Marketing services outfit St Ives (SIV) reports encouraging progress as it seeks to rebuild around its cash generative but low growth publishing division.

Results for the year to July 2015 are ‘moderately ahead of forecast’ because of slightly better underlying operating profit, according to analysts at Peel Hunt.

St Ives’ financial statements are heavily adjusted to account for acquisition costs related to St Ives’ buy-and-build strategy.

St Ives historical price to book value

‘The Strategic Marketing division – the key area of investment – is exceeding expectation and the other divisions are seeing quality of earnings protected by longer term contracts,’ writes Peel Hunt analyst Malcolm Morgan.

‘This is a modestly rated company delivering a clear strategy well.’

Following St Ives’ results, Morgan upgraded his year-ahead forecast for profit before tax forecast to £35.7 million from £34.8 million. Earnings per share estimates increased from 20.2p to 20.9p.

Operating profit in Strategic Marketing, which delivers marketing through print and in-store displays, gained 38% to £16.3 million.

Marking Activation operating profit fell slightly to £10.9 million. The unit provides in-store sales, product recall, mystery shopping and retail audit.

Finally, Books, a market-leading book printing business in the UK, posted a flat profit performance at £8.1 million.

Statutory profit-before-tax was down 26% at £8.7 million as deferred costs on historical acquisitions were paid out. Exceptional charges totaled £24.2 million.

Shares in St Ives trade 4.5% lower at 181p following a rally in the week ahead of results.

Issue Date: 06 Oct 2015