Positive trading update from Communisis

By Richard Stuart-Turner, Thursday 21 January 2016

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Communisis has reported improvement across all of its performance metrics in a trading update released today (21 January) for the financial year to 31 December 2015.


Blundell: We are making a strong start to 2016

The group said its adjusted operating profit is expected to be in line with current expectations at approximately £18m. This is up 12% year-on-year, or 17% year-on-year on a constant currency basis.

The company also expects to deliver associated improvements in both basic and adjusted earnings per share.

The organisation said it has delivered free cash flow of approximately £12m, which is double the prior year figure, due to a focus on cash generation and active management of working capital during the year. Net debt is in line with expectations at £40m.

These results represent a sixth consecutive year of improvement in group performance.

Barclays, one of Communisis’ largest clients, has renewed its contract with the company for marketing print and direct mail services for three years from this month, with the option of a further two year extension.

In the firm’s Produce segment, Legal & General has become a new client after signing a three-year contract for printed matter and print logistics services, due to start in April.

Additionally, long-standing client Centrica has extended its outgoing transactional communication services contract for a further three years until December 2018, with an option to extend by a further two years.

The company said that this, alongside an increased focus on driving operational efficiencies and cost savings, has ensured the continuation of profitable growth in this area of the business.

The Deploy segment has continued to grow strongly in EMEA, with 2015 seeing an increase in the number of overseas clients served.

The business will open its latest international hub in Dubai in March 2016, in response to requests from existing clients for help in this region.

In the Design segment, the firm said its outlook for the year ahead is positive, with focus on organic growth and identifying opportunities to offer clients support from this segment as part of a package of services.

Communisis chief executive Andy Blundell said: “Growth at Communisis will continue to be fuelled by demand for our integrated marketing services and we are delighted to announce the renewal of our contract with Barclays; one of our biggest clients.

“Current activity, together with our new business pipeline, mean that we are making a strong start to 2016.”

In November the organisation warned that profits would be lower than expectations because shopper marketing agency Life, which Communisis acquired last January, was “taking longer than anticipated to contribute its projected earnings”.

In this trading update the group said Life is now starting to see benefits from synergies with Communisis’ existing clients which, coupled with the impact of wins secured in the second half of the year, leads the business to expect an increasing contribution from Life from this point forward.

Furthermore, the group’s Psona agency has secured an extension to its existing retained relationship with RBS in business and corporate and commercial banking marketing while Communisis Data Intelligence has been awarded a two-year retainer by an unnamed leisure organisation for the provision of campaign management, analytics and consultancy services.

Communisis will issue preliminary annual results for 2015 on 3 March.

The group's share price rose by 1.75p to 42p in early trading (52-week high: 63p; low: 36.25p).

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