Investor presentation 2015 preliminary results Andy Blundell , Chief Executive Mark Stoner , Finance Director March 2016
Communisis Investor presentation | 2015 Results What we do Communisis is an integrated marketing services company which improves communication between brands and their customers. We create engaging content and deliver it across multiple customer touch-points; in digital, broadcast and print channels. 2
Communisis Investor presentation | 2015 Results Communisis at a glance What we do Key facts • Customer Engagement Fully listed (CMS) • (Design) 2200+ employees (170+overseas) • Blue chip clients in: • • Personalised Communications (Produce) Financial services Consumer goods • Brand Deployment 15% 3% Utilities 4% (Deploy) 40% Public sector 7% Retail & distribution 8% 23% Telecoms Other 3
Communisis Investor presentation | 2015 Results Financial highlights Comparison 2015 Constant • Strong growth in £m As reported to 2014 currency* profitability, operating Total revenue £354m +3% +6% margin and earnings per Adjusted operating profit** £18.3m +14% +20% share Adjusted operating margin** 7.6% +10% +13% Adjusted earnings per share*** 5.18p +12% +21% • Free cash flow doubled Dividend per share 1.47p +10% +10% • Dividend increase for Profit before tax £17.3m +£30m +£30m the fifth consecutive Free cash flow £12m +£6m +£6m year Net debt £39.4m -£3.5m -£3.5m * As reported excluding the translation effect of changes in foreign exchange rates **Before exceptional items and the amortisation of acquired intangibles ***Fully diluted and excluding the after tax effects of exceptional items and the amortisation of acquired intangibles 4
Communisis Investor presentation | 2015 Results Some of our clients 5
Communisis Investor presentation | 2015 Results Market trends “ Customer engagement Outsourcing of incoming and outgoing customer • = persuasive content + “ relevant channel communications Precision marketing through personalised • “ The market demands communications a marketing services More consistent messaging in global campaigns • provider capable of Clients reducing the number of service providers • ‘creating once, publishing Client brands focusing on improving customer • everywhere’ to retention and attraction connect brands to “ individuals 6
Communisis Investor presentation | 2015 Results Value creation Growth Value Efficiency People 7
Communisis Investor presentation | 2015 Results Growth Growth Value • Organic sales growth People Efficiency • Broaden and deepen the service offering • Increase international presence 8
Communisis Investor presentation | 2015 Results Customer engagement - Design 9
Communisis Investor presentation | 2015 Results Personalised communications - Produce 10
Communisis Investor presentation | 2015 Results Brand deployment - Deploy 11
Communisis Investor presentation | 2015 Results Innovation Apple Pay The Bakery Client conferences Welcome to the Communisis 2016 Client Conference The future of customer communications Andy Blundell CEO, Communisis PLC 12
Communisis Investor presentation | 2015 Results International office locations 13
Communisis Investor presentation | 2015 Results Efficiency Growth Value • Optimise direct cost and overhead base • Improve capacity utilisation People Efficiency • Capitalise on synergy Carbon 7 % footprint 28 Invoiced Clients through 6 % packs / FTE international Total Deploy hubs 14 % operational waste down by Design co-location in London 14
Communisis Investor presentation | 2015 Results People Growth Attract the best people Value • Launch of new graduate recruitment scheme seeing People Efficiency several graduates complete a two-year development programme Engage, develop and reward • 12 managers enrolled onto our Inspire Programme which was formulated to support and develop middle- tier management Optimise structures • Re-alignment of senior leadership 15
2015 Summary financials
Communisis Investor presentation | 2015 Results Summary income statement 2015 2014 • Total revenue increased 3% reported, 6% on a constant currency £m £m basis Trading 239 232 Margin improved to 7.6% • Pass through 115 111 • Exceptional items include credit against deferred consideration Total revenue 354 343 of £6.7m, restructuring £(2.0)m, property provision release £0.4m, acquisition costs £(0.5)m Adjusted operating profit 18.3 16.0 Underlying Profit before tax of £10.6m (PY £7.8M) +35% reported • Amortisation of acquired intangibles (1.2) (1.0) Adjusted Earnings per share increase +12% (+21% on constant • currency) 17.1 15.0 • Delivering bottom line improvements Exceptional items 4.0 (24.7) Net finance costs (3.8) (3.5) Adjusted Earnings Per Share(EPS) Profit before tax 17.3 (13.2) 6 5.18 4.62 5 4.19 Tax (2.8) (1.9) 4 Profit after tax 14.5 (15.1) 3 Pence per share (pps) 2 Adjusted earnings per share 5.18p 4.62p 1 0 Operating margin 7.6% 6.9% 2013 2014 2015 17
Communisis Investor presentation | 2015 Results Sector and segment analysis Segmental split of contribution 2015 Turnover by Sector 2015 Segmental split of turnover 2015 Design Financial Services Design 9% 12% 14% Produce Produce Consumer Goods 7% 32% 37% 3% Deploy Utilities Deploy 40% 4% Pass Through Retail and Distribution 44% Telecoms 8% Public sector 15% 51% 23% Other Turnover by Sector 2014 Segmental split of turnover 2014 Segmental split of contribution 2014 Financial Services Design Design 8% 9% 9% Consumer Goods Produce Produce 7% 32% 4% Deploy Deploy Utilities 38% 43% 5% Pass Through Retail and Distribution 8% 44% Telecoms 53% Public sector 16% 24% Other 18
Communisis Investor presentation | 2015 Results Segmental performance Design Produce Deploy Pass through +1% +3% + Revenue 7% CC (£m) (+3%) +8% CC +34% 150.7 151.6 113.4 110.6 53.8 55.2 35.4 150.7 26.5 2015 2014 2015 2015 2015 2014 2014 2014 +2% + +2% Contribution 8% CC +29% 3.4 19.3 18.9 (£m) 13.8 14.1 4.3 2015 2015 2014 2014 2015 2014 19
Communisis Investor presentation | 2015 Results Key metrics Adjusted Operating Profit 7.6% 20 8.0% 6.9% 6.9% 18 6.4% 7.0% £18.3m 16 5.3% 6.0% 14 £16.0m 5.0% 12 £13.3m £ m £11.5m % 10 4.0% 8 £9.0m 3.0% 6 2.0% 4 1.0% 2 0 0.0% *2011 *2012 2013 2014 2015 Adjusted operating profit *� restated� for� 2.20 Operating margin (on sales excluding pass through) the� effects� of� pps� IAS19R� � 2.5 � Dividends Free Cash Flow +10%� 12 +11%� 2.0 +9%� 2.20 8 +10%� 2.00 pps� Pence per share pps� 1.50 1.80 1.5 pps� 1.65 4 £ m 1.50 pps� pps� 1.0 0 -4 0.5 -8 0.0 20 *2011 *2012 2013 2014 2015 2011 2012 2013 2014 2015
Communisis Investor presentation | 2015 Results Summary cash flow & net debt 2015 2014 £m £m Free cash flow doubled EBITDA 29.3 27.1 • Increased profitability Working capital increase 0.2 1.1 Tight working capital management Pension contributions (2.9) (1.2) • Interest and tax (3.7) (4.7) A tax repayment • Exceptional items (2.0) (5.1) • Lower exceptional cash items Capital expenditure (8.8) (11.2) • Reduced levels of capital expenditure Free cash flow 12.0 6.0 Investment in new contracts (2.2) (3.2) Acquisition of Life Marketing Agency Acquisitions (0.6) (6.5) • Two- year promissory loan notes (payable Q1’17 ) Dividends (4.3) (3.7) Other 0.3 (0.7) Free cash flow improvement trend expected to continue Decrease (increase) in bank 5.2 (8.1) Free Cash Flow debt 15 10 Net bank debt (28.0) (33.0) 5 £m 0 Finance leases (2.1) (2.9) -5 Promissory loan notes (9.3) - -10 2013 2014 2015 Net debt (39.4) (35.9) 21
Communisis Investor presentation | 2015 Results Bank facilities Total facilities (£65m Revolving Credit and £5m Overdraft) £70m Utilised at December 2015 £28m Headroom 60% Average utilisation during the year £44m Headroom 37% EBITDA : Net bank debt • December 1.0 • Average for the year 1.5 • EBIT : Interest for the year 4.8 22
Communisis Investor presentation | 2015 Results Outlook Encouraged by increasing demand for the Group’s integrated marketing services • Focus on the creation of value • Bottom line profit improvement • Improving free cash flow • Progressive reduction in debt Supported by • Success in winning and retaining multi-year contracts • New business pipeline 23
Thank you 24
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