Group sales rose 5% to £344.6m, with sales in the year to 31 July up from £86.2m to £110.7m in its Strategic Marketing wing, boosted by both acquisitions and organic growth in its marketing services offering.
Pre-tax profits were down 27% to £8.7m once a raft of charges, including acquisition, restructuring and redundancy costs and goodwill write-offs, were taken into account.
However, St Ives said that underlying pre-tax profits grew by 10% to £33m. Its Strategic Marketing wing now brings in 46% of group operating profit.
There was a mixed picture at its print businesses. Overall sales at its Marketing Activation division, which includes Service Graphics, SP Group and its print management business, slipped by 4% to £167m, although operating margins were maintained on a par with the prior year at 6.5%.
While sales grew from £36.7m to £37.6m at exhibition and events operation Service Graphics, the tough grocery retail environment hit sales at point-of-sale specialist SP Group, where turnover fell by 10.8% to £73.5m. Field marketing business Tactical Solutions fared worse, with sales falling by 18.6% to £9.6m
“The plan going forward in Marketing Activation is to focus on bringing those businesses closer together and to differentiate ourselves where we can,” said St Ives chief executive Matt Armitage. “We will utilise our scale and stability to drive market share growth – these markets are tough, but we’ve got a strong proposition.”
St Ives closed SP’s Burnley site earlier this year with the loss of around 80 jobs. Some equipment was relocated to SP’s Redditch production site. The closure cost the group £1.3m.
Sales at book business Clays slipped slightly to £66.9m (2014: £67.4m), as the firm is yet to fully benefit from the huge Penguin Random House contract win earlier this year. Operating profit was £8.1m (2014: £8.4m).
“We have only transitioned part of the work, and not any of the paperbacks yet,” Armitage explained. “The majority of the work is yet to come.”
Some pre-Christmas titles to be printed at Clays were also put back into August, and so missed the financial year-end.
The firm has invested in additional equipment and headcount at Clays in anticipation of the arrival of the Penguin Random House work. St Ives said this, together with other contract wins, had secured around 80% of Clays’ workload for the coming three-to-six years.
“From a market perspective we are continuing to see positive sentiment from publishers and we find that very encouraging. There are some big Christmas books already in the pipeline, and quite a number are still under wraps,” Armitage stated.
The group also reported growth in its nascent print offering for self-publishers.
Separately, St Ives has disposed of its £1.5m stake in e-book firm Easypress Technologies for a “nominal amount”. “We saw the rise in e-readers and invested to see what was going on. It’s just not the massive phenomenon it was heralded to be, so we’ve exited our interest,” he added.
The updated actuarial valuation of the group’s defined benefit pension scheme in July resulted in the deficit increasing to £27.6m (2014: £9.8m). St Ives said it would continue to make the planned funding contributions of £2m per annum into the scheme.
The PLC also reported success in its “cross-thinking” collaborative sales approach across its operations, with 100 clients now using group services.
“This involves the majority of our top blue-chip clients, and that’s continually growing,” Armitage explained.
The group’s share price slipped by 4.5p to 185p on the news.
