Growth continues at Communisis

By Sarah Cosgrove, Thursday 30 July 2015

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Growth has continued at Communisis as it announces a 3% sales rise and two significant contract extensions in its half-year results today.

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Andy Blundell: Probably the strongest results yet

The company will now provide contract marketing communication for client EE, including in-store, regulatory communication and internal communications until March 2017.

Meanwhile it has won a five-year extension on its contract with an as yet unnamed long-standing utility client for transactional communications. 

Communisis achieved a 3% rise in turnover in the six months to 30 June, from £169.3m to £174.6m, while pre-tax profits, after exceptional items, came in at £3.2m compared with £2.9m in the same period last year. 

Chief executive Andy Blundell, in his sixth year at the helm of the Leeds-headquartered business, said: “We’re delighted. It’s probably the strongest [results] yet with good news right across the board, we’re very happy.

“A lot of your readers will know the business of old, from maybe five or 10 years ago and the interesting play is about transformation. Despite the zero growth in the economy in the UK we’ve changed the business substantially. We’re growing it and we’re very happy with the progress so far.”

The company has seen sales growth of 43% from £11.5m to £16.5m in its design division and a slight rise of £77.8m to £78.2m in its produce division, which includes is transactional and cheque printing business focused around its Liverpool site. 

Blundell said the higher rise in design was because it was a smaller proportion of the whole sales but added: “It’s an area we’re putting particular emphasis on in terms of the growth from the underlying costs of design.

“Some brand owners are increasingly reviewing their relationships across marketing services generally, saying that these were traditionally siloed and actually there’s quite a lot of consolidation and rationalisation there, and that’s to our benefit. It’s a smaller part relatively than it will be.”

Regarding production, where digital services have grown rapidly, he said: “The interesting thing is how that business is changing, how we’re managing to lead our clients in terms of the most effective communication of our customers. That links in to the whole debate of print verses digital.

“Relatively few people are throwing the whole switch to digital but they are going partly digital and that’s partly reflected in our investment plans.”

“If you look at any of the large banks and utilities you can see some common themes, all those organisations want to communicate more effectively with their customers. We see a real opportunity in terms of leading that process and making that process more efficient, against a quite difficult and challenging background. Part of the evidence of that is a switch to online channels."

However, sales in its deploy division has dropped from £27m to £24.1m.

In his report, finance director Mark Stoner said the company had been affected by poor exchange rates with the euro, which accounted for half of transactions in this department over the six months, and the department had grown on a constant currency basis.

“The interesting trend of the group as a whole is becoming even more a people-oriented business, much more service-focused. That’s coming from the growth in design, and the same themes in deploy,” Blundell added.

The group is closer to its target of achieving 20% of sales from overseas. It is currently at 18% and wants to grow this to a third of its income. Blundell is not sure if this percentage will grow further at this stage.

Communisis has established three new facilities in Bucharest, Romania, Milan, Italy and Warsaw in Poland, where the company sees “a strong pipeline of opportunities with blue-chip consumer goods clients across Europe”.

“The interesting thing for us, despite the headlines about the euro, we’ve had some euro impact to a relatively modest degree, the demand from the eurozone is extremely high. We’re very happy with that,” Blundell said.

“The two underlying themes both in these numbers and the past 18 months has been the ability to turn on and deliver new clients and contracts and also push into new markets. I don’t think given our proposition we could stop at Dover. I wouldn’t claim to be global but I certainly think we’re becoming more international.”

He said this year’s contact win with Axa’s was “going well” while wins with The Communications Agency (TCA) and in Q4 last year and Life, completed in January this year have “made some contribution so far,” with more expected, Blundell said.

Commmunisis also announced a share dividend increase for the fifth year running, from 0.67p to 0.73p.

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