Results presentation for the half year ended 27 June 2015

Transcription

1 Results presentation for the half year ended 27 June 2015

2 Half Year Results Background 2. Highlights 3. Financial review 4. Operational review 5. Outlook Kevin Lyons-Tarr CEO David Seekings CFO

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 and Canada from its headquarters in Wisconsin, USA UK and Irish customers are served out of its base in Manchester, England. 4imprint s strategy is to maximise organic revenue growth at broadly stable operating margin percentage Group results now reported in US dollars; prior period comparatives restated accordingly 2

4 Highlights 3

5 Highlights Group revenue up 20% to $231.03m Underlying* profit before tax up 25% to $12.19m Underlying* basic EPS up 17% to 31.25c Interim dividend 12.09c up 15%; 7.75p up 25% Net cash $28.13m US infrastructure investment of $9m on target for completion in September 2015 Continuing operations * Underlying is before share option related charges, defined benefit pension charges and exceptional items 4

6 Financial Review

7 Results Summary Continuing Operations Revenue ($m) +20% Underlying* profit before tax ($m) +25% FY 2014 FY 2013 H H H FY 2014 FY 2013 H H H1 Underlying* EPS and dividend per share (cents) Net cash ($m) % FY 2014 H H1 EPS Dividend H FY 2015 H1 Exchange rate H1 2015: 1.52 (H1 2014: 1.67) *Underlying is before share option related charges, defined benefit pension charges and exceptional items 6

8 Group Income Statement (Underlying) H H Change FY 2014 Continuing operations $'000 $'000 % $'000 Revenue 231, ,058 20% 415,773 Gross profit 76,370 63,896 20% 137,210 Gross profit % 33.1% 33.1% 33.0% Marketing costs (42,388) (34,580) 23% (69,186) Selling costs (10,211) (8,844) 15% (18,172) Admin & central costs (11,598) (10,783) 8% (22,093) Underlying operating profit 12,173 9,689 26% 27,759 Operating margin 5.3% 5.0% 6.7% Net finance income Underlying profit before tax 12,191 9,772 25% 27,859 Underlying EPS 31.25c 26.69c 17% 73.48c Revenue up 20% Gross profit % remains stable 23% increase in marketing spend driving revenue growth Some operational gearing effect from selling and admin costs Admin & central costs includes UK Head Office cost of $1.89m (2014 H1:$1.84m; 2014 FY:$4.17m) 7

9 Group Income Statement (Other items) H H FY 2014 Continuing operations $'000 $'000 $'000 Underlying profit before tax 12,191 9,772 27,859 i) Share option related charges (140) (526) (666) ii) Exceptional items - (1,020) (2,407) iii) Defined benefit pension admin costs (236) (347) (544) iv) Pension finance charges (407) (591) (903) Profit before tax 11,408 7,288 23,339 Tax (3,309) (2,113) (6,982) Profit after tax 8,099 5,175 16,357 Basic EPS - Continuing operations 29.01c 19.28c 59.73c Discontinued operation Profit/(loss) from discontinued operation - 1,415 1,381 Profit for the period 8,099 6,590 17, Incentive Plan implemented No exceptional items charged in H Exceptional charge of around $1.5m expected in H2 for pension risk reduction exercise Effective tax rate 29% (2014 H1:29%) Underlying effective tax rate 28% (2014 H1:27%) Discontinued in 2014 is SPS disposal 8

10 Cash Flow H H FY 2014 Continuing operations $m $m $m At start of period 18,301 25,990 25,990 Underlying operating profit 12,173 9,689 27,759 Depreciation and amortisation ,705 Change in working capital 7,407 8, Capital expenditure (3,223) (1,072) (2,085) Operating cash flow 17,251 18,436 27,601 Contributions to defined benefit pension (3,275) (26,544) Net proceeds from sale of business 9,721 9,717 Tax and interest (1,195) (105) (6,067) Own share transactions (1,316) Exceptional items and social security on share option exercises (1,738) (2,251) Exchange and other (691) Dividends to Shareholders (6,268) (5,118) (7,924) Net cash inflow in the period 9,824 18,693 (7,475) Capital expenditure includes $2.4m in H1 for office and Distribution Centre projects; $6.6m expected in H2 Tax payment in US weighted to H2 FY 2014 dividend paid to Shareholders on 13 May 2015 H cash balance is pre $26.5m payment into the pension scheme Discontinued operations (217) (214) At end of period 28,125 44,466 18,301 9

11 Balance Sheet 27 Jun 28 Jun 27 Dec $'000 $'000 $'000 Fixed assets 12,827 10,448 10,403 Deferred tax asset 4,837 7,257 4,794 17,664 17,705 15,197 Inventories 4,127 3,373 4,353 Receivables 39,629 31,660 36,810 Payables (45,122) (38,677) (36,038) (1,366) (3,644) 5,125 Other liabilities (2,665) (2,285) (538) Net cash 28,125 44,466 18,301 Pension deficit (24,232) (31,879) (24,015) 1,228 10,302 (6,252) Net assets $17.53m, increase of $3.46m Negative working capital due to timing of payments Net cash $28.13m Pension deficit flat with 2014 year end Net assets 17,526 24,363 14,070 10

12 Pension Deficit Total liability $'000 Uninsured liability $'000 Liability (152,573) (33,028) Assets 128,341 8,796 Deficit (24,232) (24,232) Deferred Tax 4,846 4,846 Net Deficit at 27 June 2015 (19,386) (19,386) The change in deficit is analysed as follows: $'000 IAS 19 deficit at 27 December ,015 Pension administration costs 236 Pension finance charge 407 Remeasurement (gains)/losses due to changes in assumptions (686) Exchange loss 260 IAS 19 deficit at 27 June ,232 Legacy scheme, no future accrual 1,130 pensioners (including 957 with insured benefits); 518 deferred pensioners 78% of total liability insured Flexible Retirement Option (FRO) for deferred members planned for Sept 2015; cash cost estimate c.$3.5m in H Buy-in to buy-out project progressing; targeted to complete in the first half of 2016, resulting in removal of insured portion from the balance sheet Total cash costs on completion of buy-out still to be determined; will include one-off deficit reduction contribution to be negotiated with Trustees 11

13 2015 Guidance Continue to drive organic revenue growth through investment in marketing Operating profit margin higher in H2 than H1 due to phasing of marketing spend; but consistent with prior years Oshkosh office and Distribution Centre projects: Cash cost $2.4m in H1; $6.6m in H2 FY 2015 tax rate expected to be c. 29%, underlying c. 28% Share-based payments (IFRS2) charge of c. $0.2m in H2 Average shares in issue FY 2015 c. 27.9m; fully diluted 28.1m Pension o o o Cash requirements H2 2015: $3.5m (FRO); no regular contributions Buy-out progressing; timing dependent on progress of legal/actuarial work and negotiations with Trustee Exceptional costs of around $1.5m expected in H relating to buyout/fro Interim dividend payable in Sept 2015, cash cost c. $3.4m 12

14 Operational Review

15 Revenue ($m) Market Size ($bn) Direct Marketing Strategy Continue to deliver market share growth in large, highly fragmented market On target to double the business in five years ( ) at stable operating profit margin % Equivalent to c.15% CAGR in sales Consistent with achievement in previous five years ( ) Organic growth is driven through revenue investment in marketing as well as technology, resource and expertise High cash conversion, low fixed and working capital requirements Growth History - 4imprint v Market imprint Group Revenue $m US, Canada & UK Market Size $bn 14

16 Revenue & Order Intake FY 2014 FY 2013 H H H1 Direct Marketing NA Direct Marketing UK 900, , , , , , , , ,000 Revenue ($m) No. of Orders Received Strong overall H1 performance North American revenue $223m, +20%; Industry up circa 3-4% UK revenue $8m, +4% (14% in constant currency) Orders received +21% more than 450k in total New customer orders +18% (2014: +21%) Existing customer orders +22% (2014: +21%); now 65% of total orders H H H1 New customer orders Existing customer orders 15

17 Customers Acquired & Retention Percentage 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Customers Acquired % Retained 12 Months % Retained 24 Months Revenue/Marketing $ H H H ,000 50,000 40,000 30,000 20,000 10,000 0 Strong new customer growth - more than 100k customers acquired Consistent customer retention Marketing spend +23% Online spend continues to increase at faster rate than offline Catalogue circulation +5% Revenue per marketing dollar within acceptable bandwidth

18 Operational Highlights Expansion projects announced at start of year progressing as planned: Oshkosh office expansion complete Distribution Centre construction will be completed in September Staff added in customer-facing positions to support growth; selling costs still rising at less than the rate of sales More than 200 products added to our 24 Hour range; now more than 2,800 available More than 37,000 products in total Performance enhancements to main websites; mobile websites updated 17 Named one of 100 Best Workplaces for Millennials, featured in Fortune

19 Marketing Driving Growth H2 Catalogue: Circulation growth continues at similar pace with targeted increases driven by data analytics/insights Internet: Benefit of addition and acceleration of new techniques in late H1 last year now in the run rate; shift more to optimisation than pure expansion Retention: Blue Box programme increased to support larger customer file 18

20 Outlook Indications for the balance of the year are for a good performance in keeping with our strategic growth objectives, despite the strong growth comparator in the second half of The Group expects a good outcome for the year as a whole. 19

21 Appendices

22 4imprint Direct Marketing Model Sale of custom-printed merchandise, used to promote a brand, service or product Purchases by individuals within businesses and organisations of all sizes Product customised and shipped to customer directly from suppliers Investment in marketing, technology and people drives organic revenue growth through new customer acquisition and consistent retention rates of customers acquired: Marketing Innovative online and offline techniques including catalogues, , internet advertising, Blue Box mailings Technology Customer-facing (web sites, mobile) Order processing technology to rapidly process hundreds of thousands of customised orders Integrated supplier interfaces Complex database analytics to target marketing mix People Focus on the customer experience. Delivery time, satisfaction and service guarantees Data analytics, marketing, merchandising technology expertise Favourable cash characteristics - minimal inventory, high proportion of orders paid by credit card, ongoing capital investment broadly in line with depreciation 21

23 Shareholder List As at 14/07/2015 No. of shares % BlackRock Investment Management 4,220, Standard Life Investments 2,751, Mr K.J. Minton 1,619, JP Morgan Asset Management 1,540, GVQ Investment Management 1,426, Artemis Fund Managers 1,300, Fidelity Worldwide Investment 919, Old Mutual Global Investors 910, Ennismore Fund Management 851, Miton Group plc 846,

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