Communisis sales top £350m

Richard Stuart-Turner
Thursday, March 3, 2016

Sales at Communisis have leapfrogged those of St Ives after the group reported a sixth consecutive year of growth.

In its preliminary results Communisis posted sales up 3% to £354.2m for the year to 31 December 2015.

The group also revealed it had won a new three-year contract with Legal & General for printed matter and logistics services, which commences next month, and renewed major contracts with Barclays, RBS, Centrica and EE.

In 2015 the firm increased its number of clients active in overseas markets to 28 and international revenues now account for a fifth of its turnover, with a long-term aim to increase this to a thrid. It opened new locations in Bucharest, Milan and Warsaw in 2015, with a new hub opening in Dubai this month.

On a segmental basis, sales in the group’s Design operation rose 33.6% to £35.4m and Produce grew 0.6% to £151.6m.

Communisis said transactional benefitted in particular from a slow-down in volume decreases, from 8% in 2014 to 5% last year.

Sales in the company’s Deploy segment dipped by 2.54% to £53.8m, which was attributed to an unfavourable reporting translation rate between euro and sterling from the European subsidiaries.

'Pass-through’ sales for managed services clients grew by 2.53% from £110.6m to £113.4m.

Operating profits, prior to exceptionals, rose 14% to £17.1m. The operating margin on sales (excluding pass-through) rose from 6.9% in 2014 to 7.6% in 2015.

Pre-tax profit jumped to £17.3m, although £6.7m of this relates to the re-negotiation of the earn-out agreement for the acquisition of shopper marketing agency Life, after a slower than expected start for the acquired business.

A further credit of £400,000 relates to the release of a property provision, which has been settled during the year.

In 2014 exceptional items included a £21m non-cash provision for goodwill impairment.

Communisis said the combined effect of last year’s charge and the current year’s credit, along with the increased operating results, has resulted in an improvement in basic earnings per share of 6.98p, up from a basic loss per share of 7.67p last year.

The proposed final dividend of 1.47p per share brings the total dividend for the year to 2.20p per share, an increase of 10% over 2014.

Chief executive Andy Blundell told PrintWeek he was confident the business will continue to deliver growth in 2016.

“We think we can continue to grow and develop the business both in terms of top-line growth and also in terms of making it a more valuable business. That value is being driven by three key factors: growth, efficiency and our people.

“We’re encouraged by our business pipeline where we’ve got the benefit of deals done in terms of underlying sales volume and visibility in our forecasts at present.

“Our clients want better customer engagement and we’re trying to help them do that with more persuasive and memorable content and finding the most relevant channel to deliver it.”

In terms of people the business has streamlined its board structure and re-aligned its senior leadership and said it is focusing more on succession planning.

It has already enrolled 12 middle managers onto a fast-track development programme, reinstated its graduate recruitment programme and expanded its apprenticeships programme.

“People are a part, and increasingly the majority, of what we deliver and how we deliver value to our clients. So by extension we need to put more into our succession planning process,” said Blundell.

He said Communisis also remains alert to further acquisition opportunities should they arise.

The company’s net debt increased to £39.4m from £35.9m, which it attributed to the £9.3m two-year promissory loan notes entered into as part of the Life acquisition. It added that this was offset by an underlying reduction in bank debt of £5.2m.

The group’s pension scheme accounting deficit at the year-end increased to £41.1m, from £39.1m in 2014.

Cash contributions to the pension scheme are determined by a valuation every three years and last performed in March 2014, where the deficit reduced to £19.5m from £38m in 2011.

Communisis currently employs 2,200 staff. The group’s share price was up by 1.75p to 45p at the time of writing.

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