional disclosures when compliance with the
specific requirements in IFRSs is insufficient to enable
users to understand the impact of particular transactions,
other events and conditions on the Group’s and Company’s
financial position and financial performance.
In respect of the Group’s and Company’s financial
statements, state whether IFRSs have been followed, subject
to any material departures disclosed and explained in the
financial statements.
–
– Prepare the financial statements on the going concern basis
unless it is appropriate to presume that the Group and
Company will not continue in business.
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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 comply
with the Companies Act 2006. They 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.
Under applicable law and regulations, the Directors are
also responsible for preparing a Strategic Report, Directors’
Report, Remuneration Report and Corporate Governance
Statement that comply with that law and those regulations.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company’s website.
Each of the Directors, whose names and functions are listed in
the Board of Directors on pages 56 and 57, confirm, to the best
of their knowledge:
–
That the consolidated financial statements, prepared in
accordance with IFRSs, give a true and fair view of the assets,
liabilities, financial position and profit of the Company and
undertakings included in the consolidation taken as a whole.
That the Annual Report, including the Strategic Report,
includes a fair review of the development and performance
of the business and the position of the Company and
undertakings included in the consolidation taken as a
whole, together with a description of the principal risks
and uncertainties that they face.
That they consider the Annual Report, taken as a whole,
is fair, balanced and understandable and provides the
information necessary for Shareholders to assess the
Group’s position, performance, business model and strategy.
–
–
Approved on the 14 March 2023 by
KEVIN LYONS-TARR
CHIEF EXECUTIVE OFFICER
DAVID SEEKINGS
CHIEF FINANCIAL OFFICER
89
4imprint Group plc Annual Report and Accounts 2022
INDEPENDENT AUDITOR’S REPORT
To the members of 4imprint Group plc
Opinion
In our opinion:
–
4imprint Group plc’s Group financial statements and Company financial statements (the “financial statements”) give a true and
fair view of the state of the Group’s and of the Company’s affairs as at 31 December 2022 and of the Group’s profit for the year
then ended;
the Group financial statements have been properly prepared in accordance with UK adopted international accounting standards;
the Company financial statements have been properly prepared in accordance with UK adopted international accounting
standards as applied in accordance with section 408 of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
–
–
–
We have audited the financial statements of 4imprint Group plc (the “Company”) and its subsidiaries (the “Group”) for the year-ended
31 December 2022 which comprise:
Group
Company
Consolidated balance sheet as at 31 December 2022
Balance sheet as at 31 December 2022
Consolidated income statement for the year then ended
Statement of changes in equity for the year then ended
Consolidated statement of comprehensive income for the year
then ended
Statement of cash flows for the year then ended
Consolidated statement of changes in equity for the year
then ended
Related notes A to M to the financial statements including a
summary of significant accounting policies
Consolidated statement of cash flows for the year then ended
Related notes 1 to 28 to the financial statements, including a
summary of significant accounting policies
The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international
accounting standards and as regards the Company financial statements, as applied in accordance with section 408 of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our
report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group and Company in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled
our other ethical responsibilities in accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the Company and we remain
independent of the Group and the Company in conducting the audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group and Company’s
ability to continue to adopt the going concern basis of accounting included:
– We confirmed our understanding of the Board’s going concern assessment process and also engaged with management early
to ensure key factors were considered in their assessment. Management have performed their going concern assessment for
the period ending on 29 June 2024. Management consider the key factor that would affect the going concern assumption for the
Group to be a severe downturn in customer demand;
– We obtained the Board’s going concern assessment, including cash flow forecasts which cover the period to 29 June 2024.
The Board prepared “base case” and “downside case” cash flow forecast models. The downside scenarios assume a significant
deterioration in demand patterns during 2023, similar to those experienced in 2020 when the pandemic started, with order
volumes for the first year of the three-year forecast period dropping back to around 70% of 2022 levels, before gradually
recovering. Management’s base case and downside forecasts demonstrate that the Group retains sufficient liquidity in the going
concern period to 29 June 2024;
– We considered the appropriateness of methods used to calculate the cash forecasts and determined, through inspection of
the methodology and testing of the calculations, that the methods utilised were appropriately sophisticated to be able to make
an assessment for the Group and Company. We also confirmed the mathematical integrity of management’s scenarios. We
evaluated the historical accuracy of management’s forecasting and considered this against external analyst expectations. We have
concluded that management’s estimates have historically been appropriate and conservative, and this is supported by post year-
end results to date;
90
4imprint Group plc Annual Report and Accounts 2022
– We have assessed the Board’s considerations related to material climate change impacts, including the re-certification of the
Group’s carbon neutral status during the year, the completion of a capital investment project in the form of a 2,660 panel ground-
mounted solar array at their distribution centre in Oshkosh and developing Better Choices™, their sustainable product initiative;
– We have checked the amount and maturity of the $20m US line of credit and £1m UK overdraft facility, which expire on 31 May
2024 and 31 December 2023, respectively, to facility agreements. These facilities remain undrawn and covenant requirements
attached to the $20m US line of credit have also been tested to the facility agreement. There are no covenants on the £1m
UK overdraft;
– We obtained the Board’s forecast covenant calculations for the committed but undrawn $20m US line of credit which cover the
period until expiry (31 May 2024). We tested inputs into the covenant forecast calculations back to the base case and confirmed
the Group has significant headroom and no forecast breach in covenants. Both the base case and the downside case cash flow
forecasts assume no utilisation of the $20m line of credit or £1m UK overdraft facility;
– We assessed management’s consideration of the geopolitical and macro-economic environment and the impact on the Group’s
operations, noting that the Group has no operations in Russia, Ukraine or Belarus. The possible impact to the Group would likely
manifest itself through inflationary pressures;
– We tested the key assumptions included in each of the cash flow forecast models. We tested the assumption regarding significant
declines in revenue included in the downside scenarios as well as the recovery rates;
– We performed sensitivity analysis on the downside scenarios assuming increased product costs and reduction in demand, to
identify the impact on the Group’s liquidity. This did not identify liquidity issues. Moreover, the Group has demonstrated its ability
to manage through historic recessions and the more recent COVID-19 pandemic;
– We performed reverse stress testing on the base case forecast to identify what reduction in revenue would be required before
the Group’s liquidity is exhausted during the going concern period. We assessed whether significant declines in revenue beyond
those experienced during the pandemic were plausible;
– We considered the mitigating factors that are within the control of the Group which include the ability to reduce marketing costs,
direct costs, capex spend and flex dividends. In addition, if required, other payroll and overhead costs could also be reduced;
– We consider the severe but plausible scenarios identified as part of the going concern assessment appropriately reflect the
principal risks of the business and reasonable possible changes in key assumptions;
–
In our stress test and reverse stress test model, we have excluded the $20m US line of credit and the £1m UK overdraft facility;
– Our reverse stress test models on the base case and downside scenarios showed that with available mitigation, the Group would
have sufficient liquidity to meet its liabilities as they fall due throughout the going concern period; and
– We read the Group’s going concern disclosures included in the Annual Report in order to evaluate whether the disclosures were
appropriate and in conformity with the applicable reporting standards.
We have observed a continued recovery in performance of both the US and UK&I segments of the business since 2021, the cash and
bank deposits of $86.7m (2021: cash of $39.8m) at the balance sheet date and sustained trading results in the first month of 2023.
Based on the work we have performed, we have not identified material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Group and Company’s ability to continue as a going concern for the period to
29 June 2024.
In relation to the Group and Company’s reporting on how they have applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors
considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections
of this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the
Group’s ability to continue as a going concern.
Overview of our audit approach
Audit scope
– We performed an audit of the complete financial information of two full scope components and audit
–
procedures on specific balances for a further five components.
The components where we performed full or specific audit procedures accounted for 100% of profit before
tax, 100% of revenue and 100% of total assets.
Key audit
matters
– Management override of internal controls through manual journals to revenue;
– Management override of internal controls through manual journals to supplier rebate income; and
– Management override of internal controls related to the expected credit loss provision on unbilled
accrued revenue.
Materiality
– Overall Group materiality of $5.2m (2021: $1.5m) which represents 5% (2021: 5%) of profit before tax for
the current period. Prior year Group materiality was calculated at 5% of the average profit before tax using
the prior year and previous two financial periods.
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4imprint Group plc Annual Report and Accounts 2022
INDEPENDENT AUDITOR’S REPORT CONTINUED
To the members of 4imprint Group plc
An overview of the scope of the Company and Group audits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit
scope for each company within the Group. Taken together, this enables us to form an opinion on the consolidated and Company
financial statements. We take into account size, risk profile, the organisation of the Group and effectiveness of group-wide controls,
changes in the business environment, the potential impact of climate change and other factors such as recent wider geopolitical and
macroeconomic issues when assessing the level of work to be performed at each company.
In assessing the risk of material misstatement to the Group financial statements, and to ensure we had adequate quantitative
coverage of significant accounts in the financial statements, of the 7 (2021: 7) reporting components of the Group, we selected 7
(2021: 7) components covering entities within the United States of America and the United Kingdom, which represent the principal
business units within the Group.
Of the 7 (2021: 7) components selected, we performed an audit of the complete financial information of 2 (2021: 2) components
(full scope components) which were selected based on their size or risk characteristics. For the remaining 5 (2021: 5) components
(specific scope components), we performed audit procedures on specific accounts within those components that we considered
had the potential for the greatest impact on the significant accounts in the financial statements either because of the size of these
accounts or their risk profile.
The reporting components where we performed audit procedures accounted for 100% (2021: 100%) of the Group’s profit before tax,
100% (2021: 100%) of the Group’s revenue and 100% (2021: 100%) of the Group’s total assets.
For the current year, the 2 (2021: 2) full scope components contributed 100% (2021: 104%) of the Group’s profit before tax, 98%
(2021: 98%) of the Group’s revenue and 98% (2021: 98%) of the Group’s total assets.
The 5 (2021: 5) specific scope components contributed 0% (2021: (4)%) of the Group’s profit before tax, 2% (2021: 2%) of the Group’s
revenue and 2% (2021: 2%) of the Group’s total assets. The audit scope of these components may not have included testing of all
significant accounts of the component but will have contributed to the coverage of significant accounts tested for the Group.
Changes from the prior year
There have been no changes in scoping from the prior year.
Involvement with component teams
All audit work performed for the purposes of the audit was undertaken by the Group audit team except for our inventory existence
procedures in respect of one full scope component. These procedures were undertaken by another EY global network firm operating
under the Group audit team’s instruction and were attended in person.
The Group audit team interacted with management throughout the audit and completed site visits to the Group’s locations in the
United States of America as part of our year-end testing, and to the Group’s location in the United Kingdom as part of our interim
and year-end audit procedures.
The Group audit engagement partner participated in the interim and closing meetings for all components.
Climate change
Stakeholders are increasingly interested in how climate change will impact 4imprint Group plc. The Group has determined that the
most significant future impacts from climate change on their operations will be from extreme weather-related events and potential
reputation and brand damage from failure to take deliberate and tangible action to reduce its GHG emissions and changes in
consumer preferences towards sustainable products. These are explained on pages 28 to 31 in the required Task Force for Climate
related Financial Disclosures in the sustainability section and on pages 41 to 49 in the principal risks and uncertainties. All of these
disclosures form part of the “Other information,” rather than the audited financial statements. Our procedures on these unaudited
disclosures therefore consisted solely of considering whether they are materially inconsistent with the financial statements or our
knowledge obtained in the course of the audit or otherwise appear to be materially misstated, in line with our responsibilities on
“Other information”.
In planning and performing our audit we assessed the potential impacts of climate change on the Group’s business and any
consequential material impact on its financial statements.
As explained in the Group’s viability statement, governmental and societal responses to climate change risks are still developing,
and the degree of certainty of these changes means that they cannot be taken into account when determining asset and liability
valuations under the requirements of UK adopted International Accounting Standards.
The Group has included environmental matters in its strategic objectives and the cash flow impacts of its environmental initiatives
are incorporated into the financial forecasts used to assess viability and going concern.
Our audit effort in considering the impact of climate change in the financial statements was focused on evaluating management’s
assessment of the impact of climate risk on future cash flow forecasts, including changes in consumer preferences towards
sustainable products, which was used in their assessment of going concern, viability, recoverability of deferred tax assets and
associated disclosures.
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4imprint Group plc Annual Report and Accounts 2022
We also assessed the appropriateness of the Directors’ considerations of climate change risks in their assessment of going concern
and viability and associated disclosures.
Based on our work we have not identified the impact of climate change on the financial statements to be a key audit matter or to
impact a key audit matter.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of
resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit
of the financial statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.
Risk 1 – Management override of internal controls through manual journals to revenue
Description of risk:
There is a risk that management may override controls to intentionally misstate revenue transactions through inappropriate
manual journal entries to revenue and consequently underlying operating profit.
Investor focus on the Group’s revenue performance, together with the re-introduction of the management reward and incentive
schemes in 2022 which are based on revenue percentage growth and underlying operating profit targets, create an incentive for
management to manipulate revenue recognition.
There are no significant judgments involved in the recognition of revenue and our audit risk is focussed on manual journals to the
revenue accounts. Therefore, we concluded there was a risk that management may override controls to intentionally:
a) overstate revenue, and therefore operating profit, in order to report an improved recovery to the market; or
b) understate revenue, and therefore operating profit, in order to provide a contribution towards meeting targets for
management rewards and incentive schemes in the next financial period.
Revenue for the year was $1,140m (2021: $787m) and operating profit was $103m (2021: $31m).
Refer to the accounting policies (pages 107 and 108); and note 1 of the consolidated financial statements (page 112).
Our response to the risk:
We identified, documented and confirmed our understanding of the Group’s revenue recognition policies and performed a
walkthrough to assess the design and implementation of key controls over the revenue process.
We performed testing to validate a sample of revenue transactions extracted from the sales invoicing system to revenue recorded
and reconciled in the general ledger.
We performed data analytics testing over the entire revenue process from revenue recognition through to invoice settlement via
cash. Where the postings did not follow our expectation, we investigated outliers and tested these journal entries to assess their
validity by agreeing the transactions back to source documentation.
We tested manual journal entries posted to revenue accounts, applying parameters designed to identify entries that were not in
accordance with our expectations. This included analysing and selecting journals for testing which appeared unusual in nature due
to size, preparer or being manually posted as there is greater opportunity to record fictitious entries than with automated journals
and therefore outside the normal course of business.
We investigated material classes of journals which did not flow through this process in line with our expectations to confirm our
understanding and ensure these were genuine transactions and appropriately accounted for.
We also introduced unpredictability into our manual journal entries testing. We corroborated such journals to source
documentation to confirm that the entries supported the revenue recognised and that the entries were valid.
We performed audit procedures over this risk area on 4imprint, Inc. and 4imprint Direct Limited which covered 100% (2021: 100%)
of revenue for the year.
Key observations communicated to the Audit Committee:
We did not identify evidence of management override through inappropriate journal entries recorded to revenue in the period.
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4imprint Group plc Annual Report and Accounts 2022
INDEPENDENT AUDITOR’S REPORT CONTINUED
To the members of 4imprint Group plc
Risk 2 – Management override of internal controls through manual journals to supplier rebate income
Description of risk:
The Group receives significant rebate income from its suppliers, primarily through 4imprint, Inc. These relate to volume-based
rebates on purchases made from key product suppliers throughout the financial period.
The rebates received are determined by formal signed agreements with suppliers and depend on the level of spend and product
mix within the financial period. Supplier agreements are coterminous with the Group’s year-end. The percentage of purchases paid
as a rebate from certain suppliers increases based on predetermined purchase thresholds within supplier agreements.
There is a risk that management may override controls to intentionally misstate supplier rebate income, and consequently
operating profit, through inappropriate manual journal entries. The incentives for doing so are consistent with those noted in our
“Management override of internal controls through manual journals to revenue” matter noted above.
Rebate contracts include variable rebate rates which are dependent on product categories and volumes purchased. There are
no significant judgments involved in the recognition of supplier rebate revenue or the supplier rebate receivable. As such, our
assessment considers the risk that management may override controls to intentionally:
a) Overstate supplier rebate income when compared to the eligible amounts set out in the rebate agreements and/or are
recognised in advance of achievement of the right to earn the income; or
b) Understate supplier rebate income when compared to the eligible amounts set out in the rebate agreements and/or
recognition is incorrectly deferred to the following period when the achievement of the right to earn the income has been met.
There is, however, an element of judgment included in assessing the recoverability of the rebate income receivable at the balance
sheet date. For the current year the Group recognised $26m (2021: $18m) of rebate income including a rebate receivable balance
of $19m (2021: $13m) at the balance sheet date.
Refer to the accounting policies (page 108); and note 14 of the consolidated financial statements (pages 120 to 122).
Our response to the risk:
We identified, documented and confirmed our understanding of the Group’s supplier rebate recognition policies and performed a
walkthrough to assess the design and operating effectiveness of key controls over the rebate revenue process.
For a sample of supplier rebates, we obtained rebate agreements and inspected them to assess whether rebates received, and
receivable, by the Group had been accounted for in the correct financial period and in accordance with specific terms agreed
with suppliers.
We recalculated expected supplier rebate income and receivables based upon spend with suppliers in the period, taking account
of agreed rebate rates per signed agreements and cash received during the year for rebate income.
We obtained direct confirmations from a sample of suppliers to agree rebate receivables due at the balance sheet date.
We compared a sample of cash receipts received in the year to the prior year receivables balances to assess the historical accuracy
of management’s rebate calculations and assessment of recoverability of amounts outstanding at the year-end.
We checked a sample of purchase transactions to the purchase reports used in the rebate calculations to assess whether rebate
transactions were recorded in the correct period and with regard to the relevant supplier and for the correct amounts. We
inspected a sample of post year-end credit notes to check the recoverability of rebate receivable balances.
We tested manual journal entries to rebate income accounts by applying parameters designed to identify entries that were
not in accordance with our expectations. This included analysing and selecting journals for testing and corroborating to source
documentation to confirm that the entries supported the recognition of rebate income and that the entries were appropriate.
We performed audit procedures over this risk area on 4imprint, Inc. which covered 99% (2021: 92%) of supplier rebate income
and 99% (2021: 90%) of the rebate income receivable balance at the reporting date.
Key observations communicated to the Audit Committee:
We did not identify evidence of management override through inappropriate journal entries recorded to rebate income in
the period. Rebate income was recorded in accordance with contractual terms, in the correct period and the related year-end
receivables balance was appropriately valued.
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4imprint Group plc Annual Report and Accounts 2022
Risk 3 – Management override of internal controls to the expected credit loss provision on unbilled accrued revenue
Description of risk:
It is common for a customer order to include several different products, i.e., several “order lines”. Each order line is a separate
performance obligation and revenue is recognised when control of the related goods has transferred to the customer.
However, the Group’s policy is that a sales invoice is only raised once goods from all order lines have transferred to the customer.
In the prior year, disruption to the Group’s supply chain caused by the pandemic resulted in an increase in unbilled accrued
revenue on orders that had been delivered to customers but where other products on the overall customer order had not been
delivered at year-end. Whilst the unbilled accrued revenue balances have reduced in the current year, they remain material to the
financial statements.
There is a risk that management may override controls to intentionally misstate expected credit loss (ECL) provisions on
unbilled accrued revenues and consequently operating profit. The incentives for doing so are consistent with those noted in our
“Management override of internal controls through manual journals to revenue” matter noted above.
Our assessment considers the risk that management may override controls to intentionally:
a) Understate the ECL provision, and therefore overstate operating profit, in order to report an improved recovery to the market; or
b) Overstate the ECL provision, and therefore understate operating profit, in order to meet targets for management rewards and
incentive schemes in the next financial period.
Gross unbilled accrued revenue at the year-end was $18m (2021: $28m) and related expected credit loss provisions were $0.2m
(2021: $0.5m).
Refer to the accounting policies (page 110); and note 14 of the consolidated financial statements (pages 120 to 122).
Our response to the risk:
We identified, documented and confirmed our understanding of the Group’s ECL provision policy and performed a walkthrough to
assess the design and operating effectiveness of key controls over the unbilled revenue accrual process.
We tested the accuracy of input data and the clerical accuracy of the ECL provision workings. We verified that the provision was
calculated in accordance with management’s policy and that appropriate journal entries were processed to record the provision in
the financial statements.
We assessed the significant assumptions used by management in the ECL provision on unbilled accrued revenues, mainly the
probability of default of customers based on historic default rates for the previous 36 months.
We challenged default rates used by management through the recalculation of our own ECL provision. The difference between our
own calculation and management’s provision was not material. We further validated inputs used in our recalculation as follows:
a) We performed integrity testing over these data sets to ensure they were reliable and complete, agreeing back to source
documentation such as invoices and journal write offs.
b) The risk of default over an element of the unbilled accrued revenue population is mitigated where payments are received up-
front from customers at the time an order is processed.
c) We validated the accuracy of this input into our calculation by agreeing a sample of transactions back to order and cash
receipt. We have ensured cash received up-front has been appropriately allocated against the ageing of the unbilled accrued
revenue balance.
We assessed the adequacy of the disclosures in the financial statements for the provision for ECL’s on unbilled accrued revenue.
We performed audit procedures over this risk area on 4imprint, Inc. and 4imprint Direct Limited which covered 100% (2021: 100%)
of unbilled accrued revenue at the year-end.
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Key observations communicated to the Audit Committee:
We did not identify evidence of management override through inappropriate ECL provisions on unbilled accrued revenue.
There have been no changes from prior year in the key audit matters included in our auditor’s report.
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4imprint Group plc Annual Report and Accounts 2022
INDEPENDENT AUDITOR’S REPORT CONTINUED
To the members of 4imprint Group plc
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the
audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic
decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.
We determined materiality for the Group to be $5.2m (2021: $1.5m), which is 5% (2021: 5%) of profit before tax for the current
period. Prior year Group materiality was calculated based on 5% of the average profit before tax using the prior year and previous
two financial periods.
We believe that profit before tax provides us with an appropriate basis for determining materiality as we consider the users of the
financial statements are primarily focused on earnings following the Group’s recovery from the impact of the pandemic.
Our current year materiality has therefore been calculated using profit before tax. In the prior year, Group materiality was calculated
at 5% of the average profit before tax using the prior year and previous two financial periods. If we had calculated our prior year
materiality in a consistent manner to the current year, using profit before tax, the prior year materially would have remained at a
similar amount.
We determined materiality for the Company to be £2.4m (2021: £2.4m), which is 1% (2021: 1%) of equity. We deem equity to be the
most appropriate measure given the Company is an investment holding company with no revenue.
During the course of our audit, we reassessed initial materiality for both the Group and Company.
Our final materiality for the Group ($5.2m) was higher than our initial materiality ($4.0m) owing to the Group’s improved trading
performance during the second half of the year.
There was no change in our final materiality from our original assessment at planning for the Company.
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgment
was that performance materiality was 75% (2021: 75%) of our planning materiality, namely $3.9m (2021: $1.1m). We have set
performance materiality at this percentage based on our assessment of the appropriateness of the Group’s internal controls, the
nature of historic audit misstatements and the residual risk of undetected misstatements in the financial statements.
Audit work at component locations for the purpose of obtaining audit coverage over significant financial statement accounts is
undertaken based on a percentage of total performance materiality. The performance materiality set for each component is based
on the relative scale and risk of the component to the Group as a whole and our assessment of the risk of misstatement at that
component. In the current year, the range of performance materiality allocated to components was $0.8m to $2.9m (2021: $0.3m
to $0.8m).
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of $0.2m (2021:
$0.1m), which is set at 5% (2021: 5%) of planning materiality, as well as differences below that threshold that, in our view, warranted
reporting on qualitative grounds.
The increase seen in our reporting threshold compared to the prior year is due to the improved trading performance of the Group
which has resulted in the profit before tax used in calculating our materiality being higher than in the prior year.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of
other relevant qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the Annual Report set out on pages 1 to 89, including the Strategic
Report, set out on pages 6 to 53, Corporate Governance Report, set out on pages 54 to 89, and additional information set out
on pages 142 to 144 than the financial statements and our auditor’s report thereon. The Directors are responsible for the other
information contained within the Annual Report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in
this report, we do not express any form of assurance conclusion thereon.
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4imprint Group plc Annual Report and Accounts 2022
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise
to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there
is a material misstatement of the other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
–
the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements
are prepared is consistent with the financial statements and those reports have been prepared in accordance with applicable
legal requirements;
the information about internal control and risk management systems in relation to financial reporting processes and about share
capital structures, given in compliance with rules 7.2.5 and 7.2.6 in the Disclosure Rules and Transparency Rules sourcebook
made by the Financial Conduct Authority (the FCA Rules), is consistent with the financial statements and has been prepared in
accordance with applicable legal requirements; and
information about the Company’s Corporate Governance Statement and practices and about its administrative, management
and supervisory bodies and their Committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of the FCA Rules.
–
–
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Company and its environment obtained in the course of the
audit, we have not identified material misstatements in:
the Strategic Report or the Directors’ Report; or
–
the information about internal control and risk management systems in relation to financial reporting processes and about share
–
capital structures, given in compliance with rules 7.2.5 and 7.2.6 of the FCA Rules.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
–
adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received
from branches not visited by us; or
the Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with
the accounting records and returns; or
certain disclosures of Directors’ remuneration specified by law are not made; or
–
–
– we have not received all the information and explanations we require for our audit; or
–
a Corporate Governance Statement has not been prepared by the Company.
Corporate Governance Statement
We have reviewed the Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate
Governance Statement relating to the Group and Company’s compliance with the provisions of the UK Corporate Governance Code
specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit:
– Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material
uncertainties identified set out on page 40;
– Directors’ explanation as to its assessment of the Company’s prospects, the period this assessment covers and why the period is
appropriate set out on pages 38 and 39;
– Director’s statement on whether it has a reasonable expectation that the Group will be able to continue in operation and meet
its liabilities set out on page 40;
– Directors’ statement on fair, balanced and understandable set out on page 89;
– Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 41 to 49;
–
The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems set
out on pages 41 and 69 and 70; and
The section describing the work of the Audit Committee set out on pages 66 to 70.
–
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4imprint Group plc Annual Report and Accounts 2022
INDEPENDENT AUDITOR’S REPORT CONTINUED
To the members of 4imprint Group plc
Responsibilities of Directors
As explained more fully in the Directors’ Responsibilities Statement set out on page 89, the Directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the
Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group and Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis
of these financial statements.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud
is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery
or intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the
Company and management.
– We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined that the
most significant are those that relate to the reporting framework (IFRS, Companies Act 2006, the UK Corporate Governance Code,
the Listing Rules of the UK Listing Authority) and the relevant tax compliance regulations in the jurisdictions in which the Group
operates, notably in the US and the UK. In addition, we concluded that there are certain laws and regulations that may have an
effect on the determination of the amounts and disclosures in the financial statements and those laws and regulations relate to
health and safety, employee, environmental, bribery and corruption practices and various US state laws;
– We understood how 4imprint Group plc is complying with those frameworks by making enquiries of Board members and
senior management executives, those responsible for legal and compliance procedures, the General Counsel and the Company
Secretary. We corroborated our enquiries through our review of Board minutes, Business Risk Management Committee
minutes, papers provided to the Audit Committee and attendance at meetings of the Audit Committee and members of the
senior executive team, and from reviewing correspondence received from regulatory bodies and noted that there was no
contradictory evidence;
– We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur.
In doing so, we considered investor focus and management remuneration in the current year and next year which may create
an incentive for management to manipulate earnings. We considered the possibility of fraud through management override and,
in response, we incorporated data analytics across manual journal entries into our audit approach. Where unusual results or
anomalies were identified through our data analytics, we performed additional audit procedures to address each identified risk.
These procedures included testing transactions back to source information and were designed to provide reasonable assurance
that the financial statements were free from material fraud or error. For more details, please refer to our Key Audit Matters
section above;
– Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations.
Our procedures involved testing details of manual journal entries which met our defined risk criteria based on our understanding
of the business, enquiries of the General Counsel, Group management and senior management executives of full and specific
scope components. We inspected the volume and nature of complaints by the whistleblowing hotline during the year; and any
past or present pending or threatened litigation or claims against the Group and its components; and
– We did not identify any instances of non-compliance with laws and regulations that, in our opinion, could have an impact on the
financial statements that would be more than inconsequential.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s
website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
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4imprint Group plc Annual Report and Accounts 2022
Other matters we are required to address
–
Following the recommendation from the Audit Committee, we were reappointed by the Company on 18 May 2021 to audit the
financial statements for the period ending 1 January 2022 and subsequent financial periods.
The period of total uninterrupted engagement including previous renewals and reappointments is four years, covering the
52 week period ended 28 December 2019, the 53 week period ended 2 January 2021, the 52 week period ended 1 January 2022
and the 52 week period ended 31 December 2022.
The audit opinion is consistent with the additional report to the Audit Committee.
–
–
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for
the opinions we have formed.
CHRISTOPHER VOOGD
SENIOR STATUTORY AUDITOR
for and on behalf of Ernst & Young LLP, Statutory Auditor
Birmingham
14 March 2023
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4imprint Group plc Annual Report and Accounts 2022
GROUP INCOME STATEMENT
for the 52 weeks ended 31 December 2022
Revenue
Operating expenses
Operating profit
Finance income
Finance costs
Pension finance income/(charge)
Net finance income/(cost)
Profit before tax
Taxation
Profit for the period
Earnings per share
Basic
Diluted
Note
2022
$’000
2021
$’000
1
1,140,286
787,322
2 (1,037,384)
(756,676)
1
102,902
30,646
1,162
(425)
67
804
33
(435)
(15)
(417)
4
103,706
30,229
5
(23,563)
(7,643)
80,143
22,586
Cents
Cents
6
6
285.57
284.95
80.46
80.26
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4imprint Group plc Annual Report and Accounts 2022
GROUP STATEMENT OF COMPREHENSIVE INCOME
for the 52 weeks ended 31 December 2022
Profit for the period
Other comprehensive income
Items that may be reclassified subsequently to the income statement:
Note
2022
$’000
2021
$’000
80,143
22,586
Currency translation differences
24
(1,614)
(97)
Items that will not be reclassified subsequently to the income statement:
Return on pension scheme assets (excluding interest income)
Re-measurement gains on post-employment obligations
Tax relating to components of other comprehensive income
Other comprehensive income for the period, net of tax
Total comprehensive income for the period, net of tax
18
18
5
(16,374)
(1,391)
11,916
1,756
(4,316)
2,506
(1,411)
(393)
75,827
22,193
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4imprint Group plc Annual Report and Accounts 2022
GROUP BALANCE SHEET
at 31 December 2022
Non-current assets
Property, plant and equipment
Intangible assets
Goodwill
Right-of-use assets
Deferred tax assets
Retirement benefit asset
Current assets
Inventories
Trade and other receivables
Current tax debtor
Other financial assets – bank deposits
Cash and cash equivalents
Current liabilities
Lease liabilities
Trade and other payables
Current tax creditor
Net current assets
Non-current liabilities
Lease liabilities
Deferred tax liabilities
Net assets
Shareholders’ equity
Share capital
Share premium reserve
Other reserves
Retained earnings
Total Shareholders’ equity
Note
2022
$’000
2021
$’000
8
9
10
11
12
18
13
14
15
15
16
17
16
19
29,255
24,667
957
1,010
1,045
–
13,103
11,725
2,381
1,234
600
1,974
47,940
40,011
18,090
20,559
87,511
63,589
–
2,034
34,913
–
51,839
41,589
192,353
127,771
(1,435)
(1,150)
(84,761)
(71,877)
(1,205)
–
(87,401)
(73,027)
104,952
54,744
(12,315)
(10,939)
(357)
(850)
(12,672)
(11,789)
140,220
82,966
22
18,842
18,842
68,451
68,451
24
4,406
6,020
48,521
(10,347)
140,220
82,966
The financial statements on pages 100 to 130 were approved by the Board of Directors on 14 March 2023 and were signed on its
behalf by:
KEVIN LYONS-TARR
CHIEF EXECUTIVE OFFICER
DAVID SEEKINGS
CHIEF FINANCIAL OFFICER
102
4imprint Group plc Annual Report and Accounts 2022
GROUP STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
for the 52 weeks ended 31 December 2022
Balance at 3 January 2021
Profit for the period
Other comprehensive income
Currency translation differences
Re-measurement gains on post-employment obligations
Tax relating to components of other comprehensive income
(note 5)
Total comprehensive income
Own shares utilised
Own shares purchased
Share-based payment charge
Deferred tax relating to share options (note 5)
Deferred tax relating to UK tax losses (note 5)
Dividends
Balance at 1 January 2022
Profit for the period
Other comprehensive income
Share capital
$’000
Share
premium
reserve
$’000
Other
reserves
(note 24)
$’000
Own shares
$’000
Profit
and loss
$’000
Total
equity
$’000
Retained earnings
18,842
68,451
6,117
(581)
(27,458)
65,371
22,586
22,586
(97)
(97)
1,115
1,115
(1,411)
(1,411)
(97)
22,290
22,193
573
(843)
(573)
602
5
–
(843)
602
5
(228)
(228)
(4,134)
(4,134)
18,842
68,451
6,020
(851)
(9,496)
82,966
80,143
80,143
Currency translation differences
(1,614)
(1,614)
Re-measurement losses on post-employment obligations
Tax relating to components of other comprehensive income
(note 5)
Total comprehensive income
Proceeds from options exercised
Own shares utilised
Own shares purchased
Share-based payment charge
Deferred tax relating to share options (note 5)
Deferred tax relating to UK tax losses (note 5)
Dividends
(4,458)
(4,458)
1,756
1,756
(1,614)
77,441
75,827
344
1,191
(1,191)
344
–
(1,210)
(1,210)
815
52
148
815
52
148
(18,722)
(18,722)
Balance at 31 December 2022
18,842
68,451
4,406
(870)
49,391
140,220
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4imprint Group plc Annual Report and Accounts 2022
GROUP CASH FLOW STATEMENT
for the 52 weeks ended 31 December 2022
Cash flows from operating activities
Cash generated from operations
Tax paid
Finance income received
Finance costs paid
Lease interest
Net cash generated from operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Purchases of intangible assets
Proceeds from sale of property, plant and equipment
Consideration for business combination
Increase in current asset investments – bank deposits
Net cash used in investing activities
Cash flows from financing activities
Capital element of lease payments
Proceeds from share options exercised
Purchases of own shares
Dividends paid to Shareholders
Net cash used in financing activities
Net movement in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Exchange losses on cash and cash equivalents
Note
2022
$’000
2021
$’000
25
97,040
18,257
(20,755)
(6,414)
1,130
(33)
(398)
33
(65)
(377)
76,984
11,434
16
(7,719)
(3,083)
(341)
(382)
49
10
(1,700)
(35,003)
–
–
–
(44,714)
(3,465)
16
(1,225)
(1,117)
344
–
(1,210)
(843)
7
(18,722)
(4,134)
(20,813)
(6,094)
11,457
1,875
41,589
39,766
(1,207)
(52)
Cash and cash equivalents at end of the period
15
51,839
41,589
104
4imprint Group plc Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS
General information
4imprint Group plc, registered number 177991, is a public limited company incorporated in England and Wales, domiciled in the UK
and listed on the London Stock Exchange. Its registered office is 25 Southampton Buildings, London WC2A 1AL.
The Group presents the consolidated financial statements in US dollars and numbers are shown in US dollars thousands. A
substantial portion of the Group’s revenue and earnings are denominated in US dollars and the Board is of the opinion that a US
dollar presentation gives a more meaningful view of the Group’s financial performance and position.
Accounting policies
The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have
been consistently applied to all the periods presented.
Basis of preparation
The financial statements have been prepared under the historical cost convention in accordance with UK-adopted International
Accounting Standards.
New accounting standards applicable for the first time in this reporting period have no impact on the Group’s results or
balance sheet.
Environmental risks
In preparing the financial statements, management has considered the impact of environmental risks. Whilst the impact of
environmental risks is still developing and therefore all possible future outcomes are uncertain, risks known to the Group have been
considered in forming judgments, estimates and assumptions and in assessing viability and going concern. These considerations did
not have a material impact on the financial statements.
Going concern
In making their assessment of going concern from the date of approval of these financial statements until 29 June 2024, the Directors
have carefully considered the Group’s prospects:
–
The Group’s strategy, market position and business model, as set out in the Strategic Report section on pages 9 to 19 of the 2022
Annual Report.
The principal risks and uncertainties facing the Group, as outlined in the Principal Risks & Uncertainties section on pages 41 to 49
of the 2022 Annual Report and further detailed below.
Information contained in the Financial Review concerning the Group’s financial position, cash flows and liquidity.
–
–
– Regular management reporting and updates from the Executive Directors.
– Recent detailed financial forecasts and analysis.
Principal risks and uncertainties
The Directors have carefully considered the Group’s principal risks and uncertainties in assessing the Group’s prospects, which
include strategic risks, operational risks, reputational risks, and environmental risks. Whilst all the risks identified could have an
impact on the Group, given the prevailing external climate and potential to impact the Group’s financial position and longer-term
viability, macroeconomic and environmental risks are considered in further detail below.
Macroeconomic risks
Whilst the risk of a negative effect on demand for our products from the pandemic is considered to have receded during the year,
the macroeconomic and geopolitical environment remains challenging.
The ongoing uncertainty associated with the outlook for a potential global recession and continued geopolitical unrest poses
downside risks to growth and the cost base. Inflationary pressures (mainly in relation to product, transportation, and labour costs)
have persisted since the onset of the pandemic although the impact on the business has to date been successfully mitigated
through appropriate and timely adjustments to the customer proposition, the marketing mix and expense budgets. In addition, the
maintenance of high levels of liquidity has facilitated continued investment in the business for future growth.
The operational and financial resilience of the business through the pandemic and current economic and political uncertainty,
coupled with the strong financial position of the Group, give the Board confidence that the strategy, competitive position, and
business model remain entirely relevant and that despite residual uncertainty as to future market conditions, the Group expects to
be in a good position both to withstand further economic stress and to take market share opportunities as they arise.
The potential impacts from the current macroeconomic risks and associated mitigating actions have been reflected in the demand
and cost assumptions of the financial forecasts used to assess viability and going concern.
Environmental risks
As a primary strategic objective of the Group and as noted above in the assessment of prospects, environment-related risks and
opportunities are specifically considered by the Board in their assessment of viability and going concern.
The Group has established an appropriate governance structure, in the form of the Group Environmental Committee and Business
Risk Management Committee, to identify new and emerging risks related to climate change and the environment.
105
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4imprint Group plc Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Going concern continued
Environmental risks have the potential to impact the Group’s ability to achieve its strategic objectives through damage to our
reputation, our operational facilities and those of our supplier partners, and the failure to respond to trends and shifts in consumer
product preferences.
As detailed more fully in the Sustainability section, the Group has proactively responded to these risks with several initiatives.
These include the achievement of CarbonNeutral® company status, the installation of a solar panel array at our distribution centre
in Oshkosh, the introduction of our Better Choices™ programme to make it easier for our customers to find products with the
characteristics that are most important to them, and participation in the UPS carbon neutral shipping programme. The flexible nature
of our ‘drop-ship’ model and close relationships maintained with key and alternative suppliers allows for relatively rapid adjustment to
episodes of extreme weather.
Whilst governmental and societal responses to climate change risks are still developing, and therefore all possible future outcomes
are not known, the Group has embedded environmental matters into its strategic objectives and sees climate change and other
aspects of environmental stewardship as a fundamental part of a commitment to build a commercially and environmentally
sustainable business that delivers value to all stakeholders.
The cash flow impacts of our environmental initiatives are incorporated into the financial forecasts used to assess viability and
going concern.
Assessment of going concern
Whilst the principal risks and uncertainties outlined on pages 41 to 49 of the 2022 Annual Report could all have an impact on the
Group’s performance, the Board considers that the key factor that would prejudice the ongoing viability and liquidity of the Group
would be a severe downturn in demand, which negatively impacts new customer acquisition and existing customer retention.
The ‘base case’ three-year plan, developed for the purposes of the Group’s strategic planning process, provides the basis for
the financial modelling used to assess viability. Over the three-year period this ‘base case’ shows improving financial results, an
accumulating cash balance and no liquidity concerns.
Severe, but plausible, downside demand assumptions were then determined and used to adjust the ‘base case’ forecast to model
the effects on the Group’s liquidity. These ‘downside’ scenarios assume a significant deterioration in demand patterns during 2023,
similar to those experienced in 2020 when the pandemic started, with order volumes for the first year of the three-year forecast
period dropping back to around 70% of 2022 levels, before gradually recovering back to 2022 order levels by 2025. Marketing and
direct costs were flexed in line with revenue, capital expenditure was moderated to reflect the reduction in demand, and dividend
payments were reduced in line with earnings per share, but other payroll and overhead costs remained at 2022 levels with an
allowance for inflationary increases. These ‘downside’ scenarios are intended to simulate a severe shock to demand resulting in
sustained diminished corporate demand in a downsized promotional products market.
Even under the severe stress built into the ‘downside’ models, the Group retains strong liquidity throughout the assessment period.
This liquidity is in the form of cash balances. In addition, there are further mitigating actions that the Group could take, including
further cutting marketing costs and reducing headcount, that are not reflected in the distressed forecast but would, if required, be
fully under the Group’s control.
Given the scalability of the Group’s business model, as demonstrated over the past few years, the absence of external financing, and
low fixed or working capital requirements, a reverse stress testing scenario has not been undertaken. The Group has proven, during
the onset of the pandemic in 2020, its ability to flex its marketing and other costs to mitigate the impact of falls in revenue and retains
flexibility to further reduce other costs should the need arise.
Though the Group maintains a $20m line of credit with its US bankers that expires on 31 May 2024 and a small overdraft facility
with its UK bankers that expires on 31 December 2023, the modelling in both the ‘base case’ and ‘downside’ scenarios shows the
maintenance of positive cash balances throughout the assessment period and, as such, there is no current requirement to utilise the
facilities or intention to secure any additional facilities.
The assumptions used in the ‘base case’ and ‘downside’ scenarios and resulting financial forecasts have been reviewed and approved
by the Board. The conclusion of this review is that the Group has significant flexibility in its variable costs, a low fixed cost base, and
enters the 2023 financial year with a strong cash and bank deposits position of $86.8m, enabling it to remain cash positive even
under severe economic stress.
Going concern
Based on their assessment, the Directors have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group’s and Company’s ability to continue as a going concern from
the date the financial statements are approved until 29 June 2024. Accordingly, they continue to adopt the going concern basis in
preparing the Group’s and Company’s financial statements.
106
4imprint Group plc Annual Report and Accounts 2022
Basis of consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries for the period.
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the
Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power to direct the activities of the entity. The financial statements of subsidiaries, as amended to conform to Group
accounting policies, are included in the consolidated financial statements from the date that control commences until the date that
control ceases.
All subsidiaries have the same year-end date as the Group.
Estimates and judgments
The preparation of the consolidated financial statements requires management to make judgments and estimates that affect the
application of accounting policies, the amounts reported for assets and liabilities as at the balance sheet date and the amounts
reported for revenues and expenses during the year.
Critical accounting judgments are those judgments, apart from those involving estimations, that have been made in the process
of applying the Group’s accounting policies and that have the most significant effect on the amounts recognised in the financial
statements. Key assumptions and sources of estimation uncertainty are those that have a significant risk of resulting in a material
adjustment to the carrying amounts of the Group’s assets and liabilities within the next financial year.
Management considers the following to be the critical accounting judgments and key assumptions and sources of
estimation uncertainty:
Critical accounting judgments
Revenue
For most of its product line, the Group operates a ‘drop-ship’ business model whereby suppliers hold blank inventory, imprint the
product and ship directly to customers. In order to determine the amount of revenue to recognise, it is necessary for the Group to
make a judgment to assess if it is acting as principal or an agent in fulfilling the performance obligations and promises to customers
for these transactions.
The Group has full discretion to accept orders, agrees artwork with the customer, sets the transaction price, selects the suppliers
used to fulfil orders, and considers its customer satisfaction promises (‘on-time or free’, price and quality guarantees) to be integral to
meeting its performance obligations.
Accordingly, the Group is of the opinion that it acts as principal in providing goods to customers and recognises the gross amount of
consideration as revenue.
Retirement benefit asset
At the balance sheet date, the fair value of the defined benefit assets exceeded the present value of the defined benefit obligations
of the 4imprint 2016 Pension Plan. Although the Group anticipates that the surplus will be utilised during the life of the plan to
address members’ liabilities, the Group recognises the surplus in full on the basis that it is management’s judgment that there are no
restrictions on the return of residual plan assets in the event of a winding up of the plan after all member obligations have been met.
Key assumptions and sources of estimation uncertainty
Pensions
As detailed in note 18, the Group sponsors a defined benefit pension scheme closed to new members and future accrual. Period-
end recognition of the liabilities under this scheme requires a number of significant actuarial assumptions to be made, including
inflation rate, discount rate and mortality rates. Small changes in assumptions can have a significant impact on the amounts recorded
in other comprehensive income and on the pension liabilities in the balance sheet. Sensitivities to changes in these assumptions are
disclosed in note 18.
Other areas of judgment and accounting estimates
The consolidated financial statements include other areas of judgment and accounting estimates. Whist these areas do not meet
the IAS 1 definition of critical accounting judgments or significant accounting estimates, the recognition and measurement of certain
material assets and liabilities are based on assumptions and/or uncertainties. The other areas of judgment and accounting estimates
include the estimation of the future cash flows of subsidiary companies and the determination of appropriate discount rates, growth
rates, and probability of default rates necessary for undertaking impairment reviews and assessing the recoverability of assets (refer
to note 8 for further information on the impairment review process), and levels of provisions required in relation to trade and other
receivables (refer to note 14) and inventories (refer to note 13).
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4imprint Group plc Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Other accounting policies
Revenue
The activity from which the Group derives revenue is the sale and delivery of promotional products.
The Group primarily operates a ‘drop-ship’ model in which it acts as principal as it has control over the goods and services before
transfer to the customer. The Group also acts as principal for apparel goods that are decorated within the Group’s facilities and
shipped directly to the customer. The Group recognises the gross amount of consideration as revenue in both instances.
It is common for a customer order to include several different product lines. Individual order lines are separately priced, have
separately agreed delivery dates, and are capable of being used or enjoyed by the customer on their own, separately from any
other order lines included in the overall customer order. The Group therefore considers each order line to constitute a separate
performance obligation. Revenue is recognised at a point in time upon delivery and acceptance by the customer as this is when
control of the goods has transferred.
The price for each order line is fixed at the time of order, inclusive of any discounts given for that order line. Revenue is shown net of
discounts, credits, refunds, VAT and sales tax. The value of provisions for credits and refunds is determined using the expected value
methodology based upon historical experience of credits/refunds issued and levels of revenue.
Payment terms vary by customer but are generally either payment with order or within 30 days of delivery.
Supplier rebates
Amounts due under rebate agreements are recognised based on volumes of products purchased during the period to which
the rebates relate at the relevant rebate rates, per supplier agreements. Amounts are credited to the cost of purchase of goods
for resale and any accrued income is included in other receivables. Provision is made against such receivables to the extent it is
considered that the amounts are not recoverable.
Segmental reporting
The reporting requirements of IFRS 8 require operating segments to be identified based on internal reports about components of
the Group that are regularly reviewed by the chief operating decision maker to allocate resources to the segments and to assess
their performance. The chief operating decision maker has been identified by the Directors as the Board. The Group has two
operating segments, North America and UK & Ireland. The costs of the Head Office are reported separately to the Board, but this is
not an operating segment.
Leases
A lease is defined as a contract that conveys the right to control the use of an identified asset for a period of time in exchange
for consideration. At the commencement date of a lease a right-of-use asset and a lease liability are recognised in the
financial statements.
The lease liability is initially measured at the present value of expected future lease payments discounted at the interest rate implicit
in the lease or, if that rate cannot be determined, the lessee’s incremental borrowing rate. Subsequently the lease liability decreases
by the lease payments made, offset by interest on the liability, and may be re-measured to reflect any reassessment of expected
payments or to reflect any lease modifications.
The right-of-use asset is initially measured at cost. This comprises the amount of the initial lease liability plus: any lease payments
made on or before the commencement date less incentives received; any incremental costs of obtaining the lease; and, if any, the
costs of decommissioning the asset and any restoration work to return the asset to the condition required under the terms of the
lease. Subsequently the right-of-use asset is measured using the cost model. The asset is amortised on a straight-line basis over the
expected term of the lease, adjusted for any re-measurement of the lease liability, and is shown net of the accumulated depreciation
and any impairment provisions.
The Group has elected to use the recognition exemptions for low value assets and short-term leases (leases with a duration of 12
months or less) which are expensed to operating profit on a straight-line basis over the term of the lease.
Share-based payments
Share options, which are all equity-settled, are measured at fair value at the date of grant allowing for any market conditions, if
applicable. The fair value is charged to the income statement over the vesting period of the share option schemes on a straight-line
basis. The value of the charge is adjusted each year to reflect any non-market or service conditions that impact the expected number
of options that will become exercisable. All options cancelled are fully expensed to the income statement upon cancellation.
Exceptional items
Income or costs which are both material and non-recurring, whose significance is sufficient to warrant separate disclosure in the
financial statements, are referred to as exceptional items. The Directors consider that the separate disclosure of these items assists
in understanding the Group’s financial performance.
108
4imprint Group plc Annual Report and Accounts 2022
Taxation
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent
that it relates to items recognised in other comprehensive income, or directly in equity in which case the tax is recognised in other
comprehensive income or directly in equity, respectively. Tax attributable to the defined benefit pension scheme is recognised in the
income statement except to the extent it relates to actuarial movements recognised in other comprehensive income.
Current income tax is calculated based on the tax laws enacted or substantively enacted at the balance sheet date in the countries
where the Group’s subsidiaries operate and generate taxable income.
Transactions and calculations for which the ultimate tax determination is uncertain may arise during the ordinary course of business.
Should an uncertain tax position arise, where a risk of an additional tax liability has been identified and it is considered probable that
the Group will be required to settle that tax, a tax provision is recognised. This is assessed on a case-by-case basis.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the Group’s financial statements. However, deferred income tax is not accounted for
if it arises from initial recognition of an asset or liability in a transaction, other than a business combination that at the time of the
transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined on an undiscounted basis using
tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the
related deferred income tax asset is realised, or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profits will be available against which
the temporary differences or losses can be utilised. Deferred tax movements in respect of losses recognised or derecognised in
the period are allocated between the income statement, other comprehensive income and equity in proportion to the origin of
those losses.
Deferred tax assets and liabilities are only offset where there is a legally enforceable right of offset and there is an intention to settle
the balances net.
Dividends
Final equity dividends and where relevant, special equity dividends, are recognised in the Group’s financial statements in the period
in which the dividends are approved by the Shareholders. Interim equity dividends are recognised when paid.
Foreign currency
The functional and presentation currency of the Company is Sterling. However, the Group’s financial statements are presented in US
dollars, reflecting that most of the Group’s revenues and transactions are generated in North America in US dollars.
Transactions in currencies other than the functional currency of the Company or subsidiary concerned are recorded at the exchange
rate prevailing at the date of the transaction. At each balance sheet date, monetary assets and liabilities denominated in foreign
currencies are translated at the exchange rate prevailing at the balance sheet date. Translation differences on monetary items are
taken to the income statement.
On consolidation the balance sheets of Sterling enterprises are translated into US dollars at the exchange rate ruling at the balance
sheet date and income statements are translated at average rates for the period under review. One-off material transactions are
translated at the spot rate on the transaction date. The resulting exchange differences are taken to the cumulative translation
differences reserve and are reported in the statement of comprehensive income.
On disposal of an operation any cumulative exchange differences held in Shareholders’ equity are recycled to the income statement.
Derivative instruments
Derivatives are recognised initially at fair value and are re-measured at fair value at each reporting date.
The Group only uses derivative forward foreign exchange contracts to hedge highly probable cash flows that meet the qualifying
criteria for hedge accounting and never for maturities more than 12 months. The fair value of the hedging derivative is classified as a
current asset or liability.
The Group applies hedge accounting to these transactions designating them as cash flow hedges. The effective portion of changes
in these cash flow hedges are deferred in a hedging reserve, where material, and then charged to the income statement when the
forecast sale or purchase occurs, or if the forecast transaction is no longer expected to occur. Any ineffective portion of the cash flow
hedge is recognised immediately in the income statement.
Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the fair value of the
consideration transferred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair value at the acquisition date. The excess of the cost of acquisition over the Group’s share of identifiable
net assets is recorded as goodwill. Acquisition-related costs are expensed as incurred.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to the
Group’s cash-generating units that are expected to benefit from the combination. Goodwill is not amortised but is reviewed annually
for impairment.
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109
4imprint Group plc Annual Report and Accounts 2022
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses. No depreciation is
provided on freehold land. For all other property, plant and equipment, depreciation is calculated to write off their cost less residual
value by equal annual instalments over the period of their estimated useful lives, which are reviewed on a regular basis. Leasehold
assets are depreciated over the shorter of the term of the lease or their estimated useful lives.
Cost comprises the purchase price plus costs directly incurred in bringing the asset into use.
The principal useful lives currently fall within the following ranges:
Freehold and long leasehold buildings
Short leasehold buildings
Plant, machinery, fixtures and fittings
Computer hardware
50 years
Life of lease
3–15 years
3 years
Profits and losses on disposal, which have arisen from over or under depreciation, are accounted for in arriving at operating profit
and are separately disclosed when material.
Intangible assets
Acquired software licences and expenditure on developing websites and other computer systems, providing they meet the criteria
for recognition under IAS 38, are capitalised, held at historic cost and amortised from the date of commissioning on a straight-line
basis over their useful economic lives (currently three to five years). Amortisation is charged to operating expenses. Internal non-
development costs are expensed to operating expenses as incurred.
An expense is recognised in operating expenses for advertising and promotional activities when, in the case of goods, the business
has a right of access to the goods or, for services, when the business has received the service.
Impairment of assets
All property, plant and equipment and intangible assets are reviewed for impairment in accordance with IAS 36 ‘Impairment
of Assets’ if there is an indication that the carrying value of the asset may have been impaired. Where an impairment review is
required, the carrying value of the assets is measured against their value in use based on future estimated cash flows, discounted
by the appropriate discount rate, resulting from the use of those assets. Assets are grouped at the lowest level for which there is a
separately identifiable cash flow (cash-generating unit). An impairment loss is recognised for the amount at which the asset’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value
in use.
Inventories
Inventories are valued at the lower of cost and net realisable value using the first-in first-out basis. Net realisable value is the
estimated selling price in the ordinary course of business, less applicable variable selling expenses. Items in transit where the Group
has control are included in inventories.
Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method, less provision for impairment. A provision for impairment of trade receivables is established based on the expected credit
loss. The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss
allowance for all trade receivables, which are grouped based on shared credit risk characteristics and the days past due. The amount
of the provision is recognised in the income statement. Trade receivables are discounted when the time value of money is considered
material. Receivables also include credit and debit card sales which have not reached the bank at the reporting date.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held on call with banks and other short-term highly liquid investments
with original maturities of three months or less. Bank overdrafts are shown within borrowings in current liabilities on the balance
sheet. In the cash flow statement, cash and cash equivalents are shown net of bank overdrafts. Cash deposits and other short-term
highly liquid investments with an original maturity in excess of three months are classified as other financial assets.
Trade payables and contract liabilities
Trade payables are recognised initially at fair value and subsequently measured at amortised cost. Trade and other payables are
discounted when the time value of money is considered material.
Contract liabilities reflect the Group’s obligation to transfer goods to a customer and arise where a customer has paid an amount of
consideration in advance of receiving the goods.
110
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 4imprint Group plc Annual Report and Accounts 2022
Pensions
The Group operates defined contribution plans for the majority of its UK and US employees. The regular contributions are charged
to the income statement as they are incurred.
The Group sponsors a defined benefit scheme, which is closed to new members and future accrual. The Group accounts for the
defined benefit scheme under IAS 19 ‘Employee Benefits’. The deficit of the defined benefit pension scheme is recognised in full on
the balance sheet if the present value of the defined benefit obligation exceeds the fair value of plan assets at the balance sheet
date. If the assets exceed the obligations then a judgment is made to determine the level of refund available from the scheme
in recognising the amount of the surplus to be recognised. A full actuarial valuation is carried out at least every three years and
the defined benefit obligation is updated on an annual basis, by independent actuaries, using the projected unit credit method.
Lump sum contributions to the defined benefit scheme to reduce the deficit are included within ‘cash generated from operations’,
alongside the regular contributions.
Pension charges recognised in the income statement consist of administration costs of the scheme, past service costs, and a finance
charge/credit based on the net pension scheme position calculated in accordance with IAS 19.
Differences between the actual and expected return on assets, experience gains and losses and changes in actuarial assumptions
are included directly in the statement of comprehensive income.
Borrowings
Borrowings are measured initially at fair value net of transaction costs incurred and subsequently carried at amortised cost using
the effective interest rate method. Arrangement fees are amortised over the life of the borrowing.
Own shares held by employee share trusts
The Company is the sponsoring entity of an employee benefit trust (EBT) and, notwithstanding the legal duties of the Trustees,
the Group considers that it has ‘de facto’ control of the EBT. The trust is accounted for as assets and liabilities of the Company
and included in the consolidated financial statements. The Company’s equity instruments held by the EBT are accounted for as
if they were the Company’s own equity and are treated as treasury shares. No gain or loss is recognised in profit or loss or other
comprehensive income on the purchase, sale or cancellation of the Company’s own equity held by the EBT.
Government grants
Government grants are recognised at fair value when there is reasonable assurance that the conditions associated with the grants
have been complied with and the grants will be received. Grants compensating for expenses incurred are recognised as a deduction
of the related expenses in the consolidated income statement on a systematic basis in the same periods in which the expenses are
incurred. Grants deducted from expenses are included in ‘cash generated from operations’ in the consolidated cash flow statement
on a consistent basis with the related expenses.
IFRS standards effective in future financial statements
The IASB and IFRS IC have issued new or amended standards and interpretations which are effective for accounting periods as noted
below. Standards and interpretations which have been issued but are not yet effective will be applied by the Group in the accounting
period that they become effective. Management does not believe the impact of adopting the new or amended standards and
interpretations listed below will have a material impact on the results or net assets of the Group.
Annual Improvements to IFRS Standards 2018-2020 Cycle (effective 1 January 2022)
Amendments to IFRS 3 – Reference to the Conceptual Framework (effective 1 January 2022)
Amendments to IAS 16 – Property, Plant and Equipment: Proceeds before Intended Use (1 January 2022)
Amendments to IAS 37 – Onerous Contracts: Cost of Fulfilling a Contract (1 January 2022)
IFRS 17 Insurance Contracts (effective 1 January 2023)
Amendments to IFRS 17 – Initial Application of IFRS 17 & IFRS 9 – Comparative Information (effective 1 January 2023)
Amendments to IAS 1 – Classification of Liabilities as Current or Non-current (effective 1 January 2023)*
Amendments to IAS 1 and IFRS Practice Statement 2 – Disclosure of Accounting Policies (effective 1 January 2023)
Amendments to IAS 8 – Definition of Accounting Estimates (1 January 2023)
Amendments to IAS 12 – Deferred Tax relating to Assets and Liabilities arising from a Single Transaction (1 January 2023)*
* Not yet endorsed by the UK.
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111
4imprint Group plc Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
1 Segmental reporting
The chief operating decision maker has been identified as the Board of Directors and the segmental analysis is presented based on
the Group’s internal reporting to the Board.
At 31 December 2022, the Group has two operating segments, North America and UK & Ireland. The costs of the Head Office are
reported separately to the Board, but this is not an operating segment.
Revenue
North America
UK & Ireland
Total Group revenue
Profit
North America
UK & Ireland
Operating profit from Direct Marketing operations
Head Office costs
Operating profit
Net finance income/(cost) (note 4)
Profit before tax
Other segmental information
2022
$’000
2021
$’000
1,120,517
19,769
773,710
13,612
1,140,286
787,322
2022
$’000
107,965
(54)
107,911
(5,009)
102,902
804
2021
$’000
36,006
(1,464)
34,542
(3,896)
30,646
(417)
103,706
30,229
Assets
Liabilities
Capital expenditure
Depreciation
Amortisation
North America
UK & Ireland
Head Office
2022
$’000
2021
$’000
2022
$’000
2021
$’000
146,401 120,284 (95,817)
(3,345)
(911)
3,017
44,481
3,175
90,717
(81,674)
(2,618)
(524)
2022
$’000
7,998
36
26
2021
$’000
3,415
50
–
2022
$’000
(3,537)
(52)
(5)
2021
$’000
(3,135)
(99)
(3)
2022
$’000
(1,915)
(17)
–
2021
$’000
(1,756)
(21)
–
240,293
167,782 (100,073)
(84,816)
8,060
3,465
(3,594)
(3,237)
(1,932)
(1,777)
Head Office assets include other financial assets – bank deposits, cash and cash equivalents, deferred tax assets and the retirement
benefit asset. Head Office liabilities include other payables and accruals.
Geographical analysis of revenue and non-current assets
North
America
$’000
1,120,723
28,506
913
1,010
13,103
North
America
$’000
773,755
23,812
996
11,725
UK
$’000
18,835
749
44
–
–
UK
$’000
13,084
855
49
–
All other
countries
$’000
Total
$’000
728
–
–
–
–
1,140,286
29,255
957
1,010
13,103
All other
countries
$’000
483
–
–
–
Total
$’000
787,322
24,667
1,045
11,725
2022
Total revenue by destination
Property, plant and equipment
Intangible assets
Goodwill
Right-of-use assets
2021
Total revenue by destination
Property, plant and equipment
Intangible assets
Right-of-use assets
112
4imprint Group plc Annual Report and Accounts 2022
2 Operating expenses
The following items have been charged/(credited) in arriving at operating profit:
Purchase of goods for resale and consumables
Changes in inventories
Impairment loss on trade receivables
Staff costs
Marketing expenditure (excluding staff costs)
Depreciation of property, plant and equipment
Amortisation of intangible assets
Amortisation of right-of-use assets
Short-term and low value operating lease payments
Defined benefit pension scheme administration costs
Net exchange losses
Other operating expenses*
Note
2022
$’000
2021
$’000
14
3
8
9
11
16
18
744,906
2,469
4,773
86,819
121,216
3,594
424
1,508
213
521
237
70,704
518,944
(9,288)
1,669
66,918
120,317
3,237
437
1,340
168
340
67
52,527
1,037,384
756,676
* Other operating expenses comprise various other operating expenses, the largest items of which relate to credit card charges, medical insurance and facility costs.
During the period the Group obtained the following services from its auditor at costs as detailed below:
Fees payable to the Company’s auditor for the audit of the Parent Company and audit of consolidated
financial statements
Fees payable to the Company’s auditor and its associates for other services:
– the audit of Company’s subsidiaries pursuant to legislation
Note
18
23
23
3 Employees
Staff costs
Wages and salaries
Social security costs
Pension costs – defined contribution plans
Share option charges
Social security costs in respect of share options
Average monthly number of people (including Executive Directors) employed
Distribution and production
Sales and marketing
Administration
Key management compensation
Salaries, fees and short-term employee benefits
Social security costs
Pension costs – defined contribution plans
Share option charges
Social security costs in respect of share options
2022
$’000
596
28
624
2022
$’000
77,750
5,701
2,533
815
20
86,819
2022
Number
545
538
227
1,310
2022
$’000
2,192
91
24
134
2
2,443
2021
$’000
457
28
485
2021
$’000
59,616
4,578
2,117
602
5
66,918
2021
Number
446
494
209
1,149
2021
$’000
1,332
87
22
79
1
1,521
113
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4imprint Group plc Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
3 Employees continued
Key management compensation in the period comprised the emoluments of all Directors (which are disclosed separately in the
Remuneration Report).
Directors’ remuneration
Aggregate emoluments
Pension costs – defined contribution plans
4 Net finance income/(cost)
Finance income/(cost)
Bank and other interest receivable
Bank interest payable
Lease interest charge (note 16)
Pension finance income/(charge) (note 18)
Net finance income/(cost)
5 Taxation
Current tax
UK tax – current
Overseas tax – current
Overseas tax – prior periods
Total current tax
Deferred tax
Origination and reversal of temporary differences
Adjustment in respect of prior periods
Total deferred tax (notes 12 and 19)
Taxation
2022
$’000
2,192
24
2022
$’000
1,162
(27)
(398)
67
804
2022
$’000
1,191
23,970
24
25,185
(1,537)
(85)
(1,622)
23,563
2021
$’000
1,332
22
2021
$’000
33
(58)
(377)
(15)
(417)
2021
$’000
–
5,910
15
5,925
1,718
–
1,718
7,643
The tax for the period is different to the standard rate of corporation tax in the respective countries of operation. The differences are
explained below:
Profit before tax
Profit before tax for each country of operation multiplied by rate of corporation tax applicable in the
respective countries
Effects of:
Adjustments in respect of prior periods
Expenses not deductible for tax purposes and non-taxable income
Other differences
UK tax losses utilised in the period
UK losses (recognised)/de-recognised for deferred tax
Taxation
2022
$’000
2021
$’000
103,706
30,229
25,440
7,087
(61)
(16)
(417)
(196)
(1,187)
15
4
62
(274)
749
23,563
7,643
‘Other differences’ includes adjustments in respect of share options, US leases and a US Federal tax credit of $472k for the
investment in a solar array at the Oshkosh distribution centre.
‘UK losses (recognised)/de-recognised for deferred tax’ relates to changes to the deferred tax asset in respect of brought forward UK
tax losses which are forecast to be utilised against UK taxable profits over the next three years.
Management does not consider that there are any material uncertain tax positions.
114
4imprint Group plc Annual Report and Accounts 2022
Income tax credited/(debited) to other comprehensive income is as follows:
Current tax relating to post-employment obligations
Deferred tax relating to post-employment obligations (note 12)
Deferred tax relating to UK tax losses (note 12)
Effect of change in UK tax rate (note 12)
Income tax credited/(debited) to equity is as follows:
Deferred tax relating to UK tax losses (note 12)
Deferred tax relating to share options (note 19)
6 Earnings per share
Basic and diluted
The basic and diluted earnings per share are calculated based on the following data:
Profit after tax
Basic weighted average number of shares
Adjustment for employee share options
Diluted weighted average number of shares
Basic earnings per share
Diluted earnings per share
2022
$’000
1,191
(344)
876
33
1,756
2022
$’000
148
52
200
2021
$’000
–
(213)
(1,198)
–
(1,411)
2021
$’000
(228)
5
(223)
2022
$’000
2021
$’000
80,143
22,586
2022
Number
‘000
28,064
61
28,125
2022
Cents
285.57
284.95
2021
Number
‘000
28,072
68
28,140
2021
Cents
80.46
80.26
The basic weighted average number of shares excludes shares held in the 4imprint Group plc employee benefit trust. The effect of
this is to reduce the average number by 21,632 (2021: 13,888).
The basic earnings per share is calculated based on the profit for the financial period divided by the basic weighted average number
of shares.
For diluted earnings per share, the basic weighted average number of ordinary shares in issue is adjusted to assume conversion of
all potential dilutive ordinary shares. The potential dilutive ordinary shares relate to those share options granted to employees where
the exercise price is less than the average market price of the Company’s ordinary shares and which are likely to vest at the balance
sheet date.
7 Dividends
Equity dividends – ordinary shares
Interim paid:
Final paid:
40.00c (2021: 15.00c)
30.00c (2021: 00.00c)
2022
$’000
10,587
8,135
18,722
2021
$’000
4,134
–
4,134
The Directors are proposing a final regular dividend in respect of the period ended 31 December 2022 of 120.00c per share, as well
as a special dividend of 200.00c per share. Subject to Shareholder approval at the AGM, these dividends are payable on 1 June 2023
to Shareholders registered on 5 May 2023. These financial statements do not reflect these proposed dividends.
115
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4imprint Group plc Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
8 Property, plant and equipment
Cost:
At 2 January 2022
Additions
Acquisition of a business (note 10)
Disposals
Exchange difference
At 31 December 2022
Depreciation:
At 2 January 2022
Charge for the period
Disposals
Exchange difference
At 31 December 2022
Net book value at 31 December 2022
Plant,
machinery,
fixtures &
fittings
$’000
21,177
4,458
686
(207)
(52)
Land and
buildings
$’000
18,970
2,694
–
–
(91)
Computer
hardware
$’000
2,880
567
4
(397)
(6)
Total
$’000
43,027
7,719
690
(604)
(149)
21,573
26,062
3,048
50,683
3,711
601
–
(13)
13,187
2,262
(74)
(38)
4,299
15,337
17,274
10,725
1,462
731
(397)
(4)
1,792
1,256
18,360
3,594
(471)
(55)
21,428
29,255
Freehold land with a value of $1,006,000 (2021: $1,034,000) has not been depreciated.
Cost:
At 3 January 2021
Additions
Transfers
Disposals
Exchange difference
At 1 January 2022
Depreciation:
At 3 January 2021
Charge for the period
Transfers
Disposals
Exchange difference
At 1 January 2022
Net book value at 1 January 2022
Plant,
machinery,
fixtures &
fittings
$’000
19,775
1,445
(13)
(24)
(6)
Land and
buildings
$’000
18,584
383
13
–
(10)
Computer
hardware
$’000
2,079
1,255
–
(453)
(1)
Total
$’000
40,438
3,083
–
(477)
(17)
18,970
21,177
2,880
43,027
3,126
586
1
–
(2)
3,711
15,259
11,125
2,091
(1)
(24)
(4)
13,187
7,990
1,355
560
–
(453)
–
1,462
1,418
15,606
3,237
–
(477)
(6)
18,360
24,667
Impairment review
IAS 36 ‘Impairment of Assets’ requires an assessment at each reporting date of whether there is any indication that an asset may
be impaired (see note 10 for details on the impairment testing of goodwill). For the purposes of impairment testing, the Group is
considered to have two cash-generating units (CGUs), being the US and UK businesses.
An assessment of both the US and UK CGUs did not identify any indications of impairment and accordingly, no indicator-based
impairment testing has been undertaken. The US CGU has reported strong demand levels and financial results in 2022. Following
the lifting of the COVID-19 Plan B measures in the UK on 27 January 2022 which impacted results in the first two months of 2022,
the UK CGU has made a good recovery from the lingering effects of the pandemic. This improvement has been reflected in improved
demand and a return to profitability for the CGU for the ten months from March to December 2022.
The external environment continues to remain uncertain, manifesting in rising interest rates, high inflation, and low economic
growth. Despite these factors being present, both the US and UK businesses have shown the resilient nature of their operations
and managed to grow significantly against 2021. These external factors are therefore not considered to represent impairment
indicators themselves.
116
4imprint Group plc Annual Report and Accounts 2022
9 Intangible assets
Computer software
Cost:
At start of period
Additions
Disposals
Exchange difference
At end of period
Amortisation:
At start of period
Charge for the period
Disposals
Exchange difference
At end of period
Net book value at end of period
The average remaining life of intangible assets is 2.3 years (2021: 2.4 years).
2022
$’000
2021
$’000
2,509
341
(368)
(16)
2,466
1,464
424
(368)
(11)
1,509
957
2,546
382
(417)
(2)
2,509
1,446
437
(417)
(2)
1,464
1,045
Impairment review
See notes 8 and 10 (goodwill) for details of the impairment review undertaken for the Group’s non-current assets.
10 Business combinations
Acquisition of screen-printing business
On 25 April 2022, the Group acquired the trade and assets of Fox Graphics Ltd, a private company based in Oshkosh, Wisconsin, that
specialises in screen-printing services. The acquired screen-printing operations will enable the Group to bring this capability in-house.
With future investment the objective is to secure the capacity to meet the anticipated growth in demand for the apparel category.
The acquisition constitutes a business combination as defined in IFRS 3, as the three elements of a business (input, process, output)
have been identified as having been acquired. Accordingly, the acquisition has been accounted for using the acquisition method.
The fair values of the identifiable assets acquired and liabilities assumed as at the date of acquisition were:
Assets
Property, plant and equipment
Computer hardware
Right-of-use assets
Liabilities
Lease liabilities
Total identifiable net assets at fair value
Goodwill arising on acquisition
Purchase consideration transferred
Analysis of cash flows on acquisition:
Cash paid
Net cash flow on acquisition
Fair value
recognised on
acquisition
$’000
686
4
111
801
(111)
(111)
690
1,010
1,700
1,700
1,700
117
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O
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T
C
O
R
P
O
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A
T
E
G
O
V
E
R
N
A
N
C
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F
I
N
A
N
C
I
A
L
S
T
A
T
E
M
E
N
T
S
A
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D
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N
A
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4imprint Group plc Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
10 Business combinations continued
In addition to the purchase consideration transferred, a potential further $560,000 is payable in annual instalments over the five-year
period following closing, subject to certain conditions being satisfied, including the continued employment of the selling shareholder
with the Group. These contingent payments constitute remuneration for future services and will be expensed to profit and loss as
services are rendered; $67,000 has been recognised in operating expenses in the income statement and in trade and other payables
in the balance sheet.
Reconciliation of the carrying amount of goodwill at the beginning and end of the reporting period is presented below:
Cost
At 2 January 2022
Acquisition of screen-printing trade and assets
At 31 December 2022
Goodwill
$’000
–
1,010
1,010
The Group did not acquire any receivables as part of the business combination.
The acquired business generated revenues and net income of approximately $2.0m and $0.4m respectively for the twelve months
ended 31 December 2021. The Group was the principal customer of the acquired business, contributing approximately $1.7m of the
total $2.0m of revenue and approximately $0.3m of the total $0.4m net income.
The impact on the Group’s financial statements, both from the date of acquisition and as if the acquisition had taken place at the
beginning of the period, are not material as demonstrated by the full year results of Fox Graphics Ltd noted above. As most of the
revenue of the acquired business was contributed by the Group, these transactions will be eliminated upon consolidation from
the date of acquisition as intra-group trading and thus only external sales will impact Group revenue (based on 2021 results, this
would be expected to add circa $0.3m to revenue for a full year). The Group will benefit from lower product costs associated with
integrating the production operations of Fox Graphics Ltd; based on 2021 results and without any new investment by the Group, the
acquisition would be expected to add circa $0.4m to the Group’s profit before tax for a full year.
The goodwill recognised is primarily attributable to the specialised operational knowledge acquired and benefits of bringing the
activities of the screen-printing business in-house to secure capacity and support the growing demand for decorated garments from
our customers. The total amount of goodwill that is expected to be deductible for tax purposes is $1,010,000.
As required by IAS 36 ‘Impairment of Assets’, goodwill is required to be tested for impairment annually. The screen-printing
operations contribute to the cash flows of the US CGU and therefore the goodwill arising on acquisition has been tested in
conjunction with the other assets of that CGU. The recoverable amount of the US CGU exceeds the carrying amount of the assets
and thus no impairment of the goodwill balance is required.
Total acquisition-related transaction costs of $17,000 have been included in operating expenses in the income statement and are
part of operating cash flows in the cash flow statement.
11 Right-of-use assets
Cost:
At 2 January 2022
Additions*
At 31 December 2022
Depreciation:
At 2 January 2022
Charge for the period
At 31 December 2022
Net book value at 31 December 2022
* New leases were entered for premises relating to the acquisition of a screen-printing business during the year (see notes 10 and 16).
118
Leasehold land
and buildings
$’000
15,784
2,886
18,670
4,059
1,508
5,567
13,103
4imprint Group plc Annual Report and Accounts 2022
Cost:
At 3 January 2021
Additions
At 1 January 2022
Depreciation:
At 3 January 2021
Charge for the period
At 1 January 2022
Net book value at 1 January 2022
Impairment review
See notes 8 and 10 (goodwill) for details of the impairment review undertaken for the Group’s non-current assets.
12 Deferred tax assets
At start of period
Deferred tax credited/(charged) to income statement
Deferred tax credited/(charged) to other comprehensive income
Deferred tax credited/(charged) to equity
Effect of change in UK tax rate in other comprehensive income
Exchange difference
At end of period
2022
$’000
600
1,182
532
148
33
(114)
2,381
Leasehold land
and buildings
$’000
15,784
–
15,784
2,719
1,340
4,059
11,725
2021
$’000
4,272
(2,055)
(1,411)
(228)
–
22
600
The deferred tax asset at 31 December 2022 has been calculated at a tax rate of 19% in respect of deferred tax items that are
expected to reverse before 1 April 2023 (2021: 19%) and 25% in respect of deferred tax items expected to reverse after 1 April 2023
(2021: 19%); and 25% (2021: 25%) in respect of US deferred tax items.
Trading forecasts approved by the Board and covering a three-year period support the recoverability of the recognised deferred
tax assets. The forecasts used for this review were the forecasts used for impairment testing and the going concern and viability
assessment and covered the three-year period from 2023 to 2025.
No deferred tax is recognised on the unremitted earnings of overseas subsidiaries. No tax is expected to be payable on them in the
foreseeable future.
$0.2m of the deferred tax asset is expected to reverse within the next twelve months (2021: $0.6m).
The movement in the deferred tax asset during the period is shown in the following table. Deferred tax assets and liabilities are only
offset where there is a legally enforceable right of offset and there is an intention to settle the balances net.
Deferred tax analysis
At 2 January 2022
Deferred tax credited/(charged) to income statement
Deferred tax credited/(charged) to other comprehensive income
Deferred tax credited to equity
Effect of change in UK tax rate in other comprehensive income
Exchange difference
At 31 December 2022
Depreciation/
capital
allowances
$’000
3
(5)
–
–
–
(1)
(3)
Pension
$’000
597
–
(344)
–
33
(54)
232
UK tax
losses
$’000
–
1,187
876
148
–
(59)
Total
$’000
600
1,182
532
148
33
(114)
2,152
2,381
119
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4imprint Group plc Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
12 Deferred tax assets continued
At 3 January 2021
Deferred tax charged to income statement
Deferred tax charged to other comprehensive income
Deferred tax charged to equity
Exchange difference
At 1 January 2022
Depreciation/
capital
allowances
$’000
3
–
–
–
–
3
Pension
$’000
UK tax losses
$’000
2,111
(1,306)
(213)
–
5
597
2,158
(749)
(1,198)
(228)
17
–
Total
$’000
4,272
(2,055)
(1,411)
(228)
22
600
Deferred tax assets have been recognised where it is considered that there will be sufficient taxable profit available in future against
which the deductible temporary timing differences can be utilised. Following a review of forecast UK taxable profits and the use of
brought forward losses over the next three years, a deferred tax asset for UK tax losses has been recognised in the period.
Deferred tax is recognised in the income statement, other comprehensive income or in equity when the items it relates to are
recognised, in the same or a different period, in those categories. Deferred tax recognised or de-recognised on losses is allocated
between the income statement, other comprehensive income and equity in proportion to how the losses arose.
No deferred tax asset has been recognised for UK losses carried forward of $20.8m (2021: $34.0m) which are not forecast to be
utilised in the next three years. These losses have no expiry date and may be available for offset against future profits.
13 Inventories
Finished goods and goods for resale
2022
$’000
2021
$’000
18,090
20,559
During both the current and previous period, inventory was carried at cost less appropriate provisions. The carrying values did not
exceed their net realisable value. $13,032,000 (2021: $16,753,000) of the inventories balance relates to goods in transit to customers
at the balance sheet date. Provisions held against inventory total $60,000 (2021: $70,000).
During the period there was a credit to the income statement of $10,000 in respect of provisions for slow-moving and obsolete stock
(2021: $111,000). The nominal provisions held against inventories reflect the minimal levels of inventory held under the ‘drop-ship’
business model, the generic nature of items held and consistently high levels of inventory turnover.
The amount of inventory charged to the income statement is shown in note 2.
14 Trade and other receivables
Trade receivables – gross
Provision for credits
Provision for impairment of trade receivables
Trade receivables – net
Other receivables
Prepayments
2022
$’000
66,163
(2,342)
(4,793)
59,028
21,264
7,219
87,511
2021
$’000
48,700
(1,808)
(1,669)
45,223
14,104
4,262
63,589
The provision for credits, which covers promises made in our proposition to customers (page 15), has increased in line with
trading activity.
Trade terms are a maximum of 30 days credit.
Due to their short-term nature the fair value of trade and other receivables does not differ from the book value.
Trade and other receivables are only written off when the Group has exhausted all options to recover the amounts due and provided
for in full when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include,
amongst others, the failure of the debtor to engage in a repayment plan with the Group or a subsequent failure to make agreed
payments. An expected credit loss provision is then calculated on the remaining trade and other receivables.
120
4imprint Group plc Annual Report and Accounts 2022
Management has assessed the expected credit losses for trade receivables, which includes invoiced receivables and unbilled accrued
revenue, taking into account the uncertainty arising from the current challenging macroeconomic and geopolitical environment
and the related risks to general economic conditions and growth. In addition, certain individual customers (where there is objective
evidence of credit impairment) have been provided for on a specific basis. This has resulted in an impairment charge to the income
statement of $4,773,000 (2021: $1,669,000). The resultant provision for impairment of trade receivables continues to represent a
small percentage of the trade receivables balance, reflecting the high volume and low value nature of customer transactions.
Other receivables include rebates receivable of $18,702,000 (2021: $12,596,000).
Management has reviewed other receivables and concluded that there is no impairment required of any receivables other than trade
receivables. Certain measures undertaken during the pandemic, particularly in relation to rebates receivable where more interim
receipts of rebates were agreed with suppliers, have helped to reduce the Group’s credit exposures.
The ageing of past due trade receivables which are not impaired, based on the customer’s creditworthiness and payment history,
is as follows:
Time past due date
Up to 3 months
3 to 6 months
Over 6 months
The ageing of impaired trade receivables is as follows:
Time past due date
Current
Up to 3 months
3 to 6 months
Over 6 months
2022
$’000
15,741
7,295
1,928
24,964
2022
$’000
493
713
1,529
2,058
4,793
2021
$’000
12,169
2,660
199
15,028
2021
$’000
657
581
344
87
1,669
The trade receivables impairment provision is calculated using the simplified approach to the expected credit loss model. The
provisions made are based on the following percentages:
2022
2021
Age of trade receivable
Current
31 – 60 days
61 – 90 days
91 – 180 days
181 – 365 days
Over 365 days
Amount
$’000
34,557
10,781
5,673
8,824
3,864
122
Provision
%
1.4
2.9
7.0
17.3
50.1
100.0
These percentages are based on a combination of historical experience and current economic conditions.
The carrying amounts of trade and other receivables are denominated in the following currencies:
Sterling
US dollars
Euros
Canadian dollars
Amount
$’000
30,852
8,109
4,641
3,004
270
16
2022
$’000
2,647
80,399
71
4,394
87,511
Provision
%
2.1
2.8
7.6
11.5
27.4
81.3
2021
$’000
2,356
57,357
75
3,801
63,589
121
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P
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A
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4imprint Group plc Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
14 Trade and other receivables continued
Movements in the provision for impairment of trade receivables are as follows:
At start of period
Utilised
Provided
Exchange difference
At end of period
15 Other financial assets and cash and cash equivalents
Other financial assets – bank deposits
2022
$’000
1,669
(1,643)
4,773
(6)
4,793
2022
$’000
34,913
2022
$’000
2021
$’000
866
(866)
1,669
–
1,669
2021
$’000
–
2021
$’000
Cash at bank and in hand
51,839
41,589
Other financial assets comprise bank deposits with an original maturity in excess of three months but not greater than one year.
16 Leases
The Group leases premises in Oshkosh and Appleton, Wisconsin. The lease for office premises in Oshkosh, which was renewed in
2020, has a five-year term with a five-year extension option. New leases entered during the period as part of the strategic decision to
bring screen-printing capability in-house are as follows:
– A seventeen-month sublease on premises in Oshkosh entered as part of the acquisition of the trade and assets of Fox Graphics
Ltd (see note 10) resulted in additions to the lease liability and right-of-use asset of $111k respectively.
– A new ten-year lease on premises in Appleton was subsequently entered into to facilitate the expansion of the screen-printing
operations, adding $2,775k to lease liabilities and right-of-use assets respectively. The interest rate inherent in the lease could
not be ascertained; therefore, estimates have been used based upon incremental costs of borrowing for a similar term and asset,
obtained from the Group’s US bankers. A change of plus or minus 1.0% in the interest rate would result in a decrease/increase in
the lease liability at the year-end of $0.1m respectively.
In addition, there are various items of leasehold land and buildings (office facilities in London) and machinery on short-term leases,
and some office equipment with low value. The Group applies the IFRS 16 exemptions for short-term and low value leases. No leases
contain variable payment terms.
Details on right-of-use assets, including analysis by asset class, are shown in note 11.
Lease liabilities
Due within one year
Due in two to three years
Due in four to five years
Due in over five years
The movement in lease liabilities in the period is shown below:
At start of period
Additions
Interest charge
Lease interest payments – operating cash flow
Lease capital payments – financing cash flow
At end of period
122
2022
$’000
1,435
2,955
3,449
5,911
2022
$’000
12,089
2,886
398
(398)
(1,225)
13,750
2021
$’000
1,150
2,407
2,733
5,799
2021
$’000
13,206
–
377
(377)
(1,117)
12,089
4imprint Group plc Annual Report and Accounts 2022
The amounts recognised in the income statement are as follows:
Depreciation of right-of-use assets (note 11)
Interest expense on lease liabilities
Short-term and low value leases
The cash outflow on leases in the period was $1,836,000 (2021: $1,662,000).
17 Trade and other payables – current
Trade payables
Other tax and social security payable
Other payables
Contract liabilities
Accruals
2022
$’000
1,508
398
213
2,119
2022
$’000
59,672
5,572
278
8,647
10,592
84,761
2021
$’000
1,340
377
168
1,885
2021
$’000
51,065
3,708
186
10,434
6,484
71,877
All trade payables have a maturity of 30 days or less from the balance sheet date. Due to their short-term nature, the fair value of
trade and other payables does not differ from the book value.
Contract liabilities represents the Group’s obligation to transfer goods to customers for which payment has been received in
advance. The closing balance has reduced to $8.65m from $10.43m in 2021 reflecting the improvement in supply chain conditions
through the period. The opening contract liabilities balance of $10.43m has been recognised as revenue in 2022 (opening contract
liabilities balance recognised as revenue in 2021 was $5.90m).
The Group expects to complete its remaining performance obligations in respect of the closing contract liabilities balance of $8.65m
and recognise the full amount as revenue in 2023.
18 Employee pension schemes
The Group operates defined contribution plans for its UK and US employees. The regular contributions are charged to the income
statement as they are incurred. The charges recognised in the income statement are:
Defined contribution plans – employers’ contributions (note 3)
2022
$’000
2,533
2021
$’000
2,117
The Group also sponsors a UK defined benefit pension scheme which is closed to new members and future accrual.
The amounts recognised in the income statement are as follows:
Administration costs paid by the scheme
Pension finance (income)/charge (note 4)
Total defined benefit pension charge
The amounts recognised in the balance sheet comprise:
Present value of funded obligations
Fair value of scheme assets
Net asset recognised on the balance sheet
2022
$’000
521
(67)
454
2022
$’000
2021
$’000
340
15
355
2021
$’000
(20,290)
21,524
(37,826)
39,800
1,234
1,974
The funds of the scheme are held in trust and administered by a corporate Trustee, to meet pension liabilities for 328 former
employees of the Group. The level of retirement benefit is principally based on salary earned in the best three consecutive tax years
in the ten years prior to leaving active service and is linked to changes in inflation both pre- and post-retirement.
123
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4imprint Group plc Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
18 Employee pension schemes continued
The scheme is subject to the funding legislation outlined in the Pensions Act 2004 which came into force on 30 December 2005. This,
together with documents issued by the Pensions Regulator, and Guidance Notes adopted by the Financial Reporting Council, set out
the framework for funding defined benefit occupational pension plans in the UK.
The Trustee of the scheme is required to act in the best interest of the scheme’s beneficiaries. The appointment of trustees is
determined by the scheme’s trust documentation.
The scheme typically exposes the Company to actuarial risks such as investment risk, interest rate risk, mortality risk and longevity
risk. A decrease in corporate bond yields, a rise in inflation or an increase in life expectancy would result in an increase to scheme
liabilities. This would detrimentally impact the balance sheet position, potentially require an increase in future cash contributions
from the Company and may give rise to increased charges in future income statements. Caps on inflationary increases are in place
to protect the scheme against extreme inflation. Assets are held in a Sterling liquidity fund and in gilt funds, with the overall objective
of providing a hedge against movement in the liabilities due to interest rate fluctuation and inflation. The leveraged gilt funds use the
repurchase of bonds to assist in the hedging of risks.
An actuarial valuation was undertaken as at 30 September 2019 in accordance with the scheme funding requirements of the
Pensions Act 2004. The actuarial valuation showed a deficit of £19.4m. A recovery plan has been agreed with the Trustee under which
the Company commits to a revised schedule of contributions. The recovery plan period is five years and under the plan a lump sum
of £7.5m was paid in May 2020 and ongoing contributions of £2.53m per annum are payable by the Company. These contributions
commenced on 1 July 2020 and increase by 3% annually. In addition, an annual allowance of £0.31m, rising by 3% annually, is payable
towards costs of administration of the scheme.
For the purposes of IAS 19, numbers from the actuarial valuation as at 30 September 2019, which was carried out by a qualified
independent actuary, have been updated on an approximate basis to 31 December 2022. There have been no changes in the
valuation methodology adopted for this period’s disclosures compared to the previous period’s disclosures.
Changes in the present value of the net defined benefit obligation are as follows:
Balance at 3 January 2021
Administration costs paid by the scheme
Interest (expense)/income
Return on scheme assets (excluding interest income)
Re-measurement gains due to changes in scheme experience
Re-measurement gains due to changes in demographic assumptions
Re-measurement gains due to changes in financial assumptions
Contributions by employer
Benefits paid
Exchange gain/(loss)
Balance at 1 January 2022
Administration costs paid by the scheme
Interest (expense)/income
Return on scheme assets (excluding interest income)
Re-measurement losses due to changes in scheme experience
Re-measurement gains due to changes in demographic assumptions
Re-measurement gains due to changes in financial assumptions
Contributions by employer
Benefits paid
Exchange gain/(loss)
Present value
of obligations
$’000
Fair value of
scheme assets
$’000
Net asset/
(obligation)
$’000
(42,627)
(340)
(523)
–
33
106
2,367
–
2,708
450
(37,826)
(521)
(602)
–
(1,270)
38
13,148
–
3,071
3,672
39,317
–
508
(1,391)
–
–
–
4,589
(2,708)
(515)
39,800
–
669
(16,374)
–
–
–
4,367
(3,071)
(3,867)
(3,310)
(340)
(15)
(1,391)
33
106
2,367
4,589
–
(65)
1,974
(521)
67
(16,374)
(1,270)
38
13,148
4,367
–
(195)
Balance at 31 December 2022
(20,290)
21,524
1,234
The major categories of scheme assets as a percentage of total scheme assets are as follows:
Multi-asset credit fund
Sterling liquidity fund
Gilt funds
Index-linked gilt funds
Leveraged gilt funds
Leveraged index-linked gilt funds
Cash
124
2022
2021
$’000
0
9,946
3,879
1,772
4,227
1,370
330
%
0.0
46.2
18.0
8.2
19.7
6.4
1.5
$’000
9,624
7,051
5,980
4,376
7,901
3,737
1,131
%
24.2
17.7
15.0
11.0
19.9
9.4
2.8
4imprint Group plc Annual Report and Accounts 2022
The scheme holds no 4imprint Group plc shares or any property occupied by the Group.
It is the policy of the Trustee and the Company to review the investment strategy from time to time and at the time of each funding
valuation. Following the completion of the 2019 valuation and agreement from the Company to the lump sum contribution, after due
consideration, this resulted in a switch from the previous investment portfolio to a de-risked portfolio containing: a Sterling liquidity
fund; and a revised selection of gilt funds designed to match the interest rate and inflation exposure of the scheme liabilities, with the
aim of being fully funded on a gilts+0% p.a. basis by the end of the current recovery plan in mid-2024.
The Trustee investment objectives and the processes undertaken to measure and manage the risks inherent in the scheme
investment strategy are documented in the scheme’s Statement of Investment Principles, which can be found on the Company’s
website at https://investors.4imprint.com/governance/4imprint-2016-pension-plan.
The assets are held in gilt and index-linked gilt funds, some of which are leveraged to provide a hedge against movements in the
pension liabilities due to interest rate fluctuation and inflation. These funds invest in gilts, index-linked gilts, gilt repos, reverse gilt
repos and a Sterling liquidity fund, with the aim to provide similar interest rate and inflation sensitivities to those of the scheme. The
Sterling liquidity fund invests in certificates of deposit, fixed and floating rate notes, fixed rate commercial paper and bonds listed or
traded on one or more recognised exchanges.
None of the funds are quoted but they invest in quoted investments and, in the case of the leveraged funds, in gilt repos. The
funds are valued at net asset values by the fund managers, with the gilt repo valuations performed by the investment manager’s
valuation specialists.
The principal assumptions applied by the actuaries, as determined by the Directors, at each period-end were:
Rate of increase in pensions in payment
Rate of increase in deferred pensions
Discount rate
Inflation assumption – RPI
– CPI
2022
%
3.08
2.66
4.82
3.16
2.66
2021
%
3.25
2.75
1.80
3.35
2.75
The mortality assumptions adopted at 31 December 2022 reflect the most recent version of the tables used in the September 2019
triennial valuation. The assumptions imply the following life expectancies at age 65:
Male currently aged 45
Female currently aged 45
Male currently aged 65
Female currently aged 65
2022
Years
22.3
24.2
21.3
23.1
2021
Years
22.3
24.2
21.3
23.0
The sensitivities on the key actuarial assumptions at the end of the period were:
Discount rate
Rate of inflation
Rate of mortality
Decrease of 1.0%
Increase of 1.0%
Increase in life expectancy of one year
+16.6%
+4.5%
+3.6%
Change in assumption
Change in defined benefit obligation
The sensitivities shown above are approximate. Each sensitivity considers each change in isolation and is calculated using the same
methodology as used for the calculation of the defined benefit obligation at the end of the period. The inflation sensitivity includes
the impact of changes to the assumptions for revaluation and pension increases. In practice it is unlikely that the changes would
occur in isolation.
The weighted average duration of the defined benefit obligation at 31 December 2022 is 15 years (2021: 19 years).
19 Deferred tax liabilities
At start of period
Adjustment in respect of prior periods credited to income statement
Deferred tax credited to income statement
Deferred tax credited to equity
Exchange difference
At end of period
2022
$’000
850
(85)
(355)
(52)
(1)
357
2021
$’000
1,193
–
(337)
(5)
(1)
850
125
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4imprint Group plc Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
19 Deferred tax liabilities continued
The deferred tax liability at 31 December 2022 has been calculated at a tax rate of 19% in respect of deferred tax items that are
expected to reverse before 1 April 2023 (2021: 19%) and 25% in respect of deferred tax items expected to reverse after 1 April 2023
(2021: 19%); and 25% (2021: 25%) in respect of US deferred tax items.
The movements in the net deferred tax liability (subject to the offsetting of balances within the same jurisdiction as permitted by
IAS 12) during the period, are shown in the following table. Deferred tax assets and liabilities are only offset where there is a legally
enforceable right of offset and there is an intention to settle the balances net.
Deferred tax analysis
At 2 January 2022
Adjustment in respect of prior periods credited to income statement
Deferred tax charged/(credited) to income statement
Deferred tax charged to equity
Exchange difference
Depreciation/
capital
allowances
$’000
2,563
–
370
–
(2)
Other
$’000
(1,713)
(85)
(725)
(52)
1
At 31 December 2022
2,931
(2,574)
Total
$’000
850
(85)
(355)
(52)
(1)
357
‘Other’ includes short-term timing differences and future deductions relating to conditional share awards for US employees of which
$38,000 (2021: $151,000) is expected to reverse within the next twelve months.
At 3 January 2021
Deferred tax charged/(credited) to income statement
Deferred tax charged to equity
Exchange difference
At 1 January 2022
20 Borrowings
The Group had the following committed floating rate borrowing facilities available:
Borrowing facilities
Expiring in more than one year
Depreciation/
capital
allowances
$’000
2,461
103
–
(1)
2,563
Other
$’000
(1,268)
(440)
(5)
–
(1,713)
Total
$’000
1,193
(337)
(5)
(1)
850
2022
$’000
2021
$’000
20,000
20,000
Committed facilities comprise an unsecured US$20.0m line of credit for 4imprint, Inc., which expires on 31 May 2024. The Company
also has an unsecured UK overdraft facility of £1.0m that is repayable on demand, which expires on 31 December 2023.
These facilities were undrawn at the year-end (2021: undrawn).
21 Financial risk management
The Group’s activities expose it to a variety of financial risks including currency risk, credit risk, liquidity risk and capital risk.
Currency risk
The Group operates internationally and is exposed to various currency movements. Risk arises predominantly from the remittance
of overseas earnings in US dollars. In addition, Group subsidiaries may make both sales and purchases in a currency other than their
functional currency and have foreign currency trade receivables and trade payables in relation to these transactions.
The Group uses derivative financial instruments to partly hedge foreign currency cash flows arising from sales and purchases of
goods, as well as remittances from its overseas subsidiaries. The Group does not hedge the currency exposure of profits and assets
of its overseas subsidiaries or other financial transactions.
At 31 December 2022 the Group had no forward currency contracts outstanding (2021: none).
The movement in the exchange rates compared to the prior period increased profit after tax by $0.44m and decreased net assets by
$5.16m. The average rate used to translate profits was US$1.24 (2021: US$1.38) and the closing rate was US$1.20 (2021: US$1.35).
A strengthening in the Sterling exchange rate by 10% (the approximate range of movement of the exchange rate during the year)
would have reduced profit in the period by $0.39m and net assets would have been increased at the period-end by $4.32m.
126
4imprint Group plc Annual Report and Accounts 2022
Credit risk
Credit risk arises from deposits with banks and financial institutions, as well as credit exposures to trade receivable balances due
from customers and other receivable balances due from suppliers.
The risk associated with banks and financial institutions is managed on a Group basis and all banking relationships must be approved
by the Chief Financial Officer or the Board based on the credit rating of the bank.
The Group holds cash balances on deposit with its principal US and UK banks.
Financial instruments
The table below sets out the Group’s financial instruments by category:
Financial assets at amortised cost
Trade and other receivables (excluding prepayments) (note 14)
Other financial assets – bank deposits (note 15)
Cash and cash equivalents (note 15)
Financial liabilities at amortised cost
Trade and other payables (excluding non-financial liabilities) (note 17)
Lease commitments
Due within one year
Due in two to three years
Due in four to five years
Due over five years
2022
$’000
80,292
34,913
51,839
2021
$’000
59,327
–
41,589
(76,114)
(61,443)
2022
$’000
1,870
3,685
3,970
6,268
2021
$’000
1,494
2,987
3,161
6,123
All trade receivables and payables have contracted maturities of 30 days or less from the balance sheet dates. All other receivables
and payables are due/payable within one year.
Trade receivables are amounts due from customers for goods sold in the ordinary course of business. Other receivables are non-
derivative financial assets with fixed or determinable payments that are not quoted in an active market. If collection of the amounts is
expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.
Trade receivables are shown net of credits and expected credit losses. The expected credit losses on other receivables are $nil
(2021: $nil).
Cash and bank deposits were held with the following banks at the period-end:
Lloyds Bank plc
JPMorgan Chase Bank, N.A.
Other
2022
Rating
Aa3
Aa1
2022
Deposit
$’000
40,224
46,511
17
86,752
2021
Rating
Aa3
Aa1
2021
Deposit
$’000
12,712
28,862
15
41,589
There is no concentration of credit risk with respect to trade receivables as the Group has a large number of customers.
Management of credit risk arising from customers is delegated to the senior management of each business to a maximum level
per customer, above which it is referred to the Chief Financial Officer for approval. External credit agency assessment reports are
referred to as part of this process.
Liquidity risk
Group borrowing requirements are managed centrally and the majority of borrowing arrangements are currently with the Group’s
principal US and UK banks. Terms are agreed which are considered appropriate for the funding requirements of the Group at
that time.
Operating working capital is managed to levels agreed with the Group and cash forecasts are reviewed regularly by management.
The Group monitors its levels of cash and indebtedness to ensure adequate liquid funds are available to meet the foreseeable
requirements of the Group. The Group does not actively monitor a gearing ratio but seeks to maintain an appropriate level of
financial flexibility. Details of borrowing facilities are given in note 20 and lease liabilities in note 16.
At 31 December 2022, the total other financial assets – bank deposits and cash and cash equivalents position (note 15) of the
Group was $86.75m (2021: $41.59m).
127
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4imprint Group plc Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
21 Financial risk management continued
Capital risk management
The objective for managing cash, debt and equity capital is to safeguard the Company’s ability to continue as a going concern, in
order to provide returns for Shareholders and benefits for other stakeholders.
The policy for capital allocation is shown on page 38.
In 2022 the Company has provided returns to Shareholders in the form of dividends, details of which are included in note 7. Shares
were purchased by an employee benefit trust to cover options maturing during the period and future maturities of the 2015
Incentive Plan and Deferred Bonus Plan.
22 Share capital
Issued and fully paid
28,085,530 (2021: 28,085,530) ordinary shares of 386/13p each
All shares have the same rights.
2022
$’000
2021
$’000
18,842
18,842
The Company issued no ordinary shares in the period (2021: none). Share option exercises were satisfied by transfer of shares from
an employee benefit trust.
The following options have been granted and were outstanding under the Company’s share option schemes:
Scheme
US ESPP
UK SAYE
2015 Incentive Plan
2015 Incentive Plan
Total
Date of
grant
17/05/21
25/09/19
28/03/19
30/03/20
Number
of ordinary
shares
2022
89,388
2,059
16,993
12,640
121,080
Number
of option
holders
2022
561
6
2
7
Number
of ordinary
shares
2021
97,624
13,880
39,285
12,640
163,429
Date exercisable
Subscription
price
From
To
$27.61
£22.70
Jul 2023
Jul 2023
Nov 2022 Nov 2023
$nil Mar 2022 Mar 2029
$nil Mar 2023 Mar 2030
The weighted average exercise price for options outstanding at 31 December 2022 was £17.31 (2021: £14.16).
Details of share schemes are disclosed in note 23.
Deferred Bonus Plan (formerly the 2015 Incentive Plan/Deferred Annual Bonus Scheme)
Under the Deferred Bonus Plan (DBP) 50% of the annual bonus of the Chief Executive Officer, Chief Financial Officer and certain
senior managers will be deferred into shares as awards of $nil cost options or conditional shares, based on the share price at
31 December of the relevant year. The awards will be made in a 42-day period following the announcement of the Group’s full
year results and the options will normally not be exercisable until at least three years from the date of the award, conditional upon
the person still being in the employment of a Group Company. The awards to Executive Directors, from 4 March 2019, will not be
exercisable until five years from the date of the award. It is expected that 26,366 options or conditional shares, with a total fair value
of $1,357,105 will be awarded in respect of the 2022 bonus (2021: nil).
23 Share-based payments
Share options may be granted to senior management and, in addition, SAYE and ESPP schemes are offered to all UK and US
employees. The exercise price for SAYE and ESPP options is equal to the market rate, less any discount up to the limit imposed by the
local tax authority at the pricing date.
The fair value of the options is determined using the Black-Scholes model for SAYE and ESPP schemes and is spread over the
vesting period of the options. The significant inputs into the model are: an expected life of between 2.2 and 3.0 years for the ESPP
and SAYE options; volatility that is measured at the standard deviation of expected share price returns based on historical statistical
analysis of daily share prices and adjusted for any periods of extraordinary volatility; and a risk-free rate that is based on zero coupon
government bond yields.
Charge resulting from spreading the fair value of options
Social security costs in respect of share options
Total
128
2022
$’000
815
20
835
2021
$’000
602
5
607
4imprint Group plc Annual Report and Accounts 2022
The fair value per option granted and the assumptions used in the calculation are as follows:
Grant date
Share price at grant date
Exercise price
Number of employees
Shares under option
Vesting period (years)
Expected volatility
Option life (years)
Expected life (years)
Risk-free rate
Expected dividends expressed as a dividend yield
Possibility of ceasing employment before vesting
Expectations of meeting performance criteria
Fair value per option
US
ESPP
scheme
UK
SAYE
scheme
17/05/21
£23.00
$27.61
561
89,388
2.2
30%
2.2
2.2
0.09%
2.0%
2%
100%
£5.03
25/09/19
£29.90
£22.70
6
2,059
3.0
30%
3.5
3.0
0.36%
2.0%
5%
100%
£8.09
In respect of the executive awards under the 2015 Incentive Plan, now replaced by the DBP, the fair value of the awards of options or
conditional shares made in 2019 and 2020 are based on the share price at 31 December 2018 and 31 December 2019 respectively.
The option life is between 4.25 to 6.25 years from the start of the financial year to which the awards relate. The fair value of the
expected awards to be made under the DBP of 26,366 options or conditional shares in respect of 2022 is based on the share price
at 31 December 2022.
A reconciliation of option movements over the period is shown below:
Outstanding at start of period
Granted
Forfeited/cancelled
Exercised
Outstanding at end of period
Exercisable at end of period
2022
2021
Weighted
average
exercise price
(£)
14.16
0.00
22.33
8.08
17.31
–
Number
of shares
163,429
0
(7,721)
(34,628)
121,080
–
Weighted
average
exercise price
(£)
4.31
20.07
21.18
0.05
14.16
–
Number
of shares
84,524
100,630
(5,135)
(16,590)
163,429
–
2022
2021
Weighted
average
exercise
price
$0.00
$27.61
£22.70
Number of
shares
29,633
89,388
2,059
Weighted average remaining
life (years)
Expected
Contractual
0.82 0.82 to 0.88
0.56
0.56
0.83
0.33
Weighted
average
exercise
price
$0.00
$27.61
£22.70
Weighted average remaining
life (years)
Expected
Contractual
1.14 1.14 to 1.47
1.56
1.56
1.33
0.83
Number of
shares
51,925
97,624
13,880
Range of exercise prices
Nil
£20 – 21
£22 – 23
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129
4imprint Group plc Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
24 Other reserves
Balance at 3 January 2021
Currency translation differences
Balance at 1 January 2022
Currency translation differences
Balance at 31 December 2022
Capital
redemption
reserve
$’000
Cumulative
translation
differences
$’000
369
–
369
–
369
5,748
(97)
5,651
(1,614)
4,037
Total
$’000
6,117
(97)
6,020
(1,614)
4,406
The capital redemption reserve arose on the redemption of preference shares in 2000. The currency translation difference
represents the accumulated exchange movements on non-US dollar functional currency subsidiaries from 29 December 2003
(transition date to IFRS) to the balance sheet date.
25 Cash generated from operations
Profit before tax
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Amortisation of right-of-use assets
Loss on disposal of property, plant and equipment
Share option charges
Net finance (income)/cost
Defined benefit pension administration charge
Contributions to defined benefit pension scheme
Changes in working capital:
Decrease/(increase) in inventories
Increase in trade and other receivables
Increase in trade and other payables
Cash generated from operations
2022
$’000
2021
$’000
103,706
30,229
3,594
424
1,508
84
815
(804)
521
(4,367)
3,237
437
1,340
–
602
417
340
(4,589)
2,469
(24,164)
13,254
(9,288)
(26,831)
22,363
97,040
18,257
26 Contingent liabilities
The Group has a contingent liability of $493,000 in respect of potential payments for future services relating to the acquisition of a
screen-printing business during the period (2021: none). See note 10 for further details.
27 Capital commitments
The Group had capital commitments contracted for but not provided for in the financial statements at 31 December 2022 for
property, plant and equipment of $2.7m (2021: $nil).
28 Related party transactions
Transactions and balances between the Company and its subsidiaries have been eliminated on consolidation. The Group did not
participate in any related party transactions with parties outside of the Group.
Key management compensation is disclosed in note 3.
130
4imprint Group plc Annual Report and Accounts 2022
COMPANY BALANCE SHEET
at 31 December 2022
Non-current assets
Property, plant and equipment
Investments
Deferred tax assets
Retirement benefit asset
Other receivables
Current assets
Other receivables
Other financial assets – cash deposits
Cash and cash equivalents
Current liabilities
Amounts due to subsidiary companies
Other payables
Net current assets
Non-current liabilities
Note
2022
£’000
2021
£’000
A
B
C
F
D
D
G
E
19
3
105,222
105,030
1,286
1,025
258,816
445
1,465
–
366,368
106,943
895
244,948
29,000
–
3,717
9,083
33,612
254,031
(708)
(118,721)
(828)
(431)
(1,536)
(119,152)
32,076
134,879
Amounts due to subsidiary companies
G
(132,901)
–
Net assets
Shareholders’ equity
Share capital
Share premium reserve
Capital redemption reserve
Retained earnings*
Total equity
265,543
241,822
I
10,802
10,802
38,575
38,575
208
208
215,958
192,237
265,543
241,822
* Company’s income statement
Under section 408 of the Companies Act 2006 an income statement for the Company is not presented. Profit after tax and before
external dividends paid for the period of £41,547,000 (2021: £6,220,000) is included in the retained earnings of the Company.
The financial statements on pages 131 to 141 were approved by the Board of Directors on 14 March 2023 and were signed on its
behalf by:
KEVIN LYONS-TARR
CHIEF EXECUTIVE OFFICER
DAVID SEEKINGS
CHIEF FINANCIAL OFFICER
131
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4imprint Group plc Annual Report and Accounts 2022
STATEMENT OF CHANGES IN COMPANY SHAREHOLDERS’ EQUITY
for the 52 weeks ended 31 December 2022
Balance at 3 January 2021
10,802
38,575
208
(410)
190,019
239,194
Share
premium
reserve
£’000
Capital
redemption
reserve
£’000
Retained earnings
Own
shares
£’000
Profit
and loss*
£’000
Total
equity
£’000
Share capital
£’000
Profit for the period
Other comprehensive income
Re-measurement gains on post-employment
obligations
Deferred tax relating to components of other
comprehensive income (note C)
Total comprehensive income
Own shares purchased
Own shares utilised
Share-based payment charge
Capital instrument granted to subsidiary
Deferred tax relating to UK tax losses (note C)
Dividends
6,220
6,220
812
812
(1,025)
(1,025)
6,007
6,007
(617)
–
39
395
(166)
(410)
39
395
(166)
(3,030)
(3,030)
(617)
410
Balance at 1 January 2022
10,802
38,575
208
(617)
192,854
241,822
Profit for the period
Other comprehensive income
Re-measurement losses on post-employment
obligations
Current tax relating to components of other
comprehensive income
Deferred tax relating to components of other
comprehensive income (note C)
Total comprehensive income
Proceeds from options exercised
Own shares purchased
Own shares utilised
Share-based payment charge
Capital instrument granted to subsidiary
Deferred tax relating to UK tax losses (note C)
Dividends
41,547
41,547
(3,605)
(3,605)
963
457
963
457
39,362
39,362
279
(949)
69
590
120
279
(982)
–
69
590
120
(15,717)
(15,717)
(982)
949
Balance at 31 December 2022
10,802
38,575
208
(650)
216,608
265,543
* See note J.
132
4imprint Group plc Annual Report and Accounts 2022
COMPANY CASH FLOW STATEMENT
for the 52 weeks ended 31 December 2022
Cash flows from operating activities
Cash used in operations
Tax paid
Finance income received
Finance costs paid
Net cash generated from operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Dividends received
Return of capital contributions
Increase in current asset investments – bank deposits
Net cash generated from investing activities
Cash flows from financing activities
Proceeds from share options exercised
Purchases of own shares
Dividends paid to Shareholders
Net cash used in financing activities
Net movement in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
Note
2022
£’000
2021
£’000
H
(5,272)
(5,395)
–
–
17,605
19,535
(9,095)
(9,386)
3,238
4,754
(21)
36,438
399
(29,000)
7,816
279
(982)
–
75
111
–
186
–
(617)
(15,717)
(3,030)
(16,420)
(3,647)
(5,366)
9,083
3,717
1,293
7,790
9,083
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133
4imprint Group plc Annual Report and Accounts 2022
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
General information
4imprint Group plc, registered number 177991, is a public limited company incorporated in England and Wales, domiciled in the
UK and listed on the London Stock Exchange. Its registered office is 25 Southampton Buildings, London WC2A 1AL. The Company’s
financial statements are presented in Sterling. Numbers are shown in pounds thousands.
Basis of preparation
The financial statements have been prepared on a going concern basis (see going concern in basis of preparation section of the
Group financial statements on pages 105 and 106 for further information), under the historical cost convention in accordance with
UK-adopted International Accounting Standards.
New accounting standards applicable for the first time in this reporting period have no impact on the Company’s results or
balance sheet.
Environmental risks
In preparing the financial statements, management has considered the impact of environmental risks. Whilst the impact of
environmental risks is still developing and therefore all possible future outcomes are uncertain, risks known to the Company
have been considered in forming judgments, estimates and assumptions and in assessing viability and going concern. These
considerations did not have a material impact on the financial statements.
Estimates and judgments
The preparation of the financial statements requires management to make judgments and estimates that affect the application
of accounting policies, the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for
revenues and expenses during the year.
Critical accounting judgments are those judgments, apart from those involving estimations, that have been made in the process
of applying the Company’s accounting policies and that have the most significant effect on the amounts recognised in the financial
statements. Key assumptions and sources of estimation uncertainty are those that have a significant risk of resulting in a material
adjustment to the carrying amounts of the Company’s assets and liabilities within the next financial year.
Management considers the following to be the critical accounting judgments and key assumptions and sources of
estimation uncertainty:
Critical accounting judgments
Retirement benefit asset
At the balance sheet date, the fair value of the defined benefit assets exceeded the present value of the defined benefit obligations
of the 4imprint 2016 Pension Plan. Although the Company anticipates that the surplus will be utilised during the life of the plan to
address members’ liabilities, the Company recognises the surplus in full on the basis that it is management’s judgment that there
are no restrictions on the return of residual plan assets in the event of a winding up of the plan after all member obligations have
been met.
Amounts due from/due to subsidiary companies
The Company’s $160,000,000 and £125,915,000 loans due from subsidiary companies, and $160,000,000 loans due to subsidiary
companies, became repayable on 7 September 2022. These instruments were refinanced at maturity with new loans repayable on
7 September 2029 for the same principal amounts. In order to recognise these new loans at their respective fair values, the Company
has made a judgment that the interest rates on the loans, as determined by a detailed transfer pricing study, represented prevailing
market rates of interest for similar instruments with a similar credit rating. See notes D and G for further information.
Key assumptions and sources of estimation uncertainty
Pensions
As detailed in note 18, the Company sponsors a defined benefit pension scheme closed to new members and future accrual. Period-
end recognition of the liabilities under this scheme requires a number of significant actuarial assumptions to be made, including
inflation rate, discount rate and mortality rates. Small changes in assumptions can have a significant impact on the amounts recorded
in other comprehensive income and on the pension liabilities in the balance sheet. Sensitivities to changes in these assumptions are
disclosed in note 18.
Accounting policies
The principal accounting policies adopted in the preparation of these financial statements are the same as those adopted in the
consolidated financial statements on pages 108 to 111 except for the investments and amounts owed by subsidiary companies
policies noted below. These policies have been consistently applied to all the periods presented.
Investments
Investments in subsidiaries are stated at cost. Impairment reviews are carried out if there is some indication that the carrying value
of the investments may have been impaired. Where, in the opinion of the Directors, an impairment of the investment has arisen,
provisions are made in accordance with IAS 36 ‘Impairment of Assets’.
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4imprint Group plc Annual Report and Accounts 2022
Amounts due from subsidiary companies
Amounts due from subsidiary companies are assessed for expected credit losses on a general basis under IFRS 9 ‘Financial
Instruments’. Where required, the Company recognises a provision on this basis reflecting either the lifetime or twelve-month
expected credit loss dependent on the change in credit risk since initial recognition of the financial asset. The amount of the
provision, and any changes, are recognised in the income statement. Amounts due from subsidiary companies are discounted
when the time value of money is considered material.
A. Property, plant and equipment
Cost:
At 3 January 2021
Additions
At 1 January 2022
Additions
Disposals
At 31 December 2022
Depreciation:
At 3 January 2021
Charge for the period
At 1 January 2022
Charge for the period
Disposals
At 31 December 2022
Net book value at 31 December 2022
Net book value at 1 January 2022
B. Investments
Cost:
At 3 January 2021
Capital contribution repaid by subsidiary undertaking
Capital contribution to subsidiary undertaking
At 1 January 2022
Capital contribution repaid by subsidiary undertaking
Capital contribution to subsidiary undertaking
At 31 December 2022
Fixtures &
fittings
£’000
51
–
51
21
(22)
50
46
2
48
4
(21)
31
19
3
Shares in
subsidiary
undertakings
£’000
104,746
(111)
395
105,030
(399)
591
105,222
The capital contribution represents IFRS 2 ‘Share-based Payments’ charges in respect of subsidiaries which will not be recharged
until the options vest. £399,000 of prior years’ capital contributions have been repaid in the year.
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4imprint Group plc Annual Report and Accounts 2022
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS CONTINUED
B. Investments continued
Subsidiary undertakings
The subsidiaries at 31 December 2022 are set out below. All of these subsidiaries are wholly owned and have ordinary share capital
only, apart from 4imprint USA Limited which also has preference shares.
Company
Country of incorporation and operation
Business
4imprint, Inc.
4imprint Direct Limited
4imprint UK Holdings Limited
4imprint USA Limited
4imprint North America Limited
4imprint US Group Inc.
4imprint Limited
Cavendish Place Newco No.1 Limited
USA
England
England
England
England
USA
England
England
Promotional products
Promotional products
Holding company
Holding company
Holding company
Holding company
Dormant
Dormant
The dormant companies are exempt from statutory audit. There is no requirement, in the USA, for statutory audits of the
US subsidiaries.
The registered address of all subsidiaries registered in England is 25 Southampton Buildings, London WC2A 1AL, UK. The registered
address of 4imprint, Inc. is 101 Commerce Street, Oshkosh, WI 54901, USA and of 4imprint US Group Inc. is 103 Foulk Road, Suite
202, Wilmington, DE 19803, USA.
Impairment review
IAS 36 ‘Impairment of Assets’ requires an assessment at each reporting date of whether there is any indication that an asset may be
impaired. The Company’s investments in subsidiary undertakings are supported by the cash flows of the US and UK trading entities,
being 4imprint, Inc. and 4imprint Direct Limited respectively.
An assessment of both the US and UK trading entities did not identify any indications of impairment and accordingly, no indicator-
based impairment testing has been undertaken. The US trading entity has reported strong demand levels and financial results in
2022. Following the lifting of the COVID-19 Plan B measures on 27 January 2022 which impacted results in the first two months
of 2022, the UK trading entity has made a good recovery from the lingering effects of the pandemic. This improvement has been
reflected in improved demand and a return to profitability for the entity for the ten months from March to December 2022.
The external environment continues to remain uncertain, manifesting in rising interest rates, high inflation, and low economic growth.
Despite these factors being present, both the US and UK entities have shown the resilient nature of their operations and managed to
grow significantly against 2021. These external factors are therefore not considered to represent impairment indicators themselves.
C. Deferred tax assets
At start of period
Deferred tax credited/(charged) to income statement
Deferred tax credited/(charged) to other comprehensive income
Deferred tax credited/(charged) to equity
Effect of change in UK tax rate in other comprehensive income
At end of period
Deferred tax analysis
At 2 January 2022
Deferred tax (charged)/credited to income statement
Deferred tax (charged)/credited to other comprehensive income
Deferred tax credited to equity
Effect of change in UK tax rate in other comprehensive income
At 31 December 2022
2022
£’000
445
264
431
120
26
1,286
Losses
£’000
–
267
709
120
–
2021
£’000
3,130
(1,494)
(1,025)
(166)
–
445
Total
£’000
445
264
431
120
26
1,096
1,286
Pension
£’000
ACA
£’000
443
–
(278)
–
26
191
2
(3)
–
–
–
(1)
136
4imprint Group plc Annual Report and Accounts 2022
At 3 January 2021
Deferred tax charged to income statement
Deferred tax debited to other comprehensive income
Deferred tax debited to equity
At 1 January 2022
Pension
£’000
1,546
(949)
(154)
–
443
ACA
£’000
2
–
–
–
2
The deferred income tax credited/(debited) to other comprehensive income is as follows:
Deferred tax relating to post-employment obligations
Deferred tax relating to UK tax losses
Effect of change in UK tax rate
Losses
£’000
1,582
(545)
(871)
(166)
–
2022
£’000
(278)
709
26
457
Total
£’000
3,130
(1,494)
(1,025)
(166)
445
2021
£’000
(154)
(871)
–
(1,025)
The net deferred tax asset at 31 December 2022 has been calculated at a tax rate of 19% in respect of deferred tax items that are
expected to reverse before 1 April 2023 (2021: 19%), and 25% in respect of deferred tax items expected to reverse after 1 April 2023
(2021: 19%).
Deferred tax assets have been recognised where it is considered that there will be sufficient taxable profit available in future against
which the deductible temporary timing differences can be utilised. Following a review of forecast UK taxable profits and the use of
brought forward losses over the next three years, a deferred tax asset for tax losses has been recognised in the period.
D. Other receivables
Trading amounts due from subsidiary companies
Loans due from subsidiary companies
Expected credit loss allowance on amounts due from subsidiary companies
Net amount due from subsidiary companies
Other receivables
Prepayments and accrued income
Less non-current portion: Amounts due from subsidiary companies
Trading amounts due from subsidiary companies are repayable on demand and are non-interest-bearing.
The movements in the loans due from subsidiary companies are:
At 3 January 2021
Exchange movement
At 1 January 2022
Exchange movement to 7 September 2022
New $160.00m and £125.92m loans
Repayment of $160.00m and £125.92m loans (due 7 September 2022)
Exchange movement between 7 September 2022 and 31 December 2022
At 31 December 2022
2022
£’000
484
258,816
–
259,300
315
96
259,711
(258,816)
2021
£’000
317
244,636
(329)
244,624
227
97
244,948
–
895
244,948
£’000
243,140
1,496
244,636
20,810
265,446
(265,446)
(6,630)
258,816
The Company’s $160,000,000 and £125,915,000 loans due from subsidiary companies, and $160,000,000 loans due to subsidiary
companies (see note G), became repayable on 7 September 2022. These instruments form part of the wider financing structure
of the Group, the purpose of which was to maintain the gearing of the Group’s US subgroup at an appropriate level, facilitate the
repatriation of cash from the US to the UK, and manage cash flow volatility arising from the taxation of foreign exchange movements.
Having met these intended purposes, the Directors decided to refinance the intragroup financing structure, replacing the existing
facilities with new seven-year facilities for the same principal amounts on arm’s length terms.
137
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4imprint Group plc Annual Report and Accounts 2022
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS CONTINUED
D. Other receivables continued
New loans of $160,000,000 (with interest at 5.0% p.a.) and £125,915,000 (with interest at 4.0% p.a.) were entered into with the same
subsidiary companies on 7 September 2022. These loans are repayable on 7 September 2029. The existing loans of $160,000,000
and £125,915,000 (interest at 8.0% – 8.2% p.a.) were fully satisfied by the subsidiary companies on 7 September 2022. The
satisfaction payments for the existing loans were netted-off against the drawdown of the new loans under cash netting letters
such that no cash movements arose.
Loans due from subsidiary companies of £258,816,000 (2021: £244,636,000) bear interest at market rates ranging from 4.0%
to 5.0%. Included within the total amount due is a US dollar denominated loan of $160,000,000 (2022: £132,901,000; 2021:
£118,721,000). The movement in the GBP equivalent balance between 2022 and 2021 is due to an exchange gain of £14,180,000
(2021: exchange gain of £1,496,000) arising from the movement in the Sterling to US dollar exchange rate.
Other receivables are only written off when the Company has exhausted all options to recover the amounts due and provided for
in full when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include,
amongst others, the failure of the debtor to engage in a repayment plan with the Company or a subsequent failure to make agreed
payments. An expected credit loss (ECL) provision is then calculated on the remaining other receivables.
An ECL provision of £nil (2021: £329,000) has been recognised on the $160,000,000 intercompany loan to 4imprint US Group Inc.
that is due on 7 September 2029. A transfer pricing review undertaken to support the refinancing of the intercompany loan structure
during the period determined the borrower to have a synthetic credit rating of ‘investment grade’ and has therefore been assessed
as having ‘low credit risk’. Accordingly, the loan has been classified as ‘stage 1 – performing’, which requires twelve-month expected
credit losses to be considered in determining the ECL provision.
Management has estimated the ECL’s over the next twelve-months using a common credit loss methodology that incorporates
probability of default, loss given default, and exposure at default inputs. Probability of default has been determined using historical
twelve-month average cumulative default rates for US corporates, as calculated by external rating agencies. Prevailing economic
conditions have been considered to determine if any adjustment is required to the historical default rates to reflect current
conditions and future forecasts.
The reduction in the ECL provision from £329,000 in 2021 to £nil in 2022 reflects the improved assessment of the credit risk of the
borrower, in particular the ‘investment grade’ synthetic credit rating and the strong financial results reported for 2022 following the
impact of the pandemic in the prior years.
No credit losses are expected in respect of the other receivables, reflecting the availability of sufficient liquid assets to the borrowing
entities to enable them to settle their obligations at short notice.
The carrying amounts of the Company’s trade and other receivables are denominated in the following currencies:
Sterling
US dollars
E. Other payables
Other payables
Other tax and social security
Accruals
2022
£’000
2021
£’000
126,810
132,901
126,275
118,673
259,711
244,948
2022
£’000
217
39
572
828
2021
£’000
121
40
270
431
F. Retirement benefit asset
The amount recognised in the balance sheet represents the net asset in respect of the closed defined benefit pension scheme. Full
details of the defined benefit scheme are contained in note 18 on pages 123 to 125.
The Sterling analysis of the balance sheet amount is as follows:
Present value of funded obligations
Fair value of scheme assets
Net asset recognised in the balance sheet
138
2022
£’000
2021
£’000
(16,853)
17,878
(28,067)
29,532
1,025
1,465
4imprint Group plc Annual Report and Accounts 2022
Changes in the present value of the net defined benefit asset are as follows:
Balance at 3 January 2021
Administration costs paid by the scheme
Interest (expense)/income
Return on scheme assets (excluding interest income)
Re-measurement gains due to changes in scheme experience
Re-measurement gains due to changes in demographic assumptions
Re-measurement gains due to changes in financial assumptions
Contributions by employer
Benefits paid
Balance at 1 January 2022
Administration costs paid by the scheme
Interest (expense)/income
Return on scheme assets (excluding interest income)
Re-measurement losses due to changes in scheme experience
Re-measurement gains due to changes in demographic assumptions
Re-measurement gains due to changes in financial assumptions
Contributions by employer
Benefits paid
Present value
of obligations
£’000
Fair value of
scheme assets
£’000
Net asset/
(obligation)
£’000
(31,231)
(248)
(379)
–
24
77
1,721
–
1,969
(28,067)
(421)
(487)
–
(1,027)
31
10,634
–
2,484
28,806
–
369
(1,011)
–
–
–
3,337
(1,969)
29,532
–
541
(13,243)
–
–
–
3,532
(2,484)
(2,425)
(248)
(10)
(1,011)
24
77
1,721
3,337
–
1,465
(421)
54
(13,243)
(1,027)
31
10,634
3,532
–
Balance at 31 December 2022
(16,853)
17,878
1,025
G. Amounts due to subsidiary companies
Trading amounts due to subsidiary companies
Loans due to subsidiary companies
Net amount due to subsidiary companies
Less non-current portion: Loans due to subsidiary companies
Trading amounts due to subsidiary companies are repayable on demand and are non-interest bearing.
The movements in the loans due to subsidiary companies are:
At 3 January 2021
Exchange movement
At 1 January 2022
Exchange movement to 7 September 2022
New $160.00m loan
Repayment of $160.00m loans (due 7 September 2022)
Exchange movement between 7 September 2022 and 31 December 2022
At 31 December 2022
2022
£’000
708
132,901
133,609
(132,901)
2021
£’000
–
118,721
118,721
–
708
118,721
£’000
117,225
1,496
118,721
20,810
139,531
(139,531)
(6,630)
132,901
A new loan of $160,000,000 (with interest at 5.0% p.a.) was entered into with the same subsidiary undertaking on 7 September 2022.
This loan is repayable on 7 September 2029. The existing loans of $160,000,000 (interest at 8.0% – 8.2% p.a.) were fully satisfied on
7 September 2022. The satisfaction payment for the existing loans was netted-off against the drawdown of the new loan under a
cash netting letter such that no cash movements arose (see note D for further details).
The loans due to subsidiary companies are US dollar denominated and interest-bearing at a market rate of interest of 5.0%. The
movement in the GBP equivalent balance between 2022 and 2021 is due to an exchange loss of £14,180,000 (2021: exchange loss of
£1,496,000) arising from the movement in the Sterling to US dollar exchange rate.
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4imprint Group plc Annual Report and Accounts 2022
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS CONTINUED
H. Cash used in operations
Profit before tax
Adjustments for:
Depreciation of property, plant and equipment
Loss on disposal of property, plant and equipment
Share option charges
Impairment of loan to subsidiary
Dividends received
Net finance income
Defined benefit pension administration charge
Contributions to defined benefit pension scheme (note F)
Changes in working capital:
Increase in trade and other receivables
Increase in trade and other payables
Movements in amounts due to/from subsidiary undertakings
Cash used in operations
I. Share capital
Allotted and fully paid
28,085,530 (2021: 28,085,530) ordinary shares of 386/13p each
2022
£’000
42,246
4
1
69
(329)
(36,438)
(8,595)
421
(3,532)
(14)
354
541
2021
£’000
7,714
2
–
39
223
(75)
(10,143)
248
(3,337)
(67)
24
(23)
(5,272)
(5,395)
2022
£’000
2021
£’000
10,802
10,802
During the period no ordinary shares were issued (2021: none). Share option exercises were satisfied by transfer of shares from an
employee benefit trust.
The options that have been granted and were outstanding under the Company’s share option schemes at the year-end are shown in
note 22 on page 128. Full details of the share option schemes are given in note 23 on pages 128 and 129.
Employees of the Company had no interests in SAYE options (2021: 1,821).
J. Distributable reserves
The profit and loss reserve of £216,608,000 (2021: £192,854,000) in the Company includes £129,267,000 (2021: £125,915,000), which
is non-distributable.
K. Commitments and contingent liabilities
The Company has provided Letters of Support to its subsidiary companies, 4imprint Direct Limited, 4imprint UK Holdings Limited and
4imprint USA Limited.
The Company has also entered into a Pound Sterling Facility Agreement with one of its subsidiaries, 4imprint Direct Limited, enabling
it to borrow up to £1,000,000 from the Company under a revolving credit facility until 10 December 2025. Interest is payable at the
UK base rate for Sterling plus 2.0% on any loans drawn under the facility.
The Company had no known contingent liabilities at 31 December 2022 (2021: none).
L. Employees
Wages and salaries
Social security costs
Pension costs – defined contribution plans
Share option charges
The average number of people employed by the Company during the period was 4 (2021: 4).
2022
£’000
1,040
153
21
69
1,283
2021
£’000
807
116
17
39
979
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4imprint Group plc Annual Report and Accounts 2022
M. Related party transactions
During the period the Company has been party to a number of transactions with fellow subsidiary companies:
Income statement
Finance income due from subsidiary companies
Finance costs due to subsidiary companies
Balance sheet
Interest-bearing loans due from subsidiary companies at end of period
Interest-bearing loans due to subsidiary companies at end of period
Key management compensation, comprising remuneration of the Directors, was:
Salaries, fees and short-term employee benefits
Social security costs
Share option charges
2022
£’000
2021
£’000
17,604
(9,085)
19,535
(9,381)
258,816
(132,901)
244,307
(118,721)
2022
£’000
1,773
74
109
1,956
2021
£’000
969
63
58
1,090
All related party transactions were made on terms equivalent to those that prevail in arm’s length transactions.
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4imprint Group plc Annual Report and Accounts 2022
ALTERNATIVE PERFORMANCE MEASURES
An Alternative Performance Measure (APM) is a financial measure of historical or future financial performance, financial position, or
cash flows, other than a financial measure defined or specified within IFRS.
The Group uses APMs to supplement standard IFRS measures to provide users with information on underlying trends and additional
financial measures, which the Group considers will aid the users’ understanding of the business.
Definitions
Underlying operating profit is profit before exceptional items. Exceptional items are defined below. These items may be volatile in
magnitude and distort the underlying performance measures of the ongoing business. A reconciliation of underlying operating profit
to operating profit is shown in note 1 when applicable.
Underlying operating margin % is underlying operating profit divided by total revenue.
Exceptional items are income or costs that are both material and non-recurring.
Underlying profit before tax is defined as profit before tax excluding exceptional items. When applicable, a reconciliation of profit
before tax to underlying profit before tax is shown in note 6.
Underlying profit after tax is defined as profit after tax before exceptional items, net of any related tax charges. When applicable, a
reconciliation of profit before tax to underlying profit after tax is shown in note 6.
Underlying earnings per share is defined as underlying profit after tax divided by the weighted average number of shares in issue
during the financial year. When applicable, the calculation of underlying EPS is shown in note 6.
Revenue per marketing dollar is the total revenue of the Group divided by the total marketing expense of the Group. This provides a
measure of the productivity of the marketing expenditure, which is a cornerstone of the Group’s organic revenue growth strategy.
Free cash flow is defined as the movement in cash and cash equivalents and other financial assets – bank deposits, before
distributions to Shareholders but including exchange gains/(losses) on cash and cash equivalents. It is a measure of cash available for
allocation in line with the Group’s capital allocation policy (see page 38):
Net movement in cash and cash equivalents
Add back: Increase in current asset investments – bank deposits
Add back: Exchange loss on increase in current asset investments – bank deposits
Add back: Dividends paid to Shareholders
Less: Exchange losses on cash and cash equivalents
Free cash flow
2022
$m
11.46
35.00
(0.09)
18.72
(1.21)
63.88
2021
$m
1.87
–
–
4.13
(0.05)
5.95
Cash conversion is defined as the percentage of underlying operating cash flow to underlying operating profit and is provided as a
measure of the efficiency of the Group’s business model (pages 18 and 19) to generate cash.
Return on average capital employed is defined as underlying profit before tax divided by the simple average of opening and closing
non-current assets, excluding deferred tax, plus net current assets and non-current lease liabilities. This is given to show a relative
measure of the Group’s efficient use of its capital resources.
Capital expenditure is defined as purchases of property, plant and equipment and intangible assets net of proceeds from the sale of
property, plant and equipment. These numbers are extracted from the cash flows from investing activities shown in the Group cash
flow statement.
Purchase of property, plant and equipment
Purchases of intangible assets
Proceeds from sale of property, plant and equipment
Capital expenditure
2022
$m
(7.72)
(0.34)
0.05
(8.01)
2021
$m
(3.09)
(0.38)
–
(3.47)
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4imprint Group plc Annual Report and Accounts 2022
Underlying operating cash flow is defined as cash generated from operations, before pension contributions, less capital expenditure.
This reflects the cash flow directly from the ongoing business operations. This is reconciled to IFRS measures as follows:
Cash generated from operations
Add back: Contributions to defined benefit pension scheme
Less: Loss on disposal of property, plant and equipment
Less: Purchases of property, plant and equipment and intangible assets
Add: Proceeds from sale of property, plant and equipment
Underlying operating cash flow
2022
$m
97.04
4.37
(0.08)
(8.06)
0.05
93.32
2021
$m
18.25
4.59
–
(3.47)
–
19.37
Cash and bank deposits is defined as cash and cash equivalents and other financial assets – bank deposits. This measure is used by
the Board to understand the true cash position of the Group when determining the potential uses of cash under the balance sheet
funding and capital allocation policies. This is reconciled to IFRS measures as follows:
Cash and cash equivalents
Other financial assets – bank deposits
Cash and bank deposits
2022
$m
51.84
34.91
86.75
2021
$m
41.59
–
41.59
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143
4imprint Group plc Annual Report and Accounts 2022
FIVE YEAR FINANCIAL RECORD
Income statement
Revenue
1,140,286
787,322
560,040
860,844
738,418
Underlying* operating profit
102,902
30,646
3,972
53,620
45,043
2022
$’000
2021
$’000
2020
$’000
2019
$’000
2018
$’000
Exceptional items
Operating profit
Finance income
Finance costs
Net pension finance charge
Profit before tax
Taxation
Profit for the period
–
–
–
–
(721)
102,902
30,646
3,972
53,620
44,322
1,162
(425)
67
33
(435)
(15)
168
(193)
(104)
818
(67)
(378)
250
(23)
(403)
103,706
30,229
3,843
53,993
44,146
(23,563)
(7,643)
(753)
(11,276)
(8,952)
80,143
22,586
3,090
42,717
35,194
* Underlying has been restated to include defined benefit pension charges in 2018 to 2020.
Basic earnings per ordinary share
285.57c
80.46c
11.03c
152.42c
125.61c
Dividend per share – paid and proposed
360.00c
45.00c
–
25.00c
70.00c
Balance sheet
Non-current assets (excluding deferred tax and retirement
benefit asset)
Deferred tax assets
Net current assets
2022
$’000
2021
$’000
2020
$’000
2019
$’000
2018
$’000
44,325
37,437
38,997
27,506
20,096
2,381
600
4,272
4,338
5,636
104,952
54,744
38,694
44,792
33,482
Retirement benefit asset/(obligation)
1,234
1,974
(3,310)
(12,305)
(15,016)
Other liabilities (including lease liabilities)
(12,672)
(11,789)
(13,282)
(1,383)
(931)
Shareholders’ equity
140,220
82,966
65,371
62,948
43,267
Cash and bank deposits
86,752
41,589
39,766
41,136
27,484
144
4imprint Group plc Annual Report & Accounts 2022
REGISTERED OFFICE AND COMPANY ADVISERS
4imprint Group plc
25 Southampton Buildings
London WC2A 1AL
Telephone +44 (0)20 3709 9680
E-mail
hq@4imprint.co.uk
Registered number
177991 England
Independent auditor
Ernst & Young LLP
No. 1 Colmore Square
Birmingham B4 6HQ
Joint stockbrokers
Peel Hunt LLP
100 Liverpool Street
London EC2M 2AT
Liberum Capital Limited
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
Registrar
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds LS1 4DL
Bankers
Lloyds Bank plc
JPMorgan Chase Bank, N.A.
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CBP018209
F
Group plc
Group office
4imprint Group plc
25 Southampton Buildings
London WC2A 1AL
Telephone +44 (0)20 3709 9680
E-mail hq@4imprint.co.uk
Trading offices
USA
4imprint, Inc.
101 Commerce Street
Oshkosh
WI 54901, USA
Telephone +1 920 236 7272
E-mail sales@4imprint.com
UK
4imprint Direct Limited
5 Ball Green
Cobra Court
Trafford Park
Manchester M32 0QT
Freephone 0800 055 6196
Telephone +44 (0)161 850 3490
E-mail sales@4imprint.co.uk
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