Slide 1: Investor presentation for the year ended 31 March 2016
Investor presentation for the year ended 31 March 2016 Presented by Paul Fineman CEO and Anthony Lawrinson CFO June 2016 Formerly International Greetings plc
Slide 2: Introduction
Introduction designs, innovates, manufactures and sources the following core product categories Stationery & Celebrations creative play Gifting 2
Slide 3: Welcome to our vision of the future
Welcome to our vision of the future A design‑focused multi‑category business servicing the world’s best retailers. Benefits to the business Leverages our Becomes Broadens Helps global scale more cohesive growth potential to simplify Drive the benefits of Next phase – trading Communicating the extent
Slide 4: Some key facts
Some key facts Present in over 150,000 Over 80 million retail outlets crackers, in more than In excess No. 3 in the 750 million stickers, of 5,400 80 countries nearly 850 million global gift customers packaging metres of giftwrap, sold in 2016 market worth £10bn at retail value Balanced business wit
Slide 5: Where we operate
Where we operate Group revenue by customer destination 34% 33% UK USA 19% 12% Europe Australia 2% Rest of world £79.6m £80.0m £43.8m £27.9m £5.6m 5
Slide 6: A unique blend of creativity and reliability
A unique blend of creativity and reliability • Strong offering created for specific customer channels – • Design and innovation – we design with creative flair and we provide a good, better, best approach and are proud imagination, striving to exceed our customers’ expectations to serve the best ret
Slide 7: The elephant in the room – Brexit
The elephant in the room – Brexit • Weaker sterling results in stronger overseas • Diversified earnings when translated • Global portfolio • One third of product manufactured in local markets • New global funding arrangements • Product sourced from Asia in US dollars potentially higher cost • Largel
Slide 8: Results
Results Design is at the heart of all we do 8
Slide 9: Financial highlights
Financial highlights +18% +15% +16% 40% on 2015 on 2015 on 2015 reduction on 2015 10.8 13.2 20.7 42.1 11.5 17.9 36.9 9.2 15.2 7.6 29.4 7.3 8.4 7.8 17.5 7.5 2013 2014 2015 2016 2013 2014 2015 2016 2013 2014 2015 2016 2013 2014 2015 2016 Profit before tax, Underlying diluted Cash generated Net debt ex
Slide 10: Operational and commercial highlights
Operational and commercial highlights • Record Group sales of £237m includes • Non‑UK revenues by customer destination highest volumes ever of gift packaging and are now 66% of Group sales greetings related products sold, including over 60 million gift bags • In a year of excellent overall performan
Slide 11: Summary of full year results
Summary of full year results Year ended Year ended 31 March 31 March 2016 2015 Growth £m £m % Sales 237.0 229.0 3 43.4 Gross profit 40.0 9 18.3% 17.5% (30.7) Overheads (28.8) 6 12.9% 12.6% 0.8 Other income 0.7 13.5 Operating profit 11.9 14 17.4 EBITDA (pre exceptional items and LTIP) 16.3 7 Finance
Slide 12: Where we operate: revenue by geographic business unit
IG Design IG Design Group Group plc plc IG Design Where we operate Next phase – trading stru Group revenue by geographic business unit oup ralia ign Group Europe Pty Europe BV BV IG Design IG Design Group IG Design Group Americas Group Asia Limited IncAsia Limited IG Design IG Design Group Group UK
Slide 13: Earnings per share and tax
Earnings per share and tax Diluted EPS (Pre‑exceptionals and LTIP) Tax rates 14.8% 12 40 13.2 36.9% 35 10 11.5 35.1 30 “Expected” rate 30.0 27% 8 7.7% 25 EPS (pence) 8.4 7.8 % 23.9 24.2 6 20 “Underlying” rate 20.0 22.5% 15 4 10 2 5 Continental 2012/13 2013/14 2014/15 2015/16 UK Asia* USA USA Europe*
Slide 14: Strong cash flow conversion
Strong cash flow conversion 2016 2015 £m £m EBITDA before LTIP costs 17.2 16.3 (Increase)/decrease in debtors 1.0 (1.3) Decrease in stock 1.2 3.2 Increase in creditors, provisions and accruals 1.5 0.7 Exceptional items (0.2) (1.1) Cash generated from operations 20.7 17.8 Net capital expenditure (3.2
Slide 15: Balance sheet
Balance sheet As at As at Freehold property 31 March 31 March Fixed assets of £30.2m include freehold land and buildings with a net book value of 2016 2015 £9.9m. This includes the following site that may become available for sale in the future: £m £m IG UK NBV Est. market value £m Intangibles 32.2
Slide 16: New global funding arrangements
New global funding arrangements Lender Due Facility Margin Covenant HSBC Corporate revolving credit facility & overdraft 2019 £18m 0.95% Leverage covenant Working capital revolving credit facility Annual £39m 1.40% Stock and unfunded debtors HP agreement 2021 £2m 4.75% Fixed rate UK/Europe Receivabl
Slide 17: Our objectives
Outperformance remains our goal Underlying Average leverage Dividend policy EPS growth Our objectives Double digit CAGR for Average leverage Trend upwards no less than underlying EPS < 2.5x by 18/19 3x covered Through organic growth 15/16 2.5p Currently 3.2x and acquisitions (5.3x covered) Return on
Slide 18: Looking forward
Looking forward 18
Slide 19: Strategy
Strategy Strategic themes To be the world’s largest and most efficient designer and manufacturer in our core category 1 chieve market leading A position in gift packaging of gift packaging To become an increasingly important and successful supplier of design‑led stationery, 2 F ocus on stationery an
Slide 20: Growth
Growth Organic growth Inorganic growth Products M&A New products to existing customers ie partyware, stickers • Entering new closely related categories • Adding recognised brands to our group Channels • Leveraging scale Increase number of channels for existing products through • Consolidating the ma
Slide 21: Underpinning growth
Underpinning growth Operational scale Automation • Operational synergies resulting • Purchasing of raw materials – • Payback from high speed, • Further automation – cost from inter‑changeable Group‑wide worldwide benchmarking highly efficient paper reducing and volume enhancing. wrap manufacturing f
Slide 22: Outlook for Design Group
Outlook for Design Group 1 Foundations in place to support growth 2 Plentiful growth opportunities, organic or M&A/JV/partnerships 3 Flexible and competitive global funding in place gives us options to support the future vision 4 Focused on profit growth underpinned by a unique blend of creativity a