FULL YEAR RESULTS ENDING 28 JULY 2017 Matt Armitage Brad Gray CEO - - PowerPoint PPT Presentation

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FULL YEAR RESULTS ENDING 28 JULY 2017 Matt Armitage Brad Gray CEO - - PowerPoint PPT Presentation

Oct 01, 2022 240 likes •489 views

FULL YEAR RESULTS ENDING 28 JULY 2017 Matt Armitage Brad Gray CEO CFO AGENDA 1 2 3 4 Overview 2017 Full Year Results Strategy Update Summary & Outlook New photo to be supplied by CKD 2 OVERVIEW Challenging year, reflected in

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SLIDE 1

FULL YEAR RESULTS

ENDING 28 JULY 2017

Matt Armitage Brad Gray CEO CFO

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SLIDE 2

1 2 3 4

Overview

AGENDA

2

2017 Full Year Results Strategy Update Summary & Outlook

New photo to be supplied by CKD

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SLIDE 3

Good progress on key strategic priorities:

  • Enhanced collaboration with 209 clients using the services of more than one Group business

(up from 150 in 2016)

  • Continued international growth – nine Strategic Marketing businesses serving clients

internationally, representing 39% of Strategic Marketing revenues (up from 37% in 2016) Net Debt: improved by 32% at £54.6m (2016: £80.8m)

OVERVIEW

3 367.5 393.2 30.4 17.61 13.39 1.5 7.80

Challenging year, reflected in our financial performance Encouraging underlying progress within our core Strategic Marketing segment - which remains at the centre of our long term growth strategy Strategic Marketing now represents 75% of adjusted operating profit

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SLIDE 4

4

2017 RESULTS

FOR FULL YEAR ENDING 28 JULY 2017

Brad Gray CFO

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SLIDE 5

FINANCIAL SUMMARY

5

Incom

  • me Statemen

ement

2017 17 £m £m 2016** £m Revenue 393. 3.2 367.5 Gross profit 108. 8.8 105.1 Operating profit* 27. 7.1

7% 7%

33.3

9%

Profit before tax* 24. 4.1 30.4 Adjusting items (68. 8.2) 2) (36.1) Statutory loss before tax (44. 4.1) 1) (5.7) Earnings per share* 13. 3.39p 39p 17.61p Full year dividend 1.95p 95p 7.80p

* Adjusted Results ** Restated

Total revenue growth of 7% Non-cash Adjusting items £66.1m

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SLIDE 6

ADJUSTING ITEMS

6 £m

Key: 2017 2016

33.0 33.1 3.0 (2.8) 1.9 68.2 17.4 12.7 2.6 1.7 1.7 36.1

  • 10

10 20 30 40 50 60 70 80

Acquisition costs* Impairment Restructuring items (Gain)/loss on disposal of properties St Ives Defined Benefits Pension Scheme costs Total * Includes amortisation of acquired intangibles and contingent deferred consideration

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SLIDE 7

Strat ategic egic Market rketing ing

2017 17 2016 Revenue £163 63.0m £144.1m Operating profit* £20. 0.2m 2m £19.4m Operating margin* 12% 12% 13%

Mar arketi keting ng Activation vation

2017 17 2016 Revenue £153 53.7m £154.8m Operating profit* £4. 4.3m 3m £8.1m Operating margin* 3% 3% 5%

Book

  • ks

2017 17 2016 Revenue £76. 6.5m 5m £68.6m Operating profit* £2. 2.6m 6m £5.8m Operating margin* 3% 3% 9%

SEGMENTAL SUMMARY

7

*Adjusted Results

Revenue growth

  • f 13%, organic

5%, acquisitive growth and currency translation 8% Revenue broadly in line with prior year; margin eroded due to pricing pressures Revenue growth of 12% margin decline to 3%

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SLIDE 8

GROWTH ANALYSIS - STRATEGIC MARKETING

8

H2 H2

2017 £m £m 2016 £m £m VAR VAR £m £m

Revenu enue 87.2 74.7 +12.4 Opera erating ing Prof

  • fit

it 14.0 9.7 +4.3 Margin rgin 16% 16% 13% 13%

H1 H1

2017 £m £m 2016 £m £m VAR VAR £m £m

Revenu enue 75.8 69.4 +6.4 Opera erating ing Profit

  • fit

6.2 9.7

  • 3.5

Margin rgin 8% 8% 14% 14%

  • H1 2016 – Prior year momentum maintained
  • H2 2016 – Q4 sees a number of project cancellations
  • H1 2017 – Significant impact on revenue & margin from

project cancellations

  • H2 2017 – New clients replace cancelled projects. Strong

revenue growth and recovery in margin

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SLIDE 9

2018 REVENUE PIPELINE - STRATEGIC MARKETING

9

Key: Identified Confirmed Unidentified

83% 39% 15% 14% 30% 23% 3% 31% 62% Q1 Q2 H2

  • Improved visibility in Q1 & Q2
  • Efforts concentrated on latter part Q2 & H2
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SLIDE 10

CASH FLOW

10

Key: Outflow Total Inflow

£m

33.6 29.4 34.7 3.6 3.5 0.7 2.8 2.9 8.7

  • 10

20 30 40

Adjusted EBITDA Working capital Tax & interest Net Capex Underlying FCF Acquisitions Pension payment Adjusting items & disposal of properties FCF

  • Much improved underlying FCF generation
  • FCF supplemented by property disposal
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SLIDE 11

LIQUIDITY

11

28. 8.07. 07.17 £m £m 29.07.16 £m Net debt 54. 4.6 80.8 EBITDA* 33. 3.9 41.3 Net debt/EBITDA* 1.6x 6x 2.0x Pensio nsion Assets Liabilities 354. 4.5 (370 70.5) 344.1 (370.5) Deficit 16. 6.0 26.4 Interest cover* 9.0x 0x 11.5x Financial gearing 52. 2.3% 3% 60.4%

*Adjusted Results

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SLIDE 12

DEFERRED CONSIDERATION – ESTIMATED*

12

FY18 18 £m £m FY19 19 £m £m Total £m £m Solstice 16.4 3.5 19. 9.9 TAB 7.3 5.0 12. 2.3 FY18 18 £m £m FY19 19 £m £m Total £m £m Cash 16.7 8.5 25.2 Shares 7.0

–

7.0 Total 23. 3.7 8.5 32. 2.2

£25.2m £m

Impact on debt

16.7 8.5 5 10 15 20 25 30 FY18 FY19

* Based on budgets and latest forecast

  • Best estimate of deferred consideration
  • Solstice at maximum
  • TAB – 2nd deferred consideration of £3.8m agreed, paid and excluded from above
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SLIDE 13

MAXIMUM DEFERRED CONSIDERATION – INCREMENTAL

13 Consid sidera ratio tion £m £m Consid sidera ratio tion £m £m EBIT ITDA DA £m £m Remainin ing maxim ximum Estim imate ted Incre crementa tal Cash sh Shares res Incre crementa tal

TAB 24.0 12.3 11.7 8.8 2.9 1.6 Solstice 19.9 19.9

– – – –

Total 43. 3.9 32. 2.2 11. 1.7 8.8 2.9 1.6

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SLIDE 14

BALANCE SHEET

14

28. 8.07. 07.17 £m £m 29.07.16 £m Fixed assets 69. 9.0 96.3 Goodwill 108. 8.7 135.8 Working capital 8.2 12.5 Income taxes (1. 1.3) 3) 1.3 Net debt (54. 4.6) 6) (80.8) Deferred consideration (15. 5.9) 9) (1.8) Deferred tax (0. 0.9) 9) (3.3) Pension (16. 6.0) 0) (26.4) Net Asset ets 97.2 7.2 133.6

Net debt reduced by 32% at £54.6m Disposal of selected non- core properties

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SLIDE 15

15

STRATEGY UPDATE

Matt Armitage CEO

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SLIDE 16

REPORTING SEGMENTS

16

BOOKS 10% STRATEGIC MARKETING 75% MARKETING ACTIVATION 15%

% share of Group Adjusted operating profit

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SLIDE 17

MARKETING ACTIVATION

17

  • Revenue growth versus the previous year
  • Focus on extending supply chain solutions to reduce overall costs
  • Significant restructuring costs as a result of the loss of the HarperCollins contract
  • Challenging conditions due to on-going pressures within the UK grocery retail sector
  • Continued diversification of the client base to reduce exposure
  • New wins and project extensions including Royal Mail, Innocent, Superdry, AkzoNobel, ESPA and

OfficeTeam

BOOKS

£153.7m (1)% decline £76.5m 12% growth

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SLIDE 18

STRATEGIC MARKETING

18

DIGITAL £93.0m .0m | | 31%* DATA £32.3m .3m | | ( (11)%* INSIGHT £37.7m .7m | | 3 3%*

  • Closer alignment of Digital marketing

businesses in response to client demand

  • Data businesses aligned single

management team

  • Significant number of new client wins
  • Significant number of new client wins

and contract renewals

  • Change in client work mix – margins

expected to improve

  • Further expansion of international footprint

particularly within the US

  • Synergies between Solstice and TAB

continue to deliver positive results

  • Further collaboration between Data and

Digital businesses moving forward

  • Growing collaboration between Pragma

and FSP

*Revenue growth

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SLIDE 19

CURRENT FOCUS FOR GROWTH

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INTERNATIONALISATION COLLABORATION ACQUISITION

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SLIDE 20

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STRATEGY IN ACTION

Over 200 clients currently working with more than one Group business

INTERNATIONALISATION

Increased demand for integrated solutions Number of new global client wins and project deliveries including DuPont and Bosch 39% of our Strategic Marketing revenue now comes from clients based outside the UK International offices in Singapore, Shanghai, New York, Chicago, Buenos Aires and San Francisco supporting projects across the world Operating model continues to evolve to help drive growth and margin improvement

COLLABORATION

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SLIDE 21

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COLLABORATION

RESOURCE SHARING CROSS SELLING

TAB has created co-sourced teams with Solstice, Amaze, Incite and Realise for three major international businesses Realise UX experts are with Solstice working on a leading US industrial company Amaze are working with Realise to support a leading sports company Realise have introduced Branded3 to many clients including leading insurance, travel and betting companies plus Amaze to one of the world’s largest producers of medicines Response One have introduced Branded3 to two significant businesses TAB has been introduced to two of the largest companies in the world by Realise and Amaze

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SLIDE 22

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COLLABORATION

DEMAND GENERATION KNOWLEDGE TRANSFER

TAB and Incite jointly developed a white paper which has resulted in major client wins for TAB with three major international financial businesses Joint lead generation conferences and technology partner events TAB and Solstice technology horizon and R&D planning shared Multiple specialist training sessions: SEO; data intelligence; market trends; technology developments

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SLIDE 23

SUMMARY & OUTLOOK

23

  • Significantly improved performance with Strategic Marketing in the second half
  • Collaboration now having a tangible impact on performance
  • Debt levels reduced
  • Positive outlook and improved visibility into new financial year
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SLIDE 24

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THANK YOU

matt.armitage@st-ives.co.uk brad.gray@st-ives.co.uk Website: st-ives.co.uk Twitter: @StIvesGroup