St Ives: price must be right for print ops sale

By Jo Francis, Monday 04 December 2017

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Nine months on from announcing a strategic review of its printing operations, St Ives chairman Richard Stillwell has admitted that finding a buyer or buyers “is not easy”, and the group could even retain the businesses.

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Stillwell (far left) at the St Ives AGM with other members of the board

Speaking at the St Ives AGM last week, Stillwell told PrintWeek that the process was still ongoing: “We said we were going to conduct a strategic review and we are doing exactly that. We have looked at all sorts of options and clearly divestment is one of them.

"We’re not going to divest [these businesses] at any price and if we can’t divest we have to look at options for either restructuring, or partnering, or doing all sorts of things that we’ve had a look at.”

With St Ives executives focused on reinventing the group as a marketing services business, the firm’s legacy printing businesses have been under pressure.

In the financial year to the end of July, operating profits fell by nearly 47% to £4.3m at the £153.7m turnover Marketing Activation division comprising of SP Group, Service Graphics, Tactical Solutions, and SIMS. And while sales at Books wing Clays grew by 12% to £76.5m following the Penguin Random House contract win, profits more than halved to £2.6m.

The PLC effectively hoisted a ‘for sale’ sign over both print divisions when it announced the strategic review at the beginning of March, but nothing concrete has emerged since.

Stillwell acknowledged that it was a difficult process.

“It’s not easy, that’s the reason it’s taking quite a long time. It’s no secret that we’ve talked to people in the marketplace about a possible purchase, but at the moment we haven’t had a purchase.”

He also accepted that ongoing uncertainty over the future for the businesses “will inevitably have some impact” on the group’s ability to win or retain large contracts.

Walstead, which acquired the St Ives web division in 2011, has been mooted as a possible buyer, but the group’s focus has been on continental expansion in its most recent M&A deals. The Clays business is understood to be of potential interest to a number of large Chinese book printers.   

Stillwell was also quizzed by a private shareholder about the potential impact on the firm’s balance sheet of the substantial earn-out payments totalling £29m, due in this financial year and next, to the vendors of The App Business and Solstice.

“We’ve done financial projections for the cash implications of that and we will remain well within the banking covenants. I don’t think you need to have any concerns on the earn-outs per se having any impact on the balance sheet structure,” he stated.

“The overall position is the one that we would prefer, in that those businesses are performing extremely well.”

The PLC has traditionally had a very strong balance sheet with a large amount of equipment and property on its books and little debt, but at the last balance sheet date net assets had reduced by 27% to £97.2m. St Ives also has more than £150m of goodwill and intangible assets on its balance sheet.

“These days our assets walk out of the door at five o’clock,” Stillwell said.

Stillwell has already made addressing the balance sheet issues a top priority for the board. In the group’s report and accounts he stated: “We have agreed that our [the board’s] number one task is to achieve a more stable balance sheet, allowing us to consider future acquisitions and international expansion from a stronger foundation.”

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