MARKETING specialist Communisis reported a strong increase in operating profits after signing up a number of new blue chip customers including Boots, Nationwide and Virgin Money (Northern Rock).
The Leeds-based group said operating profits, before exceptional items, rose 19 per cent to £9.4m in the year to December 31.
Communisis is in the process of branching out beyond its traditional financial services sector to new areas.
Chief executive Andy Blundell said: “We are reducing the influence of financial services with growth in retail and telecoms.
“The percentage of revenue derived from the financial services sector has reduced from 58 per cent in 2010 to 51 per cent in 2011 and our involvement in other sectors, especially consumer goods, media and retail is increasing.”
Other new customers include Premium Credit, Speedy Hire, Virgin Media and Proximity (BBC TV Licensing).
Collectively, new business wins in 2011 are expected to contribute £24m toward the revenue growth targets in 2012.
Last year, the group made revenues of £208.3m, up eight per cent on 2010.
Mr Blundell said larger contracts typically have an average term of three to five years and, due to the nature of the work, Communisis often becomes deeply involved with the customer’s organisation.
Communisis is currently expanding abroad thanks to its connection with consumer goods giant Procter & Gamble and it has set up teams in Germany and Italy.
The teams are using Communisis’s technology to boost Procter & Gamble’s supply chains in both countries.
After exceptional items relating to the group’s restructuring programme, 2011 pre-tax profits fell from £4.9m to £4.2m.
Exceptional costs of £3.7m included a restructuring of the group’s manufacturing facility in Leeds which made 50 workers redundant.
Mr Blundell said the restructuring programme has been completed and there are no plans for any further job losses. Site consolidation has reduced the number of operating units and office locations from 14 to 10 with the closure of four sites in Bristol, Eastcote, Rickmansworth and Leicester.
A new central London office has been established to boost print work in the south.
Communisis has also invested in high-speed colour digital expansion in Leeds and Liverpool to create UK centres of excell- ence.
Mr Blundell believes that current economic uncertainties are likely to continue throughout 2012.
He said that these worries are unlikely to affect transactional and regulatory mailshots, but could affect customers’ discretionary marketing spend.
“The macro-economic environment presents a blend of risks and opportunities and Communisis is well positioned to respond to both,” he said.
“If there is an impact it would favour our approach. It could provide opportunities for outsourcing that would benefit us.”
The group said it is on track for further growth in 2012.
“Trading in the early weeks of 2012, together with new and existing customer prospects, support our expectation of further financial progress for the current year as a whole,” said Mr Blun- dell.
Analyst Paul Jones, at Panmure Gordon, said: “These are better than expected results for 2011 from Communisis and confirmation that it continues to make good progress.
“We anticipate further growth as the higher margin services element of its business continues to advance and, with cost reductions and further attention to the pension deficit (which has positive tax charge implications), we believe Communisis looks increasingly well placed.”
Earlier this year the group and its trustees agreed a deal to reduce the pension deficit by using rent from one of the group’s freehold properties.
Under the arrangement the pension scheme will be entitled to annual rent of £1.15m for 15 years.
The present value of the rental stream of £9.8m will be treated as an additional pension contribution and an asset that reduces the deficit by the same amount.
“This is very good for the trustees and the members of the scheme,” said Mr Blundell.
At the end of last year, Communisis was awarded Gold Certification by the Chartered Institute of Purchasing and Supply, one of only 13 UK organisations to achieve this standard.
CIPS described the company’s sourcing processes as “world class”.
At cutting edge of technology
Communisis is investing £10m in colour digital technology with the purchase of two state-of-the art HP T400 Color Inkjet Web Press lines.
Communisis will be the first UK company to install T400 technology, which delivers superior quality, fully variable, digital colour output at high speed.
The group has been at the forefront of high-speed colour digital technology.
Two HP T300 lines were installed at its Leeds facility during 2010 and 2011.
Communisis has worked with 18 major customers to date to realise the benefits of the technology platform.
The first T400 line has already been installed and the second will follow in June.