Slide 1: Full Year Results Presentation 2018
Full Year Results Presentation 2018 Presented by Paul Fineman, CEO and Giles Willits, CFO
Slide 2: Contents
CONTENTS 1. 2. 3. Highlights Review of Future 2018 Financial Growth Performance Drivers IG Design Group plc FULL YEAR RESULTS PRESENTATION 2018 2
Slide 3: Highlights 2018
[HEADING] Highlights 2018 IG Design Group plc FULL YEAR RESULTS PRESENTATION 2018 3
Slide 4: Another year of significant progress
ANOTHER YEAR OF SIGNIFICANT PROGRESS Success delivered through: Growth Investment Innovation across all regions at record levels in product driving efficiency development and in and streamlining delivering excellent processes customer service Acquisition Financial of Biscay in January another year of
Slide 5: Our promises delivered
OUR PROMISES DELIVERED Underlying EPS(a) Average leverage(b) Dividend (pence) (pence) Target double digit three year Sustain average leverage Trend to 2.5x covered CAGR in underlying EPS between 1.5x and 2.5x 21.8 4.6 6.0 4.1 18.2 4.5 3.2 13.2 11.5 2.3 8.4 2.5 1.5 1.0 — 2014 2015 2016 2017 2018 2014
Slide 6: Group revenue through diversity
GROUP REVENUE THROUGH DIVERSITY By customer destination By category 74% 13% 10% 3% Celebrations Giftware Stationery(a) NFR(b) ROW Australia £6.4m By season £36.9m 2% 51% 45% 4% 11% Minor Christmas Everyday Seasons Europe USA £58.1m £136.8m By brand 18% 42% 51% 49% Designed for you/Customer bespoke D
Slide 7: Who we sell to
WHO WE SELL TO Our large customer base includes the following retailers: 15 19 11 28 years years years years 21 30 4 15 years years years years 20 11 31 35 years years years years 15 15 13 29 years years years years 25 11 7 16 years years years years UK Europe USA Australia World IG Design Group plc
Slide 8: Some key facts
SOME KEY FACTS 100 million cards, 100 million No. 3 in the global gift Balanced business with gift bags and over 1 billion packaging and greetings 27% of sales by destination metres of gift wrap sold in market worth an estimated in UK and with 73% in 2017/18 £15 billion(a) at retail value other mark
Slide 9: Review of Financial Performance
[HEADING] Review of Financial Performance IG Design Group plc FULL YEAR RESULTS PRESENTATION 2018 9
Slide 10: Financial highlights
FINANCIAL HIGHLIGHTS Revenue Underlying profit Net cash/(debt) (£m) (£m) (a) (£m) 327.5 21.4 4.4 3.0 311.0 16.3 229.0 237.0 (17.5) 224.5 (29.4) 10.8 9.2 7.6 (36.9) 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 +5% on 2017 +32% on 2017 +£1.4m on 2017 (a) Underlying profit
Slide 11: Summary of full year results
SUMMARY OF FULL YEAR RESULTS Year ended Year ended 31 March 31 March 2018 2017 Growth £m £m % Sales 327.5 311.0 5 Gross profit 70.0 63.9 9 Overheads (47.6) (46.6) 2 Other income 0.4 0.2 EBITDA (pre‑exceptional items and LTIP) 28.0 22.4 25 Operating profit 22.8 17.5 30 Finance costs (1.4) (1.2) 13 Pr
Slide 12: On track to deliver group margin targets
ON TRACK TO DELIVER GROUP MARGIN TARGETS Sales Profit Margin Group revenue 2018 2017 Growth 2018 2017 Growth 2018 2017 38% UK & Asia £m 123.3 117.0 5.4% 7.9 7.5 5.6% 6.4% 6.4% 37% Americas $m 158.8 151.6 4.8% 12.3 9.1 34.6% 7.8% 6.0% 16% Europe €m 58.5 53.1 10.1% 7.5 5.8 29.0% 12.9% 11.0% 11% Austra
Slide 13: Strong cash conversion funding growth investment
STRONG CASH CONVERSION FUNDING GROWTH INVESTMENT Year ended Year ended 31 March 31 March 2018 2017 £m £m EBITDA(a) 28.0 22.4 Change in trade and other receivables (9.1) (0.8) Change in inventory 0.4 2.7 Change in creditors, provisions and accruals 3.3 8.2 Exceptional items (0.5) (0.7) LTIP charges (
Slide 14: Balance sheet
BALANCE SHEET As at As at 31 March 31 March Freehold property 2018 2017 £m £m Sale of excess warehousing at Hirwaun site Intangibles 36.5 33.7 delivers exceptional gain of £1.1 million, comprising sale proceeds net of related costs Fixed assets 35.5 32.6 for the rationalisation of operations to suit
Slide 15: Flexible facilities improve interest cover and leverage
FLEXIBLE FACILITIES IMPROVE INTEREST COVER AND LEVERAGE As at 31 March Lender Renewal 2018 Margin Covenant HSBC Corporate revolving credit facility and overdraft 2021 £18m 0.95% Leverage Working capital revolving credit facility Annual £40m 0.80% Stock and unfunded debtors UK/Europe receivables fina
Slide 16: Managing our challenges
MANAGING OUR CHALLENGES Be Have a Have a Sustain resilient Combatting Challenge robust reliable De-risk FX and nurture to macro cost supply customer movements capable economic headwinds chain base leadership factors • Use our global • Low customer • Continue to • A portfolio of • Operating in local
Slide 17: Our objectives
OUR FUTURE PROMISES Growth: Returns: Risk: Underlying EPS growth Dividend policy Average leverage OUR OBJECTIVES Target double digit three year Trend to 2.5x covered Sustain long term between CAGR in underlying EPS (40% pay-out) 1.5x and 2.5x Through organic growth with Out-performance supports Prov
Slide 18: Future Growth Drivers
[HEADING] Future Growth Drivers IG Design Group plc FULL YEAR RESULTS PRESENTATION 2018 18
Slide 19: Group development – time for growth
GROUP DEVELOPMENT – TIME FOR GROWTH Underlying EPS(a) Growth Transformation EPS Recovery 2008 2014 2018 8.4p 21.8p (13.9p) (a) Underlying fully diluted earnings per share before exceptional items and LTIP charges. IG Design Group plc FULL YEAR RESULTS PRESENTATION 2018 19
Slide 20: Building on our strengths
BUILDING ON OUR STRENGTHS Our capabilities Product categories A broad portfolio Stationery and creative play Low Geographic cost diversity ‘Not-for-resale’ bags Strong Award offering winning service Celebrations Giftware Audited Design & Customer compliance innovation relationships IG Design Group p
Slide 21: Leveraging market opportunities
LEVERAGING MARKET OPPORTUNITIES TRENDS OPPORTUNITIES MARKET • Consumers expect innovation and value in core categories • Increasing number of occasions to celebrate • Working with the winners throughout the year • Design and innovation • Efficiency and scale CUSTOMER • Mass, discounter and specialis
Slide 22: Delivering growth
DELIVERING GROWTH WORKING WITH THE WINNERS DESIGN AND INNOVATION EFFICIENCY AND SCALE • Organic growth with existing and new • Developing in new channels and • Driving margins through investment in customers, suppliers and product adjacent product categories process and people categories • Expanding
Slide 23: M&A opportunities
M&A OPPORTUNITIES KEY AREAS OF OPPORTUNITY CATEGORY CONSOLIDATION RELATED/ADJACENT PRODUCT CATEGORIES FOCUSED EARNINGS PER SHARE ACCRETION FOR SHAREHOLDERS THROUGH NEW CHANNELS • Synergies through economies of scale • One-stop-shop for our customers NEW REGIONS IG Design Group plc FULL YEAR RESULTS
Slide 24: Why invest?
WHY INVEST? We will continue to drive organic growth, through our diversified business operating across regions, categories, channels, seasons and brands We will enhance net margins through investment – driving efficiency, streamlining processes and attracting best talent We will continue to drive i
Slide 25: Appendix
[HEADING] Appendix IG Design Group plc FULL YEAR RESULTS PRESENTATION 2018 25
Slide 26: 'Not-for-resale' bags
‘NOT-FOR-RESALE’ BAGS Produced in the UK as from September 2017 New channel development drives organic growth • Design Group commenced supply of bags • Bags with handles represent 48% of a retailers produced in our China factory in FY16 ‘not‑for‑sale’ consumables spend and has now commenced UK produ
Slide 27: Major investments
MAJOR INVESTMENTS July 2016 Acquisition of Lang June 2016 Anker Play Products September 2017 established, USA Investment bag machine, UK April 2015 Paper conversion machine, USA July 2014 January 2018 Acquisition Acquisition of Biscay of Enper March 2014 Major investment in Wales completed March 201
Slide 28: Our environmental & corporate responsibility
OUR ENVIRONMENTAL & CORPORATE RESPONSIBILITY Across all territories, we comply with the highest standards in the market to ensure we can prove our commitment to looking after our customers, our staff and our planet. Accreditations include: Employee engagement Our team was recognised with a ‘Highly C
Slide 29: Our regional business leaders
OUR REGIONAL BUSINESS LEADERS Paul Fineman Giles Willits Group CEO Group CFO Lance Burn MD – UK & China Joost Bogers Ron Vroegindeweij MD – Europe – MD – Europe – Celebrations Gifting Gideon Schlessinger CEO – Americas Frank Pynakker CEO – Australia IG Design Group plc FULL YEAR RESULTS PRESENTATION
Slide 30: Largest shareholders
LARGEST SHAREHOLDERS(c) Hedlund Family(a) Miton Group Paul E Fineman(b) Schroders Plc 35.08% 7.97% 7.24% 5.81% Octopus Close Brothers AM Mr N Fisher & Family Hargreave Hale Ltd 4.49% 4.33% 3.94% 3.01% (a) In addition to the Hedlund Family’s beneficial interest set out above the Hedlund family is als