Strong start for communications business as revenues rise to £186m
“It’s been a strong story for Communisis in the first half of 2017,” said Communisis chief executive Andy Blundell, speaking to TheBusinessDesk.com this morning after the company’s half-year results.
It has indeed been a robust start for the Leeds-based customer communications business, which has clients including HSBC, Lloyds Bank, EE and Argos.
For the first half of 2017, to 30 June, Communisis returned revenues of £186.0m from £174.9m in the same period last year – a rise of 6%.
Pre-tax profits for the half year rose 13%, to £5.0m from £4.4m in 2016.
Blundell said two major issues had been resolved, that of bank refinancing and the defined benefit pension deficit. “So far, so good, and we have big ticks in those boxes,” said Blundell.
“We certainly benefited from exchange rates last year, and have shown a 6% increase in revenue this year along with a 10% increase in operating profit. Cash generation is strong and for this half. £6.5m come though that goes towards reducing our debt, to £28.3m as at the half year.
“Having free cash also has enabled us to increase our dividend, analysts this morning said it was further ahead than they’d imagined to further 10% increase, and we anticipate that should go down well with investors in all categories.
“With the bank refinance, Mark (Stoner, Communisis’ finance director) and his team have progressed that, we now have a club of three banks and a deal with takes us along for the next five years. We’ve done it on improved terms to have a stable financial platform.
Stoner added: “The accounting deficit is something our investors focus on, and we’ve relatively reduced that down in first half. It does impact on our valuation, which is positive from our side that we have a trustee relationship that is moving forward in a positive way.”
Blundell continued: “We’ve had for some time a big relationship with HSBC, and that’s just got a lot bigger for marketing communication.
“That will benefit our operations in Crossgates in Leeds. The direct mail business is getting more advanced, it’s having a pretty good time of it and we’ve had a strong performance from Leeds.”
The company is even bullish about the political uncertainty that is causing many businesses with interests outside domestic markets to baulk.
Blundell said: “Five years ago we didn’t have any sales outside the UK. Since then we’ve deliberately grown that in Europe, the Middle East and Africa, with 30% of group activity coming from there. We’re, seeing strong performance in Spain, Poland and the Netherlands. Our below the line focus is in the staple goods area, which is relatively immune to economic pressure. We’re upbeat about export, and ahead of the curve in terms of our forecast.
To finish, Blundell said: “All three of those businesses have performanced very well in first six months. We’re investing significantly in technology, which does build differentiation and value into our offering, and invested in tech in that space.
“Overall it’s a strong story for communisis, and there’s always plenty to do in second half, but our overall expectations for 2017 are unchanged.”
