Communisis At A Glance - Free Download PDF

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Communisis at a glanceWhat we doOmni-channelBrand communication servicesFor a better customer experienceMarketing communicationsDesign/Deploy Relevant, engaging andcaptivating contentKey facts Fully listed (CMS) 105m market cap 4.4% dividend yield 2200 employees (150 overseas) 51 locations in 16 countries Blue chip clients in:Financial services17%Consumer goodsCustomer communicationsProduce Reliable, easy to understandand efficient documents4%41%7%UtilitiesGovernment & charities8%Retail23%Other2

Communisis today – what do we do Add value to brand communications Create and distribute marketing messages and customercommunications on behalf of our clients Work B2B, providing services B2C Operate through three segments – Design, Produce and 2CTheirTheircustomerscustomersServices3

Some of our clients4

2015 Interim results

Financial highlightsStrong growth in profitability,operating margin and earningsper share driven by: Enduring client relationships Higher margin servicesImproved free cash flow andreduced bank debt by: Targeted investment Cash controlDividend increase for the fifthconsecutive year, in line withprogressive dividend policyComparison H1 2015to H1 2014 mAsReportedConstantCurrency*Total revenue 175m 3% 6%Adjusted operatingprofit** 7.2m 18% 25%Adjusted operatingmargin**6% 16% 20%Adjusted earningsper share***2.01p 15% 23%Dividend per share0.73p 9% 9%Free cash flow 6m 5m 5mBank debt(improvement) 32m- 2m- 2m* As reported excluding the translation effect of changes in foreignexchange rates**Before exceptional items and the amortisation of acquiredintangibles***Fully diluted and excluding the after tax effects of exceptionalitems and the amortisation of acquired intangibles6

Operational highlightsContinued growth Integrated agency model developed and launched as PSONA Life marketing Agency acquired. Insight-led shopper marketing agency Significant new multi-year contractual relationships secured or retained AXA UK. Six year term. Incoming and outgoing marketing and customercommunications EE. Two year contract. Marketing communications Long-standing utility sector client. Five years. Outgoing transactionalcommunications Overseas expansion Three new locations (Bucharest, Milan, Warsaw) New consumer goods clients scaling up the portfolioInnovation New digital services platform developed for multi-channel customer messaging successfully used by Nationwide Building Society, as it enabled Apple Pay Won gold and bronze POPAI awards for innovative point-of-purchase and in-storecommunications7


Design – Marketing communicationsActivitiesMetricsBuilding an integrated digitalH1 contribution increased fromagency - PSONA launched 1.6m to 2m, 24%. Bespoke London office openedMargin reduced from 13.9% to New capabilities acquired - Life Marketing Agency - Insight-ledshopper marketing12.2%. Full six months revenue from 2014 andearly 2015 acquisitions Recovery in data activities repositioning in analytics11% broader sector appeal Synergy realisation Weighting of certain retail basedrevenue and contribution to H2 with a% of groupcontributionmore evenly spread cost base9

Design – Any channel, any categoryCapabilitiesProduction & data agenciesCreative agencies10

Direct mail programme to merchants11

Digital journey to increase engagement12

Internal communications13


Produce – Customer ertise in: Personalised direct mail Personalised cheque books Personalised statements, billings and Document compositioncorrespondence Process integrityDigital messaging (email/mobile/tablet) – Regulatory compliancenew in 2014 Reliable large scale productionSpecialist customer communicationconsulting services – new in 2014Incoming IT integrationof personalised communications Investment in market-leadingDigital capture, distribution and archiving oftechnology, a significant barrier tocustomer correspondence – new in 2014entry Trusted supplier of business-criticalcommunications% of groupcontribution56%15

Produce - Integrated technology &service excellenceCorrespondencepreference n &production workflowPrintE-mailWebSMSCorrespondencearchive16

Produce – Customer communicationsTrends Market growth from newoutsourcing contracts Incoming and outgoing Market share gains Digital messaging Demand for specialist consulting Migration from paper to digitalformatsMetricsH1 contribution increased from 8.7m to 9.7m, 12%Margin improved from 11.2% to 12.5% New higher margin services Full six months contribution fromincoming mail Growth in non print including digitalmessaging and consulting (now 16%of contribution, nil in 2013) Move to white paper Process improvement and costreduction Better capacity utilisation onrestructured base17


Deploy – Marketing communicationsActivities & capabilities Brand activation services - sourcingand distributing point of sale marketingcollateral across Europe People, process and technology basedservice with modest infrastructure costs Clients – consumer goods brands in theMetricsH1 contribution increased from 5.6m to 5.8m, 3%Margin improved from 20.7% to24.1% Growth in revenues from newfood, drink, personal care, household,clients and new territories on apharmaceutical and technologyconstant currency basissectors Effective sourcing33% Hubs in operation, scaleeconomies on new clients Euro weakness impacted sterling% of groupcontributionreported result by (0.4)m19

Deploy - Our presenceHubClient 1Client 2Client 320

Deploy – Marketing communicationsRapid growth of clientsand countries: Countries increasedfrom 19 (2014) to 21 (H12015 H1 gross revenue by territory 002015) Deploy strategic clients and countriesH1 clients grew from 9232119(2014) to 23 (H1 2015)15662012982013Clients20142015Countries21

2015 Interim resultsSummary financials

Summary income statementH1 2015 mH1 2014 m 118.8116.3 Pass through55.853.0Total revenue174.6169.3currency basis 17.515.9(10.3)(9.8)Adjusted operating profit7.26.1Amortisation of acquiredintangibles(0.8)(0.4)6.45.7Exceptional items(1.4)(1.2)Net finance %5.2%Central and corporate costsProfit before taxTaxProfit after taxAdjusted earnings per shareOperating marginProfits weighted toward H2. Full year progressexpected Segmental contributionMargin improved and toward the double-digit targetExceptional items include ongoing restructuring costsand acquisition-related fees. Tax charge at the estimated effective annual rate of22.9% Earnings per share increase 8% ( 22% on constantcurrency) Focused on bottom line growth2.10Pence per share (pps)TradingRevenue increased 3% reported, 6% on a constantAdjusted earnings per share1.801.501.200.900.600.300.00H1 2013H1 2014H1 201523

Margin & dividend 10% 16% 16% 0%24

Summary cash flow & net debt statementH1 2014 mEBITDA12.811.3Working capital increase(0.6)(0.2)Pension contributions(0.6)(0.6)Interest and tax(0.5)(1.9)Exceptional items(1.7)(1.9)Capital ds(2.8)(2.3)Other(0.7)(0.1)1.4(8.5)Net bank debt(31.7)(33.3)Finance leases(2.4)(2.9)Promissory loan notes(9.3)-(43.4)(36.2)Free cash flowInvestment in new contractsAcquisitionsDecrease (increase) in bankdebtNet debt Improved free cash flow due to Increased profitability Tight working capital management A tax repayment More normal maintenance levels of capitalexpenditure Acquisition of Life Marketing Agency Consideration comprised new shares and twoyear promissory loan notes Free cash flow improvement trend expected tocontinueFree cash flow5.0 mH1 2015 m0.0H1 2013H1 2014H1 2015-5.0-10.025

Bank facilitiesBank Debt and Facilities807060 m5040302010012M to June 1012M to June 1112M to June 12Period end bank debt 12M to June 13Average intra period bank debt12M to June 1412M to June 15Total facilitiesBank debt less than 50% of facilities 65m Revolving Credit Facility until March 2018 5m overdraft, renewable annuallyAverage rolling 12 month bank debt 44.5m due to inter-period fluctuations in working capital Bank debt and average bank debt 1.1x and 1.6x EBITDA Interest cover 4x26

Summary balance sheetH1 2015 mH12014 rade and tax payables(95.4)(85.2)Pension deficit(39.2)(31.4)Net debt(43.4)(36.2)Net assets119.1140.3Share capital51.949.7Reserves67.290.6119.1140.3Property, plant and equipmentIntangible assetsDeferred tax and otherNon-current assetsInventoriesReceivablesShareholders’ funds Reduction in net assets reflects a 21mgoodwill impairment at December 2014 Intangible assets Goodwill impairment offset by newintangibles on acquisitions Pension deficit Unchanged from December 2014 19.5m triennial valuation deficit atMarch 2014 Changes principally driven by fall ingilt/bond yields27

OutlookConfident outlook for the full year with the prospect of: Revenue growthContinuing profit improvementOngoing cash generation and reduction in bank debtSupported by: Success in winning and retaining multi-year contractsGrowing reputation for delivering brand activation services acrossEuropeStrong pipeline of opportunities28

Investment caseManagement team with a record of achievement and strategy forgrowth Increasingly profitable and cash generative business Continued move into higher margin services Benefits of operational gearing following investmentsin market-leading technology and multi-year contracts Client-led international expansion Portfolio of blue-chip clients Differentiated offer and competitive position Progressive dividend policy29

Communisis at a glance. What we do. Omni-channel . Brand communication services. For a better cust