St Ives ' (SIV) decision to focus investment on growing its strategic marketing business looks to be a wise one. This division grew its underlying revenue by more than a third during the first half of the year and now accounts for around half of the group total. This was enough to offset a weaker performance from its marketing activation and books businesses. After stripping out acquisition-related costs, the group's underlying pre-tax profits grew 5 per cent to £16m.
Revenues at strategic marketing's data businesses increased 78 per cent, partly reflecting the acquisition of mobile marketing services provider Solstice in March 2015, as well as increased client expenditure on digital marketing. The division also grew its US presence - a continued focus in the near term.
The group's marketing activation division, which provides in-store marketing material to retailers, continued to face pressure due to its exposure to the grocery sector. As a result, underlying revenue fell 9 per cent. The group is trying to diversify its income stream and has secured new contracts with brands including Berkeley Homes and Triumph. The group's legacy books business, Clays, suffered an 18 per cent decline in underlying operating profits to £3.7m, due to increased costs associated with its recently-won Penguin Random House contract.
Analysts at Peel Hunt expect adjusted pre-tax profits of £37.2m for the full year, giving EPS of 21p. This is up from £33m and EPS of 19.8p, respectively, in 2015.
ST IVES (SIV) | ||||
|---|---|---|---|---|
| ORD PRICE: | 224.75p | MARKET VALUE: | £319m | |
| TOUCH: | 224.75-226p | 12-MONTH HIGH: | 248p | LOW: 160p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | NA | |
| NET ASSET VALUE: | 90p* | NET DEBT: | 62% | |
| Half-year to 29 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 (restated) | 175 | 2.3 | 0.9 | 2.25 |
| 2016 | 186 | -2.9 | -4.0 | 2.35 |
| % change | +6 | -225 | -560 | +4 |
Ex-div: 7 Apr Payment: 6 May *includes intangible assets of £199m, or 140p a share | ||||
