Sales in the six months to 30 June rose 8% to £121.2m. The group’s share price hit a new 52-week high of 68p just prior to the announcement.
At the beginning of the year Communisis won a nine-year deal with Nationwide, and three weeks ago the company announced a huge ten-year outsourcing deal with Lloyds Banking Group for transactional print. Communisis has also revealed that it has extended its outsourcing contract with FMCG giant P&G to a further ten countries across Europe, taking it to 15 in total.
Chief executive Andy Blundell said: “It’s been a successful period for us with the new contract wins, and we are further ahead in terms of overseas expansion than envisaged.”
Overseas sales currently account for 13% of turnover, up from 5% last year. Blundell said the group was likely to better its target of increasing that to 20% by 2015. “We could well do it sooner than that. It’s not a cap, it’s a target.”
He highlighted a “flight to scale” by some clients: “If companies are considering outsourcing of mission-critical services they are going to do it with a company of scale, like Communisis, that has the resources, processes and standards in place to handle it,” Blundell said.
“You have to be credible to take on this scale of work.”
The group raised its interim divided by 9% to 0.6p. “That’s a key investor point and important when investors are looking at SmallCap stocks like us,” Blundell added.
There was further good news from the group as analysts upgraded their profit forecasts for 2014 and 2015.
Communisis has also agreed a new £60m banking facility, adding RBS to its existing banking syndicate of Barclays, Lloyds TSB and HSBC.
“Favourable market conditions led us to renegotiate our facilities early, and we had strong interest from new banks, which shows a lot of confidence in our strategy,” said finance director Nigel Howes.
“The new facility runs to March 2018 on better terms, with easier covenants. It’s very positive and we’ve very pleased to put that into place. It means we can take advantage of growth opportunities,” Howes added.
Blundell said Communisis remained acquisitive, with “a strong pipeline” of potential opportunities.
The operating profit figure was prior to £2.1m of exceptional costs, including costs associated with relocating its cheque printing operations from Manchester to Leeds, and rationalising the direct mail facility at Leeds. A further £1.4m costs associated with the restructuring is expected in H2.
The bottom line post-tax profit was £1m (2012: £1.5m), after exceptionals and costs associated with its recent £20m rights issue.
Communisis has also changed the way it reports its operations, to “better align with the group’s strategic direction”. Instead of intelligence driven communications (IDC) and specialist production and sourcing SPS it has now adopted three operational segments: design, produce and deploy.
Communisis shares had slipped to 64p in trading this morning. The 52-week low was 29.19p.