4imprint Group Plc · LSE:FOUR
4imprint — FY2013 Earnings Presentation
31 slides from 4imprint's earnings presentation, February 2014
Slide 1: Results presentation for the year ended 28 December 2013
Results presentation for the year ended 28 December 2013
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Slide 3: Final Results 2013
Final Results 2013 1. Background 2. Highlights 3. Financial review 4. Operating review 5. Outlook John Poulter Chairman Kevin Lyons-Tarr CEO, 4imprint Direct Marketing Gillian Davies Group Finance Director 1
Slide 4: Background
Background • 4imprint is a UK listed promotional products Group with one operation - 4imprint Direct Marketing. • This follows the disposals of: • March 2012 – Brand Addition (European distribution business) • February 2014 - SPS (UK manufacturing business) • The Group’s resources are now concentrat
Slide 5: Highlights – John Poulter
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Slide 6: Highlights
Highlights • Group revenue† up 16% • Underlying* profit before tax† up 36% • Underlying* basic EPS† up 42% • Proposed total dividend 17.00p up 10% • Robust financial position, net cash £15.76m • SPS disposal completed 10 February 2014, net proceeds c.£5.8m † Continuing operations, restated * Underly
Slide 7: Financial Review – Gillian Davies
Financial Review – Gillian Davies 5
Slide 8: Results Summary – Continuing Operations
Results Summary – Continuing Operations 2013 2012 (restated)† % Change Revenue £'000 £'000 North America US $ 294,909 256,504 +15% Direct Marketing 196,422 168,905 +16% Delivery receipts and other income** 16,439 14,608 Total 212,861 183,513 +16% • Exchange rate 2013 2012 % Change $1.56 v $1.58 prio
Slide 9: Income Statement Bridge
Income Statement Bridge 2013 2012 (restated) • Performance share Continuing operations £'000 £'000 plan & social security costs, SAYE schemes Underlying profit before tax 12,502 9,196 • Pension risk i) Share option related charges (1,594) (650) reduction exercise ii) Exceptional items (254) (592) ii
Slide 10: Discontinued Operations
Discontinued Operations SPS • The disposal of SPS was completed on 10 February 2014, for gross consideration of £7.25m • A charge of £3.65m has been made for the estimated loss on disposal after transaction costs including senior management bonus • Net assets sold c.£9.5m • Net cash proceeds receive
Slide 11: Tax
Tax • Effective tax rate 27% (2012: 32%) 2013 2012 • Tax rate on underlying profit Continuing operations £'000 £'000 25% (2012: 29%) Profit before tax 9,252 6,365 • Tax payable in US (39% marginal rate) Current tax 1,906 1,122 Deferred tax 560 931 • Cash tax payments will increase Tax charge 2,466 2
Slide 12: Cash Flow
Cash Flow Underlying EBITDA: £13.61m Working capital: £0.19m Capex: £(1.14)m • £1.25m deferred £12.66m consideration received • SPS operating cash inflow • £(0.26)m disposal costs £0.84m paid re SPS and Brand Addition 12,659 (1,735) (318) (3,175) (4,184) £’000 841 15,757 991 10,678 Continuing Group
Slide 13: Balance Sheet
Balance Sheet 2013 2012 £'000 £'000 • Net assets £16.78m, Fixed assets 6,155 13,292 increase of £2.99m Deferred tax asset 3,834 6,281 9,989 19,573 • Direct Marketing net operating assets £9.97m Inventories 2,235 3,338 (ROCE 148%) Receivables 18,253 20,190 Payables (17,997) (16,075) • Direct Marketin
Slide 14: Movement in Pension Deficit
Movement in Pension Deficit Expenses paid by the Scheme £(3.28)m interest cost £4.20m asset return assumptions (22,894) 4,586 3,175 (554) (16,611) (924) Demographic assumptions £1.9m Asset outperformance £1.7m Experience gains and losses £1.1m Discount rate and inflation £(0.1)m 30 December 2012 Cha
Slide 15: Pension Deficit
Pension Deficit • At the end of the year: • 1,163 pensioners (including 28 Dec 29 Dec 436 with insured benefits) 2013 2012 • 591 deferred pensioners £'000 £'000 • Scheme closed to future accrual Liability* (77,677) (79,798) Assets* 61,066 56,904 • Triennial valuation complete, Deficit (16,611) (22,8
Slide 16: 2014 Full Year Outlook
2014 Full Year Outlook Direct Marketing: • Target organic revenue growth and stable operating profit margin % in line with strategy • H1 operating profit margin % will reflect recognition of marketing spend as in prior years • 1 cent movement in US dollar increases/decreases revenue by c.£1.4m and o
Slide 17: Direct Marketing – North America
Direct Marketing – North America 2013 2012 • Gross profit % stable, over a $'000 $'000 % Change number of years Revenue 294,909 256,504 15% • 10% increase in marketing Gross profit 104,158 90,362 15% spend driving revenue growth Gross profit % 35.3% 35.2% Marketing costs (51,572) (46,836) 10% • Sell
Slide 18: Operating Review – Kevin Lyons-Tarr
Operating Review – Kevin Lyons-Tarr 16
Slide 19: Direct Marketing Strategy
Direct Marketing Strategy • Continue to deliver market share growth in the large (c.$24bn) highly fragmented market • Target to double the business in five years (2011 – 2016) • Equivalent to c.15% p.a. sales growth at stable operating profit margin % (c.7%) • Consistent with achievement in previous
Slide 20: Highlights
Highlights Revenue - North America • North American revenue 300 294.9 $294.9m, +15%; industry +5%, 256.5 250 224.5 • North American operating profit 200 $22.5m, +31% ($m) 150 100 • UK DM revenue +12% 50 • Total DM Revenue £196.4m, 0 2011 2012 2013 +16% • Total DM operating profit Cash generated v op
Slide 21: Customer Acquisition and Retention
Customer Acquisition and Retention Customers Acquired & Retention Percentage 45% 45000 40% 40000 35% 35000 30% 30000 25% 25000 • More than 145k (2012: c.135k) new customers 20% 20000 acquired 15% 15000 10% 10000 • Strong retention, 19% 5% 5000 increase in existing 0% 0 customer orders 1 2 3 4 1 2 3
Slide 22: Marketing Driving Growth
Marketing Driving Growth • Marketing spend $51.6m, up 10%. Marketing Spend by Category Revenue/marketing dollar $5.72 vs. 2008 2013 $5.48 in 2012 • Increase driven equally by improved yield and favourable costs • Improved yield driven by: • Realised full year of yield improvements on speciality book
Slide 23: Continuing Growth Opportunities
Continuing Growth Opportunities • Customer acquisition: • Targeted increases in catalogue circulation • Continue the roll out of online marketing initiatives • Customer retention: • Modest increase in Blue Box® programme volume • Enhance online customer reorder process • Expand product range at curr
Slide 24: Outlook
Outlook Early indications for 2014 are of continuing good operational performance in line with our aspirations although the dollar exchange rate will, if sustained, act as a headwind on performance measured in sterling 22
Slide 25: Appendices
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Slide 26: Financial Track Record
Financial Track Record Revenue*† (£m) Underlying** profit before tax†* (£m) 240 212.9 14.00 12.50 200 183.5 12.00 158.8 10.00 9.20 160 8.00 7.91 120 6.00 80 4.00 40 2.00 0 0.00 2011 2012 2013 2011 2012 2013 Underlying** EPS†* and dividend per share Net cash (£000) 18,000 40 (pence) 15,757 35.51 16,0
Slide 27: 4imprint Direct Marketing Model
4imprint Direct Marketing Model • Sale of custom-printed merchandise, used to promote a brand, service or product • Purchases by individuals within businesses and organisations of all sizes • Product customised and shipped to customer directly from suppliers • Investment in marketing, technology and
Slide 28: Market Size
Market Size Promotional Products Sales ($ billions) 28 24 20 16 12 8 4 0 2009 2010 2011 2012 2013 UK & Ireland Canada US Market size data source: ASI State of the Industry Survey, Sourcing City 6 year industry review and 4imprint management estimate. UK & Ireland revenues translated at 2013 average
Slide 29: Shareholder List
Shareholder List As at 17/2/2014 No. of shares % Blackrock Investment Management 4,422,348 16.5 Standard Life Investments 2,607,901 9.8 GVO Investment Management 1,878,775 7.0 Mr K.J. Minton 1,735,088 6.5 Artemis Fund Managers 1,718,892 6.4 Fidelity Worldwide Investment 1,479,366 5.5 JP Morgan Asset
Slide 30: Promotional Product Range
Promotional Product Range 4imprint Direct Marketing Revenue by Product Category Toys & Novelties 2% Misc Food & Candy Wellness & Safety 1% 1% Bags Awards & Office 4% 19% 4% Technology 5% Trade Show and Signage 5% Auto Home & Tools Writing 5% 14% Outdoors & Leisure 6% Stationery Apparel 8% 14% Drinkw
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