4imprint Group Plc · LSE:FOUR
4imprint — H1 2014 Earnings Presentation
30 slides from 4imprint's earnings presentation, July 2014
Slide 1: Results presentation for the half year ended 28 June 2014
Results presentation for the half year ended 28 June 2014
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Slide 3: Half Year Results 2014
Half Year Results 2014 1. Background 2. Highlights 3. Financial review 4. Operating review 5. Outlook John Poulter Executive Chairman Kevin Lyons-Tarr CEO, 4imprint Direct Marketing Gillian Davies Group Finance Director 1
Slide 4: Background
Background • 4imprint is a leading direct marketer of promotional products in the USA, Canada, the UK and Ireland • 96% of revenue is generated in the USA and Canada from its headquarters in Wisconsin, USA • UK and Irish customers are served out of its base in Manchester, England. • The Group’s reso
Slide 5: Highlights – John Poulter
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Slide 6: Highlights
Highlights • Group revenue† up 14% • Underlying* profit before tax † up 37% • Underlying* basic EPS † up 33% • Interim dividend 6.20p up 11% • Net cash £26.13m, including SPS net disposal proceeds £5.93m • Pursuing further significant risk reduction in legacy pension scheme † Continuing operations,
Slide 7: Financial Review – Gillian Davies
Financial Review – Gillian Davies 5
Slide 8: Results Summary – Continuing Operations
Results Summary – Continuing Operations** Revenue† (£m) +14% Revenue† - North America ($m) +23% 250 350 320.0 212.9 300 279.1 200 183.5 250 150 185.1 200 115.7 ($m) 101.3 150.5 100 150 133.5 88.3 100 50 50 0 0 2012 FY 2013 FY 2012 H1 2013 H1 2014 H1 2012 2013 2012 H1 2013 H1 2014 H1 Underlying* prof
Slide 9: Income Statement Bridge
Income Statement Bridge H1 2014 H1 2013 FY 2013 • Performance share (restated) plan, SAYE Continuing operations £'000 £'000 £'000 schemes • Pension risk Underlying profit before tax 5,854 4,284 12,502 reduction exercises (includes £0.14m i) Share option related charges (315) (380) (1,594) Scheme cos
Slide 10: Cash Flow
Cash Flow • £7.48m consideration received • £(1.24)m disposal costs paid • £(0.31)m net cash at disposal Underlying EBITDA: £6.30m . • £(0.13)m operating cash outflow Working capital: £5.38m . • £5.80m Capex: £(0.64)m. £11.04m. 11,037 (106) (544) (829) 5,798 26,132 (1,962) (3,019) £’000 15,757 Conti
Slide 11: Balance Sheet
Balance Sheet 28 Jun 29 Jun 28 Dec 2014 2013 2013 £'000 £'000 £'000 Fixed assets 6,140 13,304 6,155 Deferred tax asset 4,265 5,158 3,834 10,405 18,462 9,989 • Net assets £14.32m, Inventories 1,982 3,881 2,235 decrease of £2.46m Receivables 18,606 22,138 18,253 • Negative working capital Payables (22
Slide 12: Movement in Pension Deficit
Movement in Pension Deficit Expenses paid by the Net interest cost Scheme (3,101) 1,962 (18,735) (345) (354) (286) (16,611) Regular £1.71m FERO £0.25m Discount rate and inflation £(4.1)m (Discount rate reduced from 4.48% to 4.04%) Asset outperformance £1.5m Other assumptions £(0.5)m 28 December 2013
Slide 13: Pension Deficit
Pension Deficit • Legacy scheme, no future accrual • 1,151 pensioners (including 411 with 28 Jun 28 Dec insured benefits) 2014 2013 £'000 £'000 • 535 deferred pensioners ⍟ Liability (77,199) (77,677) Assets ⍟ 58,464 61,066 • FERO (Flexible early retirement offer Deficit (18,735) (16,611) complete) D
Slide 14: 2014 H2 Outlook
2014 H2 Outlook Direct Marketing: • Continue to drive organic revenue growth through investment in marketing • H2 operating profit margin % will reflect recognition of marketing spend as in prior years • 1 cent movement in US dollar increases/decreases annual revenue by c.£1.4m and operating profit
Slide 15: Direct Marketing – North America
Direct Marketing – North America H1 2014 H1 2013 FY 2013 • Gross profit % stable $'000 $'000 % Change $'000 • 23% increase in † marketing spend Revenue 185,094 150,484 23% 320,035 driving revenue Gross profit 60,802 49,056 24% 104,158 growth Gross profit % 32.8% 32.6% 32.5% • H1 operating margin Mar
Slide 16: Operating Review – Kevin Lyons-Tarr
Operating Review – Kevin Lyons-Tarr 14
Slide 17: Direct Marketing Strategy
Direct Marketing Strategy • Continue to deliver market share growth in the large (c.$24bn) highly fragmented market • On target to double the business in five years (2011 – 2016) at stable operating profit margin % • Equivalent to c.15% CAGR in sales • Consistent with achievement in previous five ye
Slide 18: Strong Organic Growth
Strong Organic Growth North America - Revenue 350 320.0 300 279.1 250 • Strong H1 performance in both sales and profit ($m) 200 185.1 150.5 150 133.5 • North American revenue 100 $185.1m, +23%; industry 50 +7% 0 2012 2013 2012 H1 2013 H1 2014 H1 • North American operating profit $11.45m, +41% North
Slide 19: Consistent Customer Acquisition and Retention
Consistent Customer Acquisition and Retention Customers Acquired & Retention Percentage 45% 60000 40% 50000 35% • Orders received +21%; 30% 40000 more than 360,000 in 25% total 30000 20% • Strong performance 15% 20000 driven by increased 10% 10000 marketing spend 5% 0% 0 • In particular, orders 1 2
Slide 20: Marketing Driving Growth
Marketing Driving Growth • Marketing spend $32.5m, +23%; H1 revenue/marketing dollar $5.70 vs. $5.71 in H1 PY • Increased marketing spend driving robust growth in new customer acquisition: • Online marketing spend increased significantly • Acceleration in a variety of online marketing opportunities
Slide 21: Strong Customer Satisfaction
Strong Customer Satisfaction • Recent external customer survey (undertaken every c.3 years) • Confirms results of internal customer surveys continually undertaken found the rated the 99% 4imprint service to be ‘favourable’ 97% overall value of 4imprint as ‘Excellent’ or ‘Good’ would be ‘very 94% of
Slide 22: H2 Priorities
H2 Priorities • Continued focus on online spend • Use database technology and “test -read –rollout” approach to identify opportunities • Establish rate at which online marketing expansion continues • Continue planned catalogue circulation growth, targeted to opportunities identified via database ana
Slide 23: Outlook
Outlook Indications for the second half year are that good performance, consistent with our stated strategic growth objectives will continue 21
Slide 24: Appendices
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Slide 25: 4imprint Direct Marketing Model
4imprint Direct Marketing Model • Sale of custom-printed merchandise, used to promote a brand, service or product • Purchases by individuals within businesses and organisations of all sizes • Product customised and shipped to customer directly from suppliers • Investment in marketing, technology and
Slide 26: Market Size
Market Size Promotional Products Sales ($ 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 27: Results Summary – Continuing Operations
Results Summary – Continuing Operations H1 2014 H1 2013 FY 2013 † (restated) % Change Revenue £'000 £'000 £'000 North America US $ 185,094 150,484 +23% 320,035 Direct Marketing NA 110,881 97,414 +14% 204,613 Direct Marketing UK 4,771 3,923 +22% 8,248 Total 115,652 101,337 +14% 212,861 • Exchange rat
Slide 28: Discontinued Operation – Sale of SPS
Discontinued Operation – Sale of SPS H1 2014 Profit on disposal of business £'000 Consideration 7,250 Adjustment for working capital and cash at date of sale 235 Adjusted consideration 7,485 Costs of disposal (1,492) 5,993 Net assets sold, excluding cash and debt (9,054) Cash transferred with busine
Slide 29: Shareholder List
Shareholder List As at 15/07/2014 No. of shares % BlackRock Investment Management 4,573,325 16.4 Standard Life Investments 2,526,070 9.0 GVO Investment Management 1,868,775 6.7 Mr K.J. Minton 1,735,088 6.2 Artemis Fund Managers 1,630,272 5.8 JP Morgan Asset Management 1,492,960 5.3 Fidelity Worldwid
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