4imprint Group Plc · LSE:FOUR
4imprint — FY2014 Earnings Presentation
29 slides from 4imprint's earnings presentation, March 2015
Slide 1: Results presentation for the year ended 27 December 2014
Results presentation for the year ended 27 December 2014
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Slide 3: Year End Results 2014
Year End Results 2014 1. Background 2. Highlights 3. Financial review 4. Operating review 5. Outlook John Poulter Executive Chairman Gillian Davies Group Finance Director Kevin Lyons-Tarr CEO, Direct Marketing David Seekings CFO, Direct Marketing 1
Slide 4: Background
Background • 4imprint is the 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 • 4imprint’s stra
Slide 5: Highlights – John Poulter
Highlights — John Poulter ® | e | 8
Slide 6: Highlights
Highlights • Group revenue† up 25% • Underlying* profit before tax † up 42% • Underlying* basic EPS † up 32% • Proposed total dividend 32.41c up 18%; 20.45p up 20% • 79% of the pension liability now insured • Net cash $18.30m † Continuing operations * Underlying is before share option related charge
Slide 7: Financial Review – Gillian Davies
Financial Review – Gillian Davies 5
Slide 8: Summary – Continuing Operations
Summary – Continuing Operations +25% +42% Revenue† ($m) Underlying* profit before tax† ($m) 460 30.00 415.8 27.86 420 26.00 380 332.9 340 290.8 22.00 300 19.55 260 18.00 220 14.57 180 14.00 140 100 10.00 2012 2013 2014 2012 2013 2014 +32% After $26.5m Underlying EPS* and dividend per share Net cash†
Slide 9: Group Income Statement
Group Income Statement 2014 2013 Continuing operations $'000 $'000 % Change Revenue 415,773 332,936 25% • Gross profit % stable Gross profit 137,210 109,021 26% Gross profit % 33.0% 32.7% • 26% increase in marketing spend Marketing costs (69,186) (54,753) 26% driving revenue Selling costs (18,172) (
Slide 10: Income Statement Bridge
Income Statement Bridge 2014 2013 • Performance share plan, SAYE Continuing operations $'000 $'000 schemes • Pension risk Underlying profit before tax 27,859 19,555 reduction exercises (includes $1.08m i) Share option related charges (666) (2,493) paid by Scheme) ii) Exceptional items (2,407) (397)
Slide 11: Cash Flow
Cash Flow Underlying PBIT: $27.76m Depreciation & Amortisation: $1.70m .Working capital: $0.21m NI on share options $1.37m Capex: $(2.09)m .Pension projects $0.88m $27.58m Regular $3.72m FERO $0.41m Buy in $22.41m 27,583 (2,251) $12.27m consideration received (6,187) $(2.05)m disposal costs paid $(0
Slide 12: Balance Sheet
Balance Sheet 2014 2013 $'000 $'000 Fixed assets 10,403 10,152 Deferred tax asset 4,794 6,324 15,197 16,476 • Net assets $14.07m, reduction of $13.60m Inventories 4,353 3,686 (pension remeasurement Receivables 36,810 30,105 loss of $21.70m) Payables (36,038) (29,684) Assets held for sale - 13,824 Li
Slide 13: Movement in Pension Deficit
Movement in Pension Deficit Regular $3.72m FERO $0.41m Premium paid $107.06m Buy in $22.41m Liability insured $94.44m £16.61m Exceptional items $1.08m (9,081) 26,544 Admin charges $0.54m FERO settlement charge $0.47m £15.43m $’000 (27,398) (903) 1,539 (2,094) (24,015) (12,622) Discount rate and infl
Slide 14: Pension Deficit
Pension Deficit • 79% of total liability now insured, risk significantly reduced Total Uninsured Liability Liabiity • Legacy scheme, no future accrual $'000 $'000 Liability (154,918) (33,066) • At 30 Sept 2014: 977 insured Assets 130,903 9,051 pensioners, 163 uninsured pensioners Deficit (24,015) (2
Slide 15: 2015 Guidance
2015 Guidance • Continue to drive organic revenue growth through investment in marketing • Operating profit margin % lower in H1 than H2 due to phasing of marketing spend (as in prior years) • FY tax rate at c.32% (underlying c.30%), as US profit increases • Share based payments charge of c.$0.2m, e
Slide 16: Operating Review – Kevin Lyons-Tarr
Operating Review – Kevin Lyons-Tarr 14
Slide 17: Strategy
Strategy Growth History* - 4imprint v Market 440 415.8 40 • Continue to deliver market 4imprint US & Canada Revenue ($m) 420 4imprint 38 share growth in the large 400 increase 63% 36 (c.$27bn) highly fragmented 380 markets Market Size ($bn) 34 360 332.9 32 340 Market 30 320 increase 16% 300 290.8 28
Slide 18: Revenue
Revenue Revenue 450 415.8 400 • Continued strong organic 350 332.9 growth 300 290.8 ($m) 254.7 • North America revenue 250 $399m, +25% 200 150 • Industry +5% 100 2011 2012 2013 2014 • UK revenue £10.2m, +23% DM NA Revenue DM UK Revenue • Orders received +24%; more No. of Orders Received than 780k in
Slide 19: Marketing Driving Growth
Marketing Driving Growth Customers Acquired & Retention Percentage 50% 60,000 45% • Marketing spend $69.2m, +26% 50,000 40% 35% 40,000 • Catalogue circulation increased 30% by 11%, offline still represents 25% 30,000 the majority of marketing spend 20% 20,000 15% 10% • Online marketing spend 10,000
Slide 20: Improving the Customer Experience
Improving the Customer Experience • Continued expansion in the product range • More than 34,000 products available in North America; 20% increase • More than 4,500 products available in the UK • More than 800 4imprint exclusive items • Enhanced 24 hour service, 2,600 products • Online “co-pilot” co-
Slide 21: 2015 Initiatives: Data-Driven Marketing That Drives Growth
2015 Initiatives Data-Driven Marketing That Drives Growth Catalogue: • Circulation grows, but at a modest rate (albeit over a large base) • Increases are title and time specific; driven by data analytics Internet: • Continue to drive growth at a rapid pace across all techniques • Depth and pace of i
Slide 22: 2015 Initiatives: Investment in Infrastructure
2015 Initiatives Investment in Infrastructure • $9m investment to support next 5 years of growth • 25,000 sq ft office expansion, 25% capacity increase • 100,000 sq ft DC expansion, doubles capacity • Blue Box® fulfilment Revenue per Employee ($'000) & Average • Samples Headcount • Embroidery $637k
Slide 23: Outlook
Outlook Early indications for 2015 are positive and in line with our aspirations. 21
Slide 24: Appendices
Appendices A
Slide 25: 4imprint Business Model
4imprint Business Model • Sale of custom-printed merchandise, used to promote a brand, service or product • Purchases by individuals within businesses and organisations of all sizes • Product customised and shipped to customer directly from suppliers • Investment in marketing, technology and people
Slide 26: Market Size
Market Size 30 Promotional Products Sales ($ billions) 25 20 UK & Ireland 15 Canada US 10 5 0 2010 2011 2012 2013 2014 Market size data source: ASI State of the Industry Survey, Sourcing City 2014 HY industry review and 4imprint management estimate. UK & Ireland revenues translated at 2014 average r
Slide 27: Tax
Tax 2014 2013 Continuing operations $'000 $'000 • Effective tax rate 30% (2013: Profit before tax 23,339 14,472 27%) Current tax 7,619 2,981 Deferred tax (637) 876 Tax charge 6,982 3,857 • Tax rate on underlying profit 28% (2013: 25%) Effective tax rate 30% 27% Underlying profit before tax 27,859 19
Slide 28: Shareholder List
Shareholder List As at 16/02/2015 No. of shares % BlackRock Investment Management 4,431,684 15.9 Standard Life Investments 2,726,070 9.8 Mr K.J. Minton 1,735,088 6.2 JP Morgan Asset Management 1,685,953 6.0 GVO Investment Management 1,671,775 6.0 Artemis Fund Managers 1,530,865 5.5 Fidelity Worldwid
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