International marketing services specialist St Ives (SIV) warned back in April that profits for this period would be materially below expectations, and so a £12.7m non-cash impairment charge relating to its marketing activation arm came as no surprise. Much of this reflected weakness in the grocery retail sector, where clients reduced spending on promotional activity, but new contracts and extensions elsewhere, including work for Royal Mail, Adidas and Duracell, will help to reduce dependency on grocery retail work.
Putting aside such impairments, restructuring costs and other one-offs, profits before tax were down a more manageable 8 per cent at £30.4m, and management was confident enough to maintain the total dividend for the year to July. And despite deferral and cancellation of a number of large projects, the strategic marketing arm, which now accounts for 39 per cent of group revenue (up from 32 per cent), delivered a strong performance, pushing adjusted operating profits ahead by nearly a fifth to £19.4m. Digital marketing in particular saw revenue jump from £45.5m to £71.2m, boosted by new business wins including the English Football League and Emirates Airline.
Analysts at Peel Hunt are forecasting adjusted pre-tax profits for the year to July 2017 of £32.3m and EPS of 17.8p (from £30.4m and 17.5p in FY2016).
| ST IVES (SIV) | ||||
|---|---|---|---|---|
| ORD PRICE: | 146p | MARKET VALUE: | £207m | |
| TOUCH: | 146-147p | 12-MONTH HIGH: | 248p | LOW: 70p |
| DIVIDEND YIELD: | 5.3% | PE RATIO: | na | |
| NET ASSET VALUE: | 94p* | NET DEBT: | 60% | |
| Year to 29 Jul | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 329 | 6.4 | 4.3 | 5.75 |
| 2013 | 323 | 5.5 | 3.7 | 6.5 |
| 2014 | 331 | 11.9 | 8.6 | 7.2 |
| 2015 | 345 | 8.7 | 4.4 | 7.8 |
| 2016 | 368 | -5.7 | -5.9 | 7.8 |
| % change | +7 | - | - | - |
Ex-div: 24 Nov Payment: 19 Dec *Includes intangible assets of £189m, or 133p a share | ||||
