After a difficult first half, St Ives (SIV) spent the second half of its financial year replacing lost clients for its core strategic marketing business and trying to diversify its legacy businesses. However, this was not enough to offset the £33m impairment the group was forced to take against goodwill associated with the marketing activation and books segment, in addition to an increase in deferred costs for past acquisitions. To its credit, management has strengthened the balance sheet by selling three properties and cutting the total dividend by three-quarters. This resulted in a reduction in net debt to 1.6 times adjusted cash profits, down from two times in 2016.
Sales at its core strategic marketing business – which includes data and digital services – were up 13 per cent to £163m. Focusing on collaboration between its three sub-divisions led to 209 clients working with more than one business – an increase of more than a third on 2016. Chief executive Matt Armitage says the group has also lengthened the termination notice period for contracts where it employs a substantial number of staff. However, continued cuts in marketing budgets within the grocery sector put pressure on the marketing activation business, where adjusted operating profits almost halved to £4.3m. Efforts to diversify the client base bore some fruit, including project wins with AkzoNobel and Royal Mail.
Analysts at Peel Hunt expect adjusted pre-tax profits of £23.7m during the 12 months to July 2018, giving EPS of 12.9p (from £24.1m and 13.4p in FY2017).
| ST IVES (SIV) | ||||
| ORD PRICE: | 79p | MARKET VALUE: | £112m | |
| TOUCH: | 78.5-79.5p | 12-MONTH HIGH: | 152p | LOW: 38p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | NA | |
| NET ASSET VALUE: | 68p* | NET DEBT | 56% | |
| Year to 28 Jul | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 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 |
| 2017 | 393 | -44.1 | -30.4 | 1.95 |
| % change | +7 | - | - | -75 |
| Ex-div: | 23 Nov | |||
| Payment: | 18 Dec | |||
| *Includes intangible assets of £151m, or 106p a share | ||||
