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2015 Full Year Results 2015 Full Year Results Background Kevin - - PowerPoint PPT Presentation

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2015 Full Year Results 2015 Full Year Results Background Kevin Lyons-Tarr, CEO 1 2015 Full Year Results Background 4imprint is the leading direct marketer of promotional products in the USA, Canada, the UK and Ireland 96% of revenue is

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SLIDE 1

2015 Full Year Results

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SLIDE 2

Background

Kevin Lyons-Tarr, CEO

2015 Full Year Results

1

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SLIDE 3

Background

4imprint is the leading direct marketer of promotional products in the USA, Canada, the UK and Ireland 96% of revenue is generated in the USA & Canada from its headquarters in Wisconsin, USA UK & Irish customers are served out of its base in Manchester, England 4imprint’s strategy is to maximise organic revenue growth at broadly stable operating profit margin The Group reports in US dollars

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2015 Full Year Results

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SLIDE 4

Highlights

Kevin Lyons-Tarr, CEO

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2015 Full Year Results

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SLIDE 5

Highlights

Group revenue † Underlying* profit before tax †

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Underlying* basic EPS † Proposed total dividend Net cash US infrastructure investment

$497.22m

 20%

$33.55m

 20%

88.04c

 20%

38.89c

 20%

$18.38m $9m

2015 Full Year Results

† Continuing operations

* Underlying is before share option related charges, defined benefit pension charges and exceptional items

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SLIDE 6

Financial Review

David Seekings, CFO

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2015 Full Year Results

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SLIDE 7

32.94 39.67 55.55 73.48 88.04 23.26 23.55 27.56 32.41 38.89 2011 2012 2013 2014 2015

EPS Divi per share

Underlying* EPS and dividend per share (cents) 8,490 17,251 25,990 18,301 18,381

2011 2012 2013 2014 2015

Net cash – year end ($000) 13.20 14.57 19.55 27.86 33.55

2011 2012 2013 2014 2015

Underlying profit before tax ($m) 254.7 290.8 332.9 415.8 497.2

2011 2012 2013 2014 2015

Revenue ($m)

Results Summary †

6 Exchange rate 2015: 1.53 (2014: 1.65) *Underlying is before share option related charges, defined benefit pension charges and exceptional items

† Continuing operations

2015 Full Year Results

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SLIDE 8

Group Income Statement (Underlying)

  • Revenue up 20%
  • US $479m, UK $18m
  • 53 week accounting

period

  • Gross profit % stable
  • 21% increase in

marketing spend driving growth

  • Admin & central costs

includes UK Head Office cost of $3.5m (2014: $4.2m)

  • Operating margin %

remains stable

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2015 Full Year Results

Continuing operations 2015 2014 Change

$'000 $'000 %

Revenue 497,219 415,773 20% Gross profit 162,598 137,210 19% Gross profit % 32.7% 33.0% Marketing costs (83,996) (69,186) 21% Selling costs (21,188) (18,172) 17% Admin & central costs (23,895) (22,093) 8% Underlying operating profit 33,519 27,759 21% Operating margin 6.7% 6.7% Net finance income 30 100 Underlying profit before tax 33,549 27,859 20% Underlying EPS 88.04c 73.48c 20%

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SLIDE 9

Group Income Statement (non-operating)

  • 2015 Incentive Plan

implemented

  • Exceptional charges

relate to DB pension scheme

  • DB pension admin costs

paid by the Scheme

  • Effective tax rate 27%

(2014: 30%)

  • Underlying effective tax

rate 27% (2014: 28%)

  • Discontinued in 2014 is

SPS disposal

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2015 Full Year Results

Continuing operations 2015 2014

$'000 $'000

Underlying profit before tax 33,549 27,859 Share option related charges (304) (666) Exceptional items (858) (2,407) Defined benefit pension admin costs (394) (544) Pension finance charges (836) (903) Profit before tax 31,157 23,339 Tax (8,462) (6,982) Proft after tax 22,695 16,357 Basic EPS - Continuing operations 81.26c 59.73c Profit from discontinued operation

  • 1,381

Profit for the period 22,695 17,738

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SLIDE 10

Cash Flow

  • 2015 working capital

movement not typical

  • $9m capex investment in

Oshkosh facilities

  • Exceptional charges

relate to the DB pension scheme

  • FY 2014 includes:
  • $9.7m proceeds from

sale of SPS

  • $26.5m pension

contributions principally buy-in

  • Dividend cover 2.26x

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2015 Full Year Results

Continuing operations 2015 2014

$'000 $'000

At start of period 18,301 25,990 Underlying operating profit 33,519 27,759 Depreciation and amortisation 1,878 1,705 Change in working capital (4,463) 222 Capital expenditure (10,912) (2,085) Operating cash flow 20,022 27,601 Contributions to defined benefit pension (825) (26,544) Net proceeds from sale of business

  • 9,717

Tax and interest (8,700) (6,067) Own share transactions

  • (1,316)

Exceptional items (310) (883) Social security on share option exercises

  • (1,368)

Exchange and other (503) (905) Dividends to Shareholders (9,604) (7,924) Net cash inflow/(outflow) in the period 80 (7,689) At end of period 18,381 18,301

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SLIDE 11

Balance Sheet

  • Net assets $28.5m,

increase of $14.4m

  • US Distribution Centre

capex $9m

  • Working capital increase:
  • Timing effects
  • Rebates receivable
  • Net cash $18.38m, after

$9m capex

  • Pension deficit expected

to reduce by around half in 2016 after buy-out

  • R.O.C.E. 82%

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2015 Full Year Results

2015 2014

$'000 $'000

Fixed assets 19,365 10,403 Deferred tax asset 4,388 4,794 23,753 15,197 Inventories 4,460 4,353 Receivables 43,194 36,810 Payables (37,254) (36,038) 10,400 5,125 Other liabilities (968) (538) Net cash 18,381 18,301 Pension deficit (23,114) (24,015) (5,701) (6,252) Net assets 28,452 14,070

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SLIDE 12

Pension Deficit

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2015 Full Year Results

  • 1,115 pensioners (including

938 with insured benefits); 508 deferred pensioners

  • 78% of total liability insured
  • Flexible Retirement Option

(FRO) cash cost $545k

  • Buy-in to buy-out project

targeted to complete in H1 2016:

  • £10m one-off deficit

reduction contribution

  • Net deficit expected to

reduce by around half

  • New schedule of

recovery contributions

  • Old scheme to be wound

up; new plan in place for remaining members

2015 2015 2014 Total liability

$'000 $'000 $'000

Liability (139,248) (30,838) (33,066) Assets 116,134 7,724 9,051 Deficit (23,114) (23,114) (24,015) Deferred Tax 4,391 4,391 4,801 Net Deficit at 2 Jan 2016 (18,723) (18,723) (19,214) 24,015 27,398 394 544 Exceptional items 610 1,078 836 903 (765) 22,175 Contributions from employer (825) (26,544) (1,151) (1,539) 23,114 24,015 IAS 19 deficit at end of period Uninsured liability The change in deficit is analysed as follows: IAS 19 deficit at start of period Exchange gain Pension administration costs Pension finance costs Actuarial (gain)/loss

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SLIDE 13
  • Strategy is to continue to drive organic revenue growth through investment in marketing
  • 52 week accounting period in 2016 vs. 53 weeks in 2015
  • c.$4m revenue benefit in 2015
  • Adjust 2016 revenue forecasts down by $4m
  • 2016 capex c.$3.1m; depreciation charge c.$2.5m
  • Tax rate c.30% (2015: 27%); underlying c.28% (2015: 27%)
  • Share-based payment (IFRS2) charge $0.4m in 2016
  • Average shares in issue FY 2016 c.28.05m; fully diluted c.28.10m
  • DB pension scheme:
  • £10m one-off deficit reduction contribution in H1 2016
  • Ongoing recovery contributions $1.5m in H2 2016, then $3m/yr for next 4.5 years
  • Exceptional P&L charge $3.8m H1 2016 ($0.6m cash cost)
  • 2015 proposed final dividend cash cost $7.5m; due May 2016

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2015 Full Year Results

2016 Guidance

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SLIDE 14

Operational Review

Kevin Lyons-Tarr, CEO

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2015 Full Year Results

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SLIDE 15

Direct Marketing Strategy

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2015 Full Year Results

  • Our strategy is to maximise organic revenue growth at broadly stable operating margin
  • Market share growth driven by investment in marketing, people and technology
  • Target was to double revenue in 5 years (2011-2016); CAGR of 15%
  • Nearly achieved a year early: 2011 $255m → 2015 $497m
  • Actual 5 year CAGR 2010-2015 was 18.1%
  • Opportunity remains substantial in large and fragmented markets

254.7 290.8 332.9 415.8 497.2 21.5 22.5 23.7 24.9 25.4

15 20 25 30 35 40 45 50 200 250 300 350 400 450 500

2011 2012 2013 2014 2015

Market size $bn 4imprint US & Canada Revenue ($m)

Growth History - 4imprint v Market

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SLIDE 16

244.5 279.2 320.0 399.0 479.2 10.2 11.6 12.9 16.8 18.0 2011 2012 2013 2014 2015

Revenue ($m) Direct Marketing UK Direct Marketing NA

Revenue & Order Intake

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2015 Full Year Results

  • Continued strong
  • rganic growth
  • North America revenue

$479m, +20%

  • Industry +3-4%
  • UK revenue £11.8m,

+16%

  • 945k total orders

received, +20%

  • New customer orders

+18%; more than 220k new customers acquired

  • Existing customer
  • rders +21%

284 344 410 506 613 189 209 227 282 332 2011 2012 2013 2014 2015

  • No. of orders received ('000)

New Existing

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SLIDE 17

6.03 5.83 6.08 6.01 5.92

2011 2012 2013 2014 2015

Revenue/Marketing $

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Marketing Effectiveness

10,000 20,000 30,000 40,000 50,000 60,000 70,000 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

US and Canada Acquired and Retention %

Customers Acquired % Retained 12 months % Retained 24 months

2015 Full Year Results

  • Total marketing spend

+21% at $84.0m, (2014: $69.2m)

  • Online spend growing at a

faster rate: +64%; now 34%

  • f total
  • Catalogue circulation still

growing, + 6%

  • Blue Box™ program

expanded: 1.75m pieces in 2015

  • Revenue per marketing

dollar KPI within acceptable bandwidth

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SLIDE 18

Operational Highlights

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2015 Full Year Results

  • $9m capital investment in Oshkosh facilities to support next 5 years of growth
  • 2.3 million units embroidered in 2015
  • Major update of proprietary order processing software
  • 8th consecutive year on Top 25 Medium Sized Best Places To Work in USA list
  • Product range increased by 6,000 products
  • Top 5 product categories:
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SLIDE 19

Data driven marketing: 2016 initiatives

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2015 Full Year Results

Catalogue:

  • Targeted circulation increases

for core and specialty books

  • Further data analytics to
  • ptimise circulation planning

Internet:

  • Continue to drive growth

through mature online techniques, as results indicate

  • Continuous testing in newer

platforms and social Retention:

  • Blue Box™ programme

expands as a result of customer file growth

  • Increased automation planned

to allow for scale

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SLIDE 20

Outlook

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Going forward, the reduced contributions to the pension scheme and the lower underlying capital requirements of the business will provide scope for further increases in returns to Shareholders. The business proposition remains strong and the opportunity substantial. Our strategic objective continues to be the maximisation of organic growth while delivering broadly constant operating margins coupled with high cash conversion. 2016 has started satisfactorily.

2015 Full Year Results

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SLIDE 21

Appendices

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Business model

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2015 Full Year Results

Customer proposition  Fast, easy and convenient  Expansive and relevant product range  Industry leading customer guarantee  Online or via telephone  Free samples and artwork  Remarkable customer service  On-time shipment or your order is free  Lowest prices or double the difference  Total satisfaction or your money back ‘Drop ship’ from suppliers  Unrestricted access to tens of thousands of products  Efficient deliveries to short lead times  Minimal investment in inventory  Supplier holds the stock  Supplier prints the product  Order shipped direct to customer  Merchandisers work closely with suppliers  Product range continually updated Application of technology  Customer-facing, websites & mobile  Proprietary order processing platform  Sophisticated database analytics  Mature, scalable systems  Efficient order processing  Supplier integration  Data-driven marketing  Innovative web technology Innovative marketing  Data-driven heritage and discipline  Online and offline techniques  Catalogue, search engine, email, social  New customer acquisition  Growing customer file  Existing customer retention  Blue Box™

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SLIDE 23

Shareholder List

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2015 Full Year Results

As at 16/02/2016

  • No. of shares

% BlackRock Inc 4,083,821 14.6 Standard Life 3,069,169 11.0 JP Morgan Chase & Co 1,787,900 6.4 Mr K.J. Minton 1,619,488 5.8 GVQ Investment Management 1,346,775 4.8 Fidelity Worldwide Investment 1,216,660 4.4 Artemis Investment Management 1,117,976 4.0 AXA Group 982,857 3.5 Invesco 847,147 3.0 Miton Group plc 846,361 3.0