HALF YEAR RESULTS 26 WEEKS ENDED 29 JANUARY 2016 Matt Armitage Brad Gray CEO CFO
AGENDA 1 2 3 4 Overview 2016 Half Year Results Strategy Update Summary & Outlook 2
OVERVIEW Financial ancial Highl ghlights ights Another strong financial performance for the half year - underlying profit before tax up 5% Group profit fit Group reve venue* to £16.1m on revenue of £185.7m befo fore re tax* (£m) (£m) +6% +5 +5% Performance reflects further growth of the Strategic Marketing segment which: • Contributed 56% of Group underlying operating profit 185.7 16.1 • 175.0 Delivered underlying revenue growth of 37% 15.4 Good progress in the half year across three growth priorities: • Further increase in collaboration with over 130 clients using the services of more than one Group business 2015 2016 2015 2016 • Continued international growth – 40% of Strategic Marketing revenue now generated Basic sic earnin rnings s Inte teri rim divid vidend from international client work per share re* * per share re • Two additional Strategic Marketing acquisitions in the half year – FSP and TAB +1% 1% +4% Marketing Activation and Books segments support Group collaboration and continue to 9.70p 2.35p provide profit and cash for further growth 9.64p 2.25p Interim dividend increase of 4% 2015 2016 2015 2016 * Underlying 3
2016 RESULTS 26 WEEKS ENDED 29 JANUARY 2016 Brad Gray CFO 4
FINANCIAL SUMMARY 2016 16 2015** Incom ome Statemen ement £m £m £m 6% increase Revenue* 185. 5.7 175.0 58.0 60.0 .0 Gross Profit* % 32% 33% 16.6 17.4 .4 Operating Profit* % 9% 9% 9% Profit before tax* 16. 6.1 15.4 5% increase Non-underlying items (19. 9.0) 0) (13.1) Reported (loss)/profit before tax (2. 2.8) 8) 2.3 1% increase 9.70p 70p 9.64p Earnings per share* Interim dividend 2.35p 35p 2.25p 4% increase * Underlying 5 ** Restated
NON-UNDERLYING ITEMS £m 20.0 19.0 14.9 15.0 13.1 12.1 HY16 10.0 HY15 5.0 1.7 1.6 0.8 0.7 0.7 0.0 (0.4) -5.0 Acquisition costs Loss/(profit) on Restructuring costs Pension scheme Total disposal of properties 6
SEGMENTAL SUMMARY Strat ategic egic Market rketing ing 2016 16 2015** Revenue* £69. 9.4m 4m £50.7m Strategic Marketing represents 56% of the Group’s Operating Profit Operating Profit* £9. 9.7m 7m £7.1m Operating Margin* 14% 14% 14% Mar arketi keting ng Activation vation 2016 16 2015** Revenue* £80. 0.2m 2m £88.1m Margin erosion as customer contracts are renewed – mitigated by Operating Profit* £4. 4.0m 0m £5.0m restructuring and procurement savings Operating Margin* 5% 5% 6% Book oks 2016 16 2015** Revenue* £36. 6.1m 1m £36.2m Additional costs being carried in anticipation of the second tranche of the Operating Profit* £3. 3.7m 7m £4.5m PRH contract Operating Margin* 10% 10% 12% *Underlying 7 ** Restated
ACQUISITION OF FSP (August 2015) Specialist retail property consultancy Consideration of £2.2m split 70% cash and 30% shares Share element satisfied by an issue from treasury Shares subject to lock-in ACQUISITION OF TAB (January 2016) Mobile focussed app development consultancy Initial consideration of £27.2 million for the year ending 30 April 2015 Further consideration of up to £27.8 million based on incremental profit performance to April 2018 Consideration split 75% cash, 25% St Ives equity Subject to lock-in and claw-back 8
BALANCE SHEET 29. 9.01. 01.16 31.07.15 £m £m £m 87. 7.8 94.3 Fixed assets 156. 6.2 137.5 Goodwill 9.4 2.8 Working capital (0. 0.9) 9) (0.3) Income taxes (82. 2.1) 1) (62.8) Net debt (13. 3.1) 1) (8.3) Deferred consideration (3. 3.3) 3) (2.7) Deferred tax (21. 1.1) 1) (27.6) Pension Net Asset ets 132. 2.9 132.9 9
LIQUIDITY 29. 9.01. 01.16 31.07.15 £m £m £m Net debt 82. 2.1 62.8 EBITDA* (rolling 12 months) 44. 4.1 43.4 Net debt / EBITDA* 1.9x 9x 1.4x Pens nsio ion Assets 303. 3.3 311.0 Liabilities (324 24.4) (338.6) Deficit 21. 1.1 27.6 Interest cover* 13. 3.3x 3x 14.8x Financial gearing 61. 1.8% 8% 47.3% * Underlying 10
DEFERRED CONSIDERATION Cash Share ares Total £m £m £m £m £m £m FY16 Second Half 6.6 1.6 8.2 FY17 12.7 3.2 15.9 FY18 3.7 1.9 5.6 FY19 2.0 - 2.0 Total 25. 5.0 6.7 31. 1.7 Includes Realise, Solstice & TAB 11
CASH FLOW Key: £m Inflow 30 Outflow 20 Total 1.4 22.1 4.3 4.1 10 4.9 7.4 - (9.9) 0.9 (10) 18.2 (20) Capex Cont. EBITDA EBITDA* after Pension Wkg capital Tax & interest Net Capex Underlying Acquisitions Exceptional FCF after non cash FCF items & non cash items disposal of items empty properties * Underlying 12
STRATEGY UPDATE Matt Armitage CEO 13
REPORTING SEGMENTS BOOKS STRATEGIC MARKETING MARKETING ACTIVATION 22% 56% 23% 14
STRATEGIC MARKETING 11%* %* Data £19. 9.9m 9m rev even enue ue Data & Direct response & data CRM solutions marketing 17%* %* Digital £32. 2.2m 2m rev even enue ue Mobile & app Mobile & app Digital marketing & Search & digital development development commerce Digital marketing marketing consultancy (US) consultancy (UK) 9%* Insight £17. 7.3m 3m rev even enue ue Healthcare strategic Consumer insight & Retail & consumer Retail & property consultancy & market research markets consultancy consultancy communications 37% 37%* £69. 9.4m 4m reven evenue ue Total 37% % grow rowth * % of total Group underlying revenue 15
STRATEGIC MARKETING Data – Occam & Respon ponse e One Strong growth in half year • 20% % grow rowth Investment in Amaze One, My Bench and Accelero • Enhanced analytics and digital offering • Digital tal – Amaz aze, e, Realis lise, e, Brande anded3 d3, Sols lstic ice and nd TAB Robust organic growth due to continued expenditure in digital and technology • 78% % grow rowth Solstice and TAB further broaden our digital and mobile capabilities – over 800 digital practitioners globally • Significant number of international client wins in the half year – Emirates, Travelex, HP • Insight ight – Inc ncit ite, Pragm agma, Hive and d FSP Growth driven by international expansion – further offices opened in New York (Hive) and San Francisco (Incite) • 7% grow owth All businesses delivering an increasing number of international projects for high profile clients • Pragma and FSP working closely to provide a broader range of strategic services and have already worked on a • number of projects together 16
MARKETING ACTIVATION Challenging conditions due to on-going pressures within the • UK grocery retail sector Exhibitions and events Continuing to diversify the client portfolio to reduce exposure • 43%* Many clients now using multiple services across our Marketing • Point of sale & retail communications £80.2m .2m revenue nue Activation businesses (9%) decline ne Focus on protecting margins through efficiencies and cost • Print management & outsourcing reductions and differentiating our offering through targeted investment in new service lines Field marketing services BOOKS • Revenues in line with the prior period 20%* £36.1m .1m revenue nue • Penguin Random House contract now generating additional in in line e with PY volumes, although impacting margins Book production services • New 3 year agreements with Oneworld Publications, Cambridge University Press and Oxford University Press * % of total Group underlying revenue 17
BUSINESS MODEL St Ives offers autonomy to its Group businesses and supports collaboration between them to accelerate growth Group Businesses: INTERNATIONAL St Ives: Operate as individual MARKETING Provides investment to brands SERVICES GROUP accelerate growth Offer complementary MADE UP OF Supports and facilitates services DYNAMIC MARKET collaboration LEADING Share common attributes Offers autonomy – culture, ambition, BUSINESSES specialism 18
SHARED ATTRIBUTES CULTURE AMBITION SPECIALISM 19
STRATEGY FOR GROWTH Our strategy for growth is centred around three key priorities INTERNATIONALISATION COLLABORATION ACQUISITION 20
STRATEGY IN ACTION - INTERNATIONALISATION Expanding international reach and Offices opened in San Francisco and headcount in line with client demand Dubai, in addition to existing offices in New York, Chicago, Singapore and Shanghai 40% Over 40% of Strategic Marketing Eight Strategic Marketing businesses now revenue now comes from service clients on an international basis international client work (30% in 2015) 21 21
NEW CLIENT WIN: EMIRATES – GLOBAL DIGITAL PARTNER Amaze has been appointed by Emirates, as its global digital partner to assist in fulfilling its ambitions in the digital domain. Amaze’s initial engagement was to work with Emirates Airline and sister company dnata to deliver enterprise architecture consultancy and implementation services across its web platform. The objective is to continue to enhance the organisation’s ability to deliver customer service excellence across its digital platforms, as part of its broader omni-channel strategy. The partnership marks the first of its scale for Amaze in the Middle East. 22
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